Bowman Consulting Group Ltd Announces Q1 2023 Financial Results, Beats Estimates and Raises Guidance

By: Bowman Consulting Group via Business Wire

May 08, 2023 at 16:05 PM EDT

Bowman Consulting Group Ltd. (Nasdaq: BWMN) (“Bowman” or the “Company”), a national engineering services firm supporting owners and developers of the built environment, today released financial results for the three months ended March 31, 2023.

“We started the year strong, exceeding estimates and building upon the solid foundation and excellent results we delivered in 2022,” said Gary Bowman, Chairman and CEO of Bowman. “During the first quarter, our net service revenue increased 42% year-over-year, driven both by strong organic growth of 12% and by contributions from the eight acquisitions that we completed over the last year. In keeping with our long-term strategic plan to diversify our revenue, our transportation services market outpaced our other markets with a nearly four-fold year-over-year increase in revenue and a nearly three-fold increase in its percentage of our total revenue mix.”

“New order volume in the first quarter exceeded our goals and we entered the second quarter with a strong backlog and several awards in hand where contracts are not yet finalized, so the revenue is not yet included in our backlog. As such, we remain confident in our ability to continue to deliver growth in 2023 and are therefore increasing our full year guidance for net revenues and adjusted EBITDA,” Bowman continued. “Additionally, we continue to have a strong pipeline of acquisition opportunities. In April, we completed the acquisition of Richter & Associates, a Rockville, Maryland based professional services firm focused on dry utility infrastructure engineering, which continues our ongoing diversification effort to build our power and utility services revenue.”

Financial highlights for the three months ended March 31, 2023, compared to March 31, 2022:

Gross revenue of $76.1 million, compared to $52.5 million, a 45% increase
Year-over-year organic gross revenue growth¹ of 13%
Net service billing^1,2 of $67.6 million, compared to $47.7 million, a 42% increase
Year-over-year organic net service billing growth of 12%
Net income of $0.5 million, compared to a net income of $1.5 million
Adjusted EBITDA² of $9.7 million, compared to $7.4 million, a 31% increase
Adjusted EBITDA margin, net²of 14.3% compared to 15.5%, a 120 bps decrease
Gross backlog² of $252 million, compared to $173 million, a 46% increase

Business highlights subsequent to the first quarter 2023:

Acquisition of Richter & Associates, a utility services engineering firm focused on last mile utility infrastructure design; April 2023

Increasing FY 2023 Guidance

The Company is increasing its full year 2023 outlook for Net Service Billing to be in the range of $285 to $300 million and Adjusted EBITDA in the range of $44 to $50 million. The current outlook for 2023 is based on completed acquisitions as of the date of this release and does not include contributions from any future acquisitions. Management will discuss the Company’s acquisition pipeline during its upcoming earnings call.

FY 2023 Earnings Webcast

Bowman will host an earnings webcast to discuss the results of the quarter as follows:

Date:	May 9, 2023
Time:	9:00 a.m. Eastern Time
Hosts:	Gary Bowman, Chairman and CEO and Bruce Labovitz, Chief Financial Officer
Where:	http://investors.bowman.com

¹	Revenue from acquired companies is reclassified as organic revenue in the first full quarter following the 12-month anniversary of closing.
²	Non-GAAP financial metrics the Company believes offer valuable perspective on results of operations. See Non-GAAP tables below for reconciliations.

About Bowman Consulting Group Ltd.

Headquartered in Reston, Virginia, Bowman is an established professional services firm delivering innovative engineering solutions to customers who own, develop, and maintain the built environment. With over 1,700 employees in more than 70 locations throughout the United States, Bowman provides a variety of planning, engineering, construction management, commissioning, environmental consulting, geomatics, survey, land procurement and other technical services to customers operating in a diverse set of regulated end markets. For more information, visit bowman.com or investors.bowman.com.

Forward-Looking Statements

This press release may contain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements contained in this press release other than statements of historical fact, including statements regarding our future results of operations and financial position, business strategy and plans and objectives for future operations, are forward-looking statements and represent our views as of the date of this press release. The words “anticipate”, “believe”, “continue”, “estimate”, “expect”, “intend”, “may”, “will”, “goal” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs, These forward-looking statements are subject to several assumptions and risks and uncertainties, many of which involve factors or circumstances that are beyond our control that could affect our financial results. The Company cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements contained in this news release. Such factors include: (a) changes in demand from the local and state government and private clients that we serve; (b) general economic conditions, nationally and globally, and their effect on the market for our services; (c) competitive pressures and trends in our industry and our ability to successfully compete with our competitors; (d) changes in laws, regulations, or policies; and (e) the “Risk Factors” set forth in the Company’s most recent SEC filings. Considering these risks, uncertainties and assumptions, the future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in any forward-looking statements. Except as required by law, we are under no obligation to update these forward-looking statements after the date of this press release, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.

Non-GAAP Financial Measures and Other Key Metrics

We supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, with certain non-GAAP financial measures, as described below, to help represent, explain, and understand our operating performance. These non-GAAP financial measures may be different than similarly referenced measures used by other companies. The non-GAAP measures are intended to enhance investors’ overall understanding and evaluation of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We present these non-GAAP financial measures to assist investors in seeing our financial performance in a manner more aligned with management’s view and believe these measures provide additional tools by which investors can evaluate our core financial performance over multiple periods relative to other companies in our industry. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the financial tables accompanying this press release.

BOWMAN CONSULTING GROUP LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands except per share data)

	March 31, 2023			December 31, 2022
	(Unaudited)
ASSETS
Current Assets
Cash and equivalents	$	14,328		$	13,282
Accounts receivable, net		67,164			64,443
Contract assets		19,931			16,321
Notes receivable - officers, employees, affiliates, current portion		938			1,016
Prepaid and other current assets		7,704			7,068
Total current assets		110,065			102,130
Non-Current Assets
Property and equipment, net		26,401			25,104
Operating lease, right-of-use assets		31,132			30,264
Goodwill		53,082			53,210
Notes receivable		903			903
Notes receivable - officers, employees, affiliates, less current portion		1,390			1,417
Other intangible assets, net		26,581			27,950
Deferred tax asset, net		17,428			13,759
Other assets		1,080			1,020
Total Assets	$	268,062		$	255,757
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	30,696		$	40,293
Contract liabilities		6,838			6,370
Notes payable, current portion		9,243			10,168
Operating lease obligation, current portion		6,967			6,949
Finance lease obligation, current portion		5,804			5,297
Total current liabilities		59,548			69,077
Non-Current Liabilities
Other non-current obligations		17,811			356
Notes payable, less current portion		14,393			16,276
Operating lease obligation, less current portion		29,143			28,087
Finance lease obligation, less current portion		15,028			14,254
Pension and post-retirement obligation, less current portion		4,879			4,848
Total Liabilities	$	140,802		$	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 as of March 31, 2023 and December 31, 2022; 16,019,601 shares issued and 13,593,846 outstanding, and 15,949,805 shares issued and 13,556,550 outstanding as of March 31, 2023 and December 31, 2022, respectively		160			159
Additional paid-in-capital		167,440			162,922
Accumulated other comprehensive income		568			578
Treasury stock, at cost; 2,425,755 and 2,393,255, respectively		(21,498	)		(20,831	)
Stock subscription notes receivable		(151	)		(173	)
Accumulated deficit		(19,259	)		(19,796	)
Total Shareholders' Equity	$	127,260		$	122,859

TOTAL LIABILITIES AND EQUITY	$	268,062		$	255,757

BOWMAN CONSULTING GROUP LTD. CONDENSED CONSOLIDATED INCOME STATEMENT (Amounts in thousands except per share data) *(Unaudited)*

	For the Three Months Ended March 31,
		2023			2022
Gross Contract Revenue	$	76,100		$	52,461
Contract costs: (exclusive of depreciation and amortization below)
Direct payroll costs		28,835			20,659
Sub-consultants and expenses		8,538			4,760
Total contract costs		37,373			25,419
Operating Expenses:
Selling, general and administrative		33,636			22,821
Depreciation and amortization		3,565			2,389
(Gain) on sale		(11	)		(6	)
Total operating expenses		37,190			25,204
Income from operations		1,537			1,838
Other expense		1,213			498
Income (loss) before tax expense		324			1,340
Income tax (benefit) expense		(213	)		(117	)
Net income	$	537		$	1,457
Earnings allocated to non-vested shares		69			254
Net income attributable to common shareholders	$	468		$	1,203
Earnings per share
Basic	$	0.04		$	0.12
Diluted	$	0.04		$	0.12
Weighted average shares outstanding:
Basic		11,800,308			9,926,395
Diluted		12,669,581			10,043,794

BOWMAN CONSULTING GROUP LTD. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS *(Unaudited)*

	For the Three Months Ended March 31,
		2023			2022
Cash Flows from Operating Activities:
Net Income	$	537		$	1,457
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		2,196			1,922
Amortization of intangible assets		1,369			468
Gain on sale of assets		(11	)		(6	)
Bad debt		222			152
Stock based compensation		4,363			3,236
Accretion of discounts on notes payable		140			–
Deferred taxes		(3,669	)		–
Deferred rent		–			(119	)
Changes in operating assets and liabilities, net of acquisition of businesses
Accounts receivable		(2,943	)		(6,945	)
Contract assets		(3,610	)		(721	)
Prepaid expenses and other assets		(533	)		(630	)
Accounts payable and accrued expenses		7,748			2,960
Contract liabilities		469			640
Net cash provided by operating activities		6,278			2,414
Cash Flows from Investing Activities:
Purchases of property and equipment		(536	)		(198	)
Fixed assets converted to lease financing		–			278
Proceeds from sale of assets and disposal of leases		11			6
Payments received under loans to shareholders		105			70
Acquisitions of businesses, net of cash acquired		–			(550	)
Collections under stock subscription notes receivable		22			24
Net cash used in investing activities		(398	)		(370	)
Cash Flows from Financing Activities:
Proceeds from common stock offering, net of underwriting discounts and commissions and other offering costs		–			15,475
Repayments under fixed line of credit		(185	)		(182	)
Repayment under notes payable		(2,685	)		(905	)
Payments on finance leases		(1,687	)		(1,414	)
Payments for purchase of treasury stock		(667	)		(988	)
Proceeds from issuance of common stock		390			289
Net cash (used) provided by financing activities		(4,834	)		12,275
Net increase in cash and cash equivalents		1,046			14,319
Cash and cash equivalents, beginning of period		13,282			20,619
Cash and cash equivalents, end of period	$	14,328		$	34,938

	For the Three Months Ended March 31,
		2023			2022
Supplemental disclosures of cash flow information:
Cash paid for interest	$	757		$	344
Cash paid for income taxes	$	–			279
Non-cash investing and financing activities:
Property and equipment acquired under capital lease	$	(2,964	)	$	(2,456	)
Issuance of notes payable for acquisitions	$	–		$	(200	)

BOWMAN CONSULTING GROUP LTD. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (amounts in thousands except per share data) *(Unaudited)*

Condensed Combined Statement of Operations Reconciliation	For the Three Months Ended March 31,
		2023			2022
Gross contract revenue	$	76,100		$	52,461
Contract costs (exclusive of depreciation and amortization)	$	37,373		$	25,419
Operating expense	$	37,190		$	25,204
Income from operations	$	1,537		$	1,838
Other (income) expense	$	1,213		$	498
Income tax expense (benefit)	$	(213	)	$	(117	)
Net income	$	537		$	1,457
Net margin		0.7	%		2.8	%

Other financial information¹
Net service billing	$	67,562		$	47,701
Adjusted EBITDA		9,673			7,404
Adjusted EBITA margin, net		14.3	%		15.5	%



Gross Revenue to Net Services Billing Reconciliation	For the Three Months Ended March 31,
		2023			2022
Gross contract revenue	$	76,100		$	52,461
Less: sub-consultants and other direct expenses		8,538			4,760
Net services billing	$	67,562		$	47,701



Adjusted EBITDA Reconciliation	For the Three Months Ended March 31,
		2023			2022
Net Income	$	537		$	1,457
+ interest expense		896			334
+ depreciation & amortization		3,565			2,389
+ tax (benefit) expense		(213	)		(117	)
EBITDA	$	4,785		$	4,063
+ non-cash stock compensation		4,434			3,236
+ acquisition expenses		454			105
Adjusted EBITDA	$	9,673		$	7,404
Adjusted EBITDA margin, net		14.3	%		15.5	%

¹	Non-GAAP financial metrics the Company believes offer valuable perspective on results of operations. See Non-GAAP tables below for reconciliations.

BOWMAN CONSULTING GROUP LTD. GROSS CONTRACT REVENUE COMPOSITION *(Unaudited)*

(dollars in thousands)	For the three months ended March 31,
Consolidated Gross Revenue	2023	%		2022	%		Change	% Change
Building Infrastructure	44,337	58.3	%	38,762	73.9	%	5,575	14.4	%
Transportation	16,019	21.0	%	3,970	7.6	%	12,049	303.5	%
Power and Utilities	13,324	17.5	%	8,749	16.7	%	4,575	52.3	%
Emerging Markets¹	2,420	3.2	%	980	1.9	%	1,440	146.9	%
Total	76,100	100.0	%	52,461	100.0	%	23,639	45.1	%


(dollars in thousands)	For the three months ended March 31,
Organic vs. Acquired Revenue ²	2023	%		2022	%		Change	% Change
Baseline organic revenue	58,791	77.3	%	52,195	99.5	%	6,596	12.6	%
Acquired revenue	17,309	22.7	%	266	0.5	%	17,043	n/a
Total	76,100	100.0	%	52,461	100.0	%	23,639	45.1	%

¹	Adjusted for change, represents mining, water resources and other.
²	Revenue from acquired companies is reclassified as organic revenue in the first full quarter following the 12-month anniversary of closing.

BOWMAN CONSULTING GROUP LTD. GROSS BACKLOG BY CATEGORY AT MARCH 31, 2023 *(Unaudited)*

Category	Percentage
Building Infrastructure	51.0	%
Transportation	32.0	%
Power and Utilities	13.0	%
Emerging Markets	4.0	%
TOTAL	100.0	%

View source version on businesswire.com: https://www.businesswire.com/news/home/20230505005514/en/

Contacts

Investor Relations Contacts:

Bruce Labovitz

ir@bowman.com

(703) 787-3403

Larry Clark

lclark@bowman.com

(310) 622-8223