Prepared remarks
Page 1
CONFERENCE CALL PREPARED REMARKS FROM: Theodore S. Hanson, Chief Executive Officer, Everforth, Inc. Shiv Iyer, President, Everforth, Inc. Marie L. Perry, Chief Financial Officer, Everforth, Inc. October 28, 2026
Page 2
2 THIRD QUARTER 2026 FINANCIAL RESULTS CONFERENCE CALL OCTOBER 28, 2026 PREPARED REMARKS KIMBERLY ESTERKIN Vice President Investor Relations: Good afternoon. Thank you for joining us today for Everforth's third quarter 2026 conference call. With me are Ted Hanson, Chief Executive Officer, Shiv Iyer, President, and Marie Perry, Chief Financial Officer. Before we get started, I would like to remind everyone that our commentary contains forward -looking statements. Although we believe these statements are reasonable, they are subject to risks and uncertainties, and as such, our actual results could d iffer materially from those statements. Certain of these risks and uncertainties are described in today’s press release and in our S EC filings. We do not assume any obligation to update statements made on this call. For your convenience, our prepared remarks and supplemental materials can be found in the Investor Relations section of our website at investors.everforth.com. Please also note that on this call, we will be referencing certain non -GAAP measures, such as Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow. These non -GAAP measures are intended to supplement the comparable GAAP measures. Reconciliations between GAAP and non-GAAP measures are included in today's press release. I will now turn the call over to Ted Hanson, Chief Executive Officer. DISCLAIMER Certain statements made in these prepared remarks are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and involve a high degree of risk and uncertainty. Forward -looking statements include statements regarding our anticipated financial and operating performance. All statements in the prepared remarks , other than those setting forth strictly historical information, are forward -looking statements. Forward-looking statements are not guarantees of future performance and actual results might differ materially. In particular, we make no assurances that th e proposed revenue, expense, and profit estimates outlined above will be achieved. Additional examples of forward -looking statements include, without limitation, statements regarding our ability to attract, train, and retain qualified internal employees, the availability of qualified billable professionals, management of our growth, continued performance and improvement of our enterprise-wide information systems, our ability to successfully adapt to, integrate, and leverage new and developing technologies, including generative artificial intelligence, our ability to manage our litigation matters, the successful integration of acquisitions, statements related to the Company’s brand transition to Everforth, and other risks detailed from time -to-time in our reports filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC on February 2 5, 202 6. We specifically disclaim any intention or duty to update any forward -looking statements contained in the prepared remarks.
Page 3
3 THEODORE S. HANSON Chief Executive Officer: Thank you, Kim, and thank you for joining our third quarter 2026 earnings call. Enterprise AI Moves from Investment to Execution Our third quarter results demonstrated continued momentum. Revenues of $1.03 billion and Adjusted EBITDA of $106.3 million surpassed the high-end of our guidance, while Adjusted EBITDA margin of 10.3 percent was at the top end of our guidance range. Commercial Segment revenue growth reflected sustained customer investment in AI, IT modernization, and cloud transformation services. Strength in our Data and AI, Security & Risk, and Enterprise Platform solutions helped drive a Commercial consultin g book-to-bill of 1.1 times on a trailing twelve-month basis. In our Federal Government Segment, new contract awards totaled $584.4 million, representing a book-to-bill of 1.9 times for the quarter and 0.9 times on a trailing twelve-month basis. Strength in federal bookings for the quarter reflected planned awards and extensions, indicating continued demand for our services. Federal contract backlog was approximately $2.9 billion at quarter end, or a coverage ratio of 2.5 times trailing twelve-month revenues, with particular strength across AI and data, cybersecurity, cloud, and mission modernization. Shiv will discuss our performance and recent customer wins in more detail shortly. With that context, I want to focus on two themes shaping enterprise technology investment and strengthening Everforth's position in the market. First, AI investment remains significant, but its focus is evolving. Enterprises are moving beyond experimentation to scaled deployment, but much of the investment to date has centered on the infrastructure, platforms, and software required to support that growth. We have consistently believed that enterprise software platforms would become a primary channel for deploying AI across the enterprise. That is increasingly what we are seeing. AI is not replacing these platforms; it's expanding their role as AI becomes embedded into ERP, CRM, and workflow environments. This is important for Everforth. Our partnerships with Workday, Salesforce, ServiceNow, and other technology leaders provide us with the platform expertise required to move these AI -enabled technologies into production. Our implementation track record has earned us the opportunity to serve as forward deployed partners with early access to new capabilities that we can bring into customer environments. We are an official member of the Salesforce Forward Deployed Engineer partner network and among the first Workday partners to be certified to implement Paradox and HiredScore, Workday's unified, AI -powered talent acquisition platform. As these platforms evolve, we are positioned to help customers turn these new AI -enabled capabilities into practical business outcomes. Second, scaling AI requires more than the technology itself. Infrastructure and software are only part of the investment. Successful deployment also requires data integration, security, governance, change management, and the right operating processes. In other words, AI is not only a technology investment. It's part of a broader business transformation. That is where IT services become increasingly important. Moving from pilots to scaled deployments introduces challenges around cost, governance, and security that require both technology and execution expertise. According to ISG, more than 60 percent of enterprise customers surveyed measure AI success by the cost savings generated, while nearly 80 percent identified centralize d governance and cybersecurity as the way to best manage costs. We are seeing the same priorities amongst our customers. Our Security & Risk bookings are up over 40 percent year -to-date compared to the first nine months of 2025, while our Security & Risk pipeline has increased in the mid-teens since the end of the third quarter. Agentic AI illustrates why these capabilities matter. As agents access data and execute tasks autonomously, they must be governed and monitored. Technology providers, including Microsoft and AWS, are developing capabilities to address these emerging cybersecurity needs, but the market is still developing. Everforth helps clients assess, select, and implement the best suited technologies for their environments, which is particularly important in AI governance, where no single technology addresses every security requirement.
Page 4
4 We are also investing in governance-as-a-service for highly regulated industries, like healthcare and financial services, and bringing together capabilities across Everforth under a unified set of offerings supported by our proprietary assets and accelerat ors. For example, our teams developed a repeatable platform called our Enclave Factory for rapidly deploying secure, compliant environments across classified and unclassified networks. Our Enterprise Security Operations Center, or SOC, developed an AI - driven security triage capability that helps reduce false alarms and prioritize higher -risk concerns. And through our Everforth AI Studio, we built an AI -driven regulatory change management and compliance platform that enables financial institutions to continuously monitor evolving regulations and streamline their compliance workflows. Our view remains clear. Enterprise AI is advancing, but many of the hardest implementation challenges are still ahead. As customers move from experimentation to productio n and scale, they need partners that understand their tech environments, industries, governance, and security requirements. Everforth is well positioned to bring those capabilities together and help customers successfully navigate that next phase of enterprise AI adoption. With that, I'll turn the call over to Shiv to discuss our industry performance and how we are applying these capabilities across our customer base. SHIV IYER President: TMT and National Security Customers Drive Growth Let's begin with our Commercial industry performance. Sequential growth for the segment was led by TMT and Business Services verticals, both up high single digits from the second quarter, while the Consumer & Industrials, Financial Services, and Healthcare verticals remained relatively stable. TMT benefited from strong double-digit growth in the Software and Interactive sub-industry, driven by wor k with the frontier AI labs and hyperscalers. The Business Services vertical benefited from expanded work in the aerospace and defense and professional services sub-industries. Year over year, TMT and Business Services grew mid-teens and high-single digits, respectively. Within the Consumer & Industrials vertical, we achieved high-teens growth among Utilities customers, including growth in our work with large regional and national energy providers. In the Financial Services industry, Insurance accounts grew high single -digits driven by contracts with global carriers, while Diversified Financials grew low double-digits with growth amongst our investment management accounts. Turning to Federal. National Security drove the segment's growth, with strong double-digit revenue improvement year-over-year and mid-single digit growth sequentially. Strength in National Security was primarily driven by our cybersecurity contracts with the Department of Homeland Security and the Cybersecurity and Infrastructure Security Agency (CISA). We also saw solid growth amongst Civilian agencies, with technology infrastructure work for the Department of Veterans Affairs and managed cybersecurity work for the Centers for Medicare & Medicaid Services. Executing Across the AI Technology Stack Building on that performance, I'd like to turn to our solutions portfolio. As Ted highlighted, the infrastructure required to scale AI securely and responsibly remains a significant driver of demand, but customers are looking for more than standalone tech nology support. They are turning to Everforth to bring together our AI and data, cybersecurity, cloud, and engineering expertise to solve their complex operational challenges. As I highlighted last quarter, we're engaged in data center services across the world's four largest hyperscalers, and the pa ce of that work continues to accelerate. Our hyperscaler customers consistently identify people, power, and equipment as the three factors limiting AI build out. The people constraint plays directly to Everforth's strengths. We can quickly assemble special ized teams across data, AI, and digital engineering and deploy them at scale to bring critical infrastructure online on time. As an example, we recently secured a multi -year data center contract in a highly competitive labor market and assembled the engineering team in matter of a few weeks. Our professionals are playing a critical role in this hyperscaler's infrastructure build out, helping bring new AI capacity online, while demonstrating Everforth's differentiated combination of expertise and agility. Speaking of our agility, Everforth increasingly operates across the full AI technology stack, from the foundational infrastru cture through applications. We are also growing our capabilities in physical AI, and our hyperscaler work now extends to robotics. As a
Page 5
5 strategic supplier across the full program lifecycle, our engineers are helping a global hyperscaler install, commission, and bring its robotics systems into production across North America and Europe. We apply that same AI and engineering expertise in secure government environments. For the Department of War (DOW), we're building secure data platforms and applications to operationalize AI and autonomous capabilities. Under our recent SUNet expansion, we are supporting the DOW's existing secure environment while advancing the SUNet 2.0 platform for AI and machine learning development. Across other programs, we are validating AI -enabled workflows, transitioning applications across high - security environments, and expanding trusted data for autonomous models. We're also seeing growing demand for agentic workflow automation. For a leading global media and entertainment company, we are building an AI -powered assistant within their Microsoft environment to automate support responses to employee cybersecurity reque sts. This solution allows our customer's security team to focus on higher priority needs and establishes a foundation for broader intelligent operations. Data governance and security are equally important to scaled AI adoption. For a major North American supplier of construction materials, we are strengthening the company's Databricks environment by improving data governance, securely connecting business systems, and establishing management standards. This work supports future analytics and AI, while also improving our customer's access controls, network security, and data protection. We are bringing that same focus on security and governance to our federal customers. Through the Department of Homeland Security's Continuous Diagnostics and Mitigation (CDM) program, we onboarded 100 percent of the agency's CDM dashboards, expanding cyber security visibility across DHS. Our Security Information and Event Management as a Service offering further provides DHS with a unified view of threats and vulnerabilities across the Federal Civilian Executive Branch. Beyond infrastructure, data, and security, we help customers modernize core enterprise platforms. For a leading domestic airline, we signed a three -year Workday Gold Tier support contract covering needs from security rule updates and financial account mapping to complex integrations. We also secured our first major Salesforce Professional Services co-delivery engagement with a global food and snacking company, helping consolidate commerce platforms into a unified Salesforce solution across the U.S., Canada, and the UK. Our digital engineering work is similarly focused on helping customers modernize complex technology environments and business processes. For a leading U.S. food producer, we are consolidating four operating segments into a single ERP environment to improve end-client experience, transportation, and shipping costs. For the financial services arm of a leading global automaker, we are leveraging our offshore engineering capabilities and agentic development and testing practices to modernize front, middle, and back office processes. Our investments in AI -led automation further differentiate Everforth by helping customers accelerate time-to-value and lower their transformation costs. The breadth and complexity of these engagements demonstrate the increasingly sophisticated work we are delivering to our customers. As noted, Everforth now operates across the full AI stack, from infrastructure and applications to physical AI. By combining our industry, services, and platform expertise, with our ability to rapidly assemble and deploy specialized talent at scale, we are very well positioned to address our customers' most critical technology needs. With that, I'll turn the call over to our CFO, Marie Perry, to discuss our third quarter 2026 performance and fourth quarter guidance. MARIE L. PERRY Chief Financial Officer: Q3 2026 Financial Performance and Q4 2026 Financial Estimates For the third quarter, revenues totaled $1.03 billion and were above the top end of our guidance range. Revenues from our Commercial Segment were $719.9 million, an increase of 1.2 percent year -over-year, reflecting a continued momentum in the business. Revenues from our Federal Government Segment were $311.5 million, an increase of 3.8 percent year -over-year. Both segments contributed to our revenue outperformance in the quarter. Turning to margins. Gross margins for the third quarter of 2026 were 28.3 percent, including Commercial Segment gross margin of 31.9 percent and Federal Government Segment gross margin of 19.8 percent.
Page 6
6 SG&A for the quarter was $217.7 million, compared to $212.2 million in the third quarter of 2025. SG&A expenses included $8.3 million in acquisition, integration, and strategic planning expenses, which was within our expectations for the quarter. For the third quarter, net income was $23.1 million, Adjusted EBITDA was $106.3 million, and Adjusted EBITDA margin was 10.3 percent. As Ted noted, Adjusted EBITDA dollars surpassed our expectations and Adjusted EBITDA margin was at the top of our guidance range. Cash and cash equivalents were $147.5 million at quarter end. As we noted on our second quarter call, our focus from a capita l allocation perspective is debt repayment as we continue to deleverage following the Quinnox acquisition in Q1. In the third quarter, we repaid $52.8 million in debt, including $43.8 million toward our term loans and revolver and an additional $9.0 million in open market repurchases of our senior unsecured notes. At quarter end, we had approximately $227 million available on our $600 million senior secured revolver, and our net leverage ratio was 3.1 times. We remain committed to getting our leverage ratio to 2.5 times or below. Free cash flow for the third quarter was $46.5 million or approximately 44 percent of Adjusted EBITDA. We continue to target 60 to 65 percent conversion rate of our free cash flow to Adjusted EBITDA on a full year basis, excluding the aforementioned one - time strategic costs associated with our transformative cost savings. Turning to guidance. Our financial estimates for the fourth quarter of 2026 are set forth in our earnings release and supplemental materials. These estimates are based on current market conditions and assume no further deterioration in the markets that we serve. The fourth quarter assumes 61 Billable Days, which is three days fewer than the third quarter and consistent with the prior -year period. Our fourth quarter estimates also include $6.0 million to $7.5 million in strategic planning expenses. As noted last quarter, we expect certain upfront investments to achieve the transformative cost savings outlined in our three-year strategic plan. Alongside these investments, which will continue to decline, we are implementing targeted initiatives that will generate meaningful structural cost savings. These efforts are progressing as planned. With that as background, for the fourth quarter of 2026, we are estimating revenues of $965 million to $995 million, net inco me of $17.9 million to $25.5 million, Adjusted EBITDA of $93 million to $103 million, and Adjusted EBITDA margin of 9.6 percent to 10.4 percent. Thank you; I'll now turn the call back over to Ted. THEODORE S. HANSON Chief Executive Officer: One Everforth in Action As we close today's call, I want to return to an important part of our strategy. When we launched the Everforth brand earlier this year, it was about more than bringing our businesses together under one brand. It was about creating a unified technology services leader that combines the capabilities, industry expertise, and talent across our commercial and government businesses to crea te greater value for our customers. During the third quarter, we continued to make meaningful progress against that strategy. Our expanded relationships with AWS and Microsoft demonstrate what One Everforth looks like in practice. Our expanded AWS relationship extended Premier Tier capabilities across the Everforth portfolio, while our strengthened Microsoft partnership aligned commercial and federal capabilities through a coordinated go-to-market model. These relationships also reinforce an important point I made at the start of today's call. Our technology alliances strengthe n Everforth's role as a forward deployed partner. They keep us close to where technology is advancing and provide early access to
Page 7
7 new capabilities, while our ability to rapidly assemble specialized teams gives us the agility to put those technologies to w ork as our customers' needs evolve. As we continue bringing Everforth together, our objective is straightforward: to make the full breadth of our capabilities mo re accessible to our customers and technology partners. The benefits of that strategy extend across Everforth. For our employees, it creates new opportunities to collaborate, develop expertise, and gain experience in a broad range of technology and customer needs. For our stockholders, it strengthens our competitive position and creates a stronger foundation for long -term growth and value creation. These benefits, combined with our industry knowledge, implementation expertise, and ability to deliver service s at scale, onshore, nearshore, and offshore, strengthens the value Everforth provides our customers as their technology needs evolve. That concludes our prepared remarks. Before we open the call to your questions, I want to thank our teams for their continued dedication to our customers and to bringing Everforth together. We have made meaningful progress since launching our new brand in April, and we remain focused on building on this strong foundation. With that, we will open up the call to your questions.