Bowman Announces Record Third Quarter Results; Exceeds Consensus Estimates and Raises Guidance

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 record financial results for the three months ended September 30, 2022.

“We have once again reported a record quarter that exceeded estimates,” said Gary Bowman, Chairman and CEO of Bowman. “We continue to generate growth across all our markets and increase our backlog through bookings that outpace deliveries. Our acquisitions program has proven successful as we continue to acquire strategic partners at attractive multiples and realize meaningful synergies, leading to acquired revenue growth of 24% collectively since acquisition. We are optimistic about the fourth quarter and expect continued growth in revenue, earnings, and operating cash flow into 2023. We are once again increasing our full year outlook and are introducing 2023 guidance that reflects confidence in our ability to continue to deliver these industry leading results.”

Financial Highlights for the three months ended September 30, 2022, compared to September 30, 2021:

  • Gross revenue of $71.2 million, compared to $39.7 million, a 79% increase
  • Year-over-year organic gross revenue growth of 23%
  • Net service billing1 of $64.9 million, compared to $35.7 million, an 82% increase
  • Year-over-year organic net service billing growth of 25%
  • Net income of $3.4 million, compared to a net income of $0.4 million
  • Adjusted EBITDA1 of $9.6 million, compared to $4.4 million, a 118% increase
  • Adjusted EBITDA margin, net 1 of 14.8%, compared to 12.4%, a 240-basis point increase
  • Gross backlog1 of $230 million, compared to $139 million, a 65% increase

Financial Highlights for the nine months ended September 30, 2022, compared to September 30, 2021:

  • Gross revenue of $186.1 million, compared to $108.0 million, a 72% increase
  • Year-over-year organic gross revenue growth of 28%
  • Net service billing1 of $169.0 million, compared to $97.1 million, a 74% increase
  • Year-over-year organic net service billing growth of 31%
  • Net income of $4.5 million, compared to a net income of $0.9 million
  • Adjusted EBITDA1 of $24.6 million, compared to $12.7 million, a 94% increase
  • Adjusted EBITDA margin, net 1 of 14.6%, compared to 13.1%, a 150-basis point increase

Business Highlights during the Third Quarter:

  • Closed on the acquisition of Project Design Consultants – July 2022
  • Closed on the acquisition of Anchor Engineering – August 2022

Business Highlights after the Third Quarter:

  • Closed on the acquisition of Spatial Acuity – November 2022
  • Closed on the acquisition of SEI Engineering – November 2022

Increasing FY 2022 Guidance and Introducing FY 2023 Guidance

The Company is increasing its full year 2022 outlook for Net Service Billing to be in the range of $230 to $234 million and Adjusted EBITDA in the range of $33 to $35 million. This represents an increase from the previous guidance for Net Service Billing of $205 to $220 million and Adjusted EBITDA of $29 to $33 million. The Company is introducing its full year 2023 outlook for Net Service Billing to be in the range of $270 to $290 million and Adjusted EBITDA in the range of $42 to $48 million. The current outlook for 2022 and 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.

Q3 2022 Earnings Webcast

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

Date:

 

November 11, 2022

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

 

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 68 offices 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 anticipates 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. AND AFFILIATES
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
(Amounts in thousands except per share data)
 
For the Three Months

Ended September 30,
For the Nine Months

Ended September 30,

2022

 

2021

 

2022

 

2021

Gross Contract Revenue

 $

                    71,246

 

 $

                    39,715

 

 $

                  186,105

 

 $

                  108,041

 

Contract costs: (exclusive of depreciation and amortization below)

Direct payroll costs

 

                       27,641

 

 

                       15,531

 

 

                       73,353

 

 

                       42,873

 

Sub-consultants and expenses

 

                         6,343

 

 

                         3,967

 

 

                       17,086

 

 

                       10,967

 

Total contract costs

 

                       33,984

 

 

                       19,498

 

 

                       90,439

 

 

                       53,840

 

Operating Expenses:

Selling, general and administrative

 

                       31,916

 

 

                       18,373

 

 

                       82,819

 

 

                       48,328

 

Depreciation and amortization

 

                         3,138

 

 

                         1,598

 

 

                         8,350

 

 

                         4,506

 

Gain on sale

 

                            (11

)

 

                            (46

)

 

                            (44

)

 

                            (99

)

Total operating expenses

 

                       35,043

 

 

                       19,925

 

 

                       91,125

 

 

                       52,735

 

Income from operations

 

                         2,219

 

 

                            292

 

 

                         4,541

 

 

                         1,466

 

Other expense

 

                            595

 

 

                            314

 

 

                         2,086

 

 

                            706

 

Income (loss) before tax expense

 

                         1,624

 

 

                            (22

)

 

                         2,455

 

 

                            760

 

Income tax (benefit) expense

 

                       (1,773

)

 

                          (379

)

 

                       (2,079

)

 

                          (139

)

Net income

 $

                    3,397

 

 $

                       357

 

 $

                    4,534

 

 $

                       899

 

Earnings allocated to non-vested shares

 

                            504

 

 

                              71

 

 

                            731

 

 

                            165

 

Net income attributable to common shareholders

 $

                      2,893

 

 $

                         286

 

 $

                      3,803

 

 $

                         734

 

Earnings per share

Basic

 $

                        0.26

 

 $

                        0.03

 

 $

                        0.36

 

 $

                        0.10

 

Diluted

 $

                        0.25

 

 $

                        0.03

 

 $

                        0.34

 

 $

                        0.10

 

Weighted average shares outstanding:

Basic

 

                11,304,946

 

 

                  8,920,505

 

 

                10,669,221

 

 

                  7,003,462

 

Diluted

 

                11,768,411

 

 

                  8,935,274

 

 

                11,129,478

 

 

                  7,008,440

 

BOWMAN CONSULTING GROUP LTD. AND AFFILIATES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands except per share data)

 
September 30,

2022
December 31,

2021
(Unaudited)
ASSETS

Current Assets

Cash and equivalents

 $

                    23,844

 

 $

                    20,619

 

Accounts receivable, net

 

                       61,550

 

 

                       38,491

 

Contract assets

 

                       11,772

 

 

                         9,189

 

Notes receivable - officers, employees, affiliates, current portion

 

                         1,162

 

 

                         1,260

 

Prepaid and other current assets

 

                         9,825

 

 

                         4,850

 

Total current assets

 

                     108,153

 

 

                       74,409

 

Non-Current Assets

Property and equipment, net

 

                       22,683

 

 

                       20,202

 

Goodwill

 

                       55,264

 

 

                       28,471

 

Notes receivable

 

                            903

 

 

                            903

 

Notes receivable - officers, employees, affiliates, less current portion

 

                         1,183

 

 

                         1,218

 

Other intangible assets, net

 

                       15,734

 

 

                       12,286

 

Other assets

 

                            809

 

 

                            681

 

Total Assets

 $

               204,729

 

 $

               138,170

 

LIABILITIES AND EQUITY

Current Liabilities

Accounts payable and accrued liabilities

 $

                    28,541

 

 $

                    17,921

 

Contract liabilities

 

                         7,689

 

 

                         4,623

 

Notes payable, current portion

 

                         9,843

 

 

                         4,450

 

Deferred rent, current portion

 

                            729

 

 

                            724

 

Capital lease obligation, current portion

 

                         7,473

 

 

                         5,136

 

Total current liabilities

 

                       54,275

 

 

                       32,854

 

Non-Current Liabilities

Other non-current obligations

 

                            522

 

 

                              -

 

Notes payable, less current portion

 

                       15,807

 

 

                         8,407

 

Deferred rent, less current portion

 

                         3,851

 

 

                         4,179

 

Capital lease obligation, less current portion

 

                       10,021

 

 

                       10,020

 

Deferred tax liability, net

 

                         3,456

 

 

                         4,290

 

Common shares subject to repurchase

 

                              -

 

 

                                7

 

Total liabilities

 $

                  87,932

 

 $

                  59,757

 

 
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;

   15,723,109 shares issued and 13,384,491 outstanding, and 13,690,868

   shares issued and 11,489,579 outstanding, respectively

 

                            157

 

 

                            137

 

Additional paid-in-capital

 

                     156,966

 

 

                     120,842

 

Treasury stock, at cost; 2,338,618 and 2,201,289, respectively

 

                     (19,857

)

 

                     (17,488

)

Stock subscription notes receivable

 

                          (202

)

 

                          (277

)

Accumulated deficit

 

                     (20,267

)

 

                     (24,801

)

Total shareholders' equity

 $

               116,797

 

 $

                  78,413

 

   
TOTAL LIABILITIES AND EQUITY

 $

               204,729

 

 $

               138,170

 

BOWMAN CONSULTING GROUP LTD. AND AFFILIATES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 
For the Nine Months Ended September 30,

2022

2021

Cash Flows from Operating Activities:  

Net Income

$

4,534

 

$

899

 

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization - property, plant and equipment

 

6,366

 

 

4,283

 

Amortization of intangible assets

 

1,984

 

 

223

 

Gain on sale of assets

 

(44

)

 

(99

)

Bad debt

 

527

 

 

266

 

Stock based compensation

 

11,487

 

 

5,341

 

Deferred taxes

 

(833

)

 

(1,340

)

Deferred rent

 

(323

)

 

(6

)

Changes in operating assets and liabilities, net of acquisition of businesses

Accounts Receivable

 

(12,356

)

 

(10,015

)

Contract Assets

 

(104

)

 

(961

)

Prepaid expenses and other assets

 

(4,376

)

 

(1,462

)

Accounts payable and accrued expenses

 

5,122

 

 

6,132

 

Contract Liabilities

 

186

 

 

(31

)

Net cash provided by operating activities

 

12,170

 

 

3,230

 

Cash Flows from Investing Activities:

Purchases of property and equipment

 

(901

)

 

(609

)

Fixed assets converted to lease financing

 

196

 

 

                              -

 

Proceeds from sale of assets and disposal of leases

 

54

 

 

100

 

Amounts advanced under loans to shareholders

 

                              -

 

 

(473

)

Payments received under loans to shareholders

 

151

 

 

88

 

Acquisitions of businesses, net of cash acquired

 

(14,806

)

 

(3,000

)

Collections under stock subscription notes receivable

 

75

 

 

170

 

Net cash used in investing activities

 

(15,231

)

 

(3,724

)

Cash Flows from Financing Activities:

Proceeds from initial public offering, net of underwriting discounts and

   commissions and other offering costs

 

                              -

 

 

47,104

 

Proceeds from common stock offering, net of underwriting discounts and

   commissions and other offering costs

 

15,475

 

 

                              -

 

Net borrowings under revolving line of credit

 

                              -

 

 

(3,481

)

Repayments under fixed line of credit

 

(547

)

 

(540

)

Repayment under notes payable

 

(2,720

)

 

(735

)

Payments on capital leases

 

(4,575

)

 

(3,208

)

Payment of contingent consideration from acquisitions

 

                              -

 

 

(2

)

Payments for purchase of treasury stock

 

(2,368

)

 

(582

)

Proceeds from issuance of common stock

 

1,021

 

 

297

 

Net cash provided by financing activities

 

6,286

 

 

38,853

 

Net increase in cash and cash equivalents

 

3,225

 

 

38,359

 

Cash and cash equivalents, beginning of period

 

20,619

 

 

386

 

Cash and cash equivalents, end of period

$

23,844

 

$

38,745

 

BOWMAN CONSULTING GROUP LTD. AND AFFILIATES

COMBINED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 
For the Nine Months Ended September 30,

2022

2021

Supplemental disclosures of cash flow information:

Cash paid for interest

 $

                      1,131

 

 $

                         647

 

Cash paid for income taxes

 $

                         383

 

 

                         1,040

 

Non-cash investing and financing activities:

Property and equipment acquired under capital lease

 $

                    (6,623

)

 $

                    (5,704

)

Stock redemption for exercise of stock option

 

                              -

 

 $

                         139

 

Issuance of notes payable for acquisitions

 $

                  (16,059

)

 $

                    (3,450

)

BOWMAN CONSULTING GROUP LTD.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

Condensed Combined Statement of Operations Reconciliation

For the Three Months Ended September 30, For the Nine Months Ended September 30,

2022

 

2021

 

 

2022

 

2021

Gross contract revenue

 $

                      71,246

 

 $

                      39,715

 

 $

                    186,105

 

 $

                    108,041

 

Contract costs (exclusive of depreciation and amortization)

 

                         33,984

 

 

                         19,498

 

 

                         90,439

 

 

                         53,840

 

Operating expense

 

                         35,043

 

 

                         19,925

 

 

                         91,125

 

 

                         52,735

 

Income from operations

 

                           2,219

 

 

                              292

 

 

                           4,541

 

 

                           1,466

 

Other (income) expense

 

                              595

 

 

                              314

 

 

                           2,086

 

 

                              706

 

Income tax expense (benefit)

 

                         (1,773

)

 

                            (379

)

 

                         (2,079

)

 

                            (139

)

Net income

 $

                        3,397

 

 $

                           357

 

 $

                        4,534

 

 $

                           899

 

Net margin

 

4.8

%

 

0.9

%

 

2.4

%

 

0.8

%

 
Other financial information 1
Net service billing

 $

                      64,903

 

 $

                      35,748

 

 $

                    169,019

 

 $

                      97,074

 

Adjusted EBITDA

 

                           9,624

 

 

                           4,426

 

 

                         24,606

 

 

                         12,697

 

Adjusted EBITA margin, net

 

14.8

%

 

12.4

%

 

14.6

%

 

13.1

%

Gross Revenue to Net Service Billing Reconciliation

 
For the Three Months Ended September 30, For the Nine Months Ended September 30,

2022

2021

2022

 

2021

Gross contract revenue

 $

                      71,246

 $

                      39,715

 $

                    186,105

 $

                    108,041

Less: sub-consultants and other direct expenses

 

                           6,343

 

                           3,967

 

                         17,086

 

                         10,967

Net services billing

 $

                      64,903

 $

                      35,748

 $

                    169,019

 $

                      97,074

Adjusted EBITDA Reconciliation

 
For the Three Months Ended September 30, For the Nine Months Ended September 30,

2022

 

2021

 

 

2022

 

2021

Net Income

 $

                        3,397

 

 $

                           357

 

 $

                        4,534

 

 $

                           899

 

+ interest expense

 

                              538

 

 

                              216

 

 

                           1,223

 

 

                              650

 

+ depreciation & amortization

 

                           3,138

 

 

                           1,598

 

 

                           8,350

 

 

                           4,506

 

+ tax expense

 

                         (1,773

)

 

                            (379

)

 

                         (2,079

)

 

                            (139

)

EBITDA

 $

                        5,300

 

 $

                        1,792

 

 $

                      12,028

 

 $

                        5,916

 

+ non-cash stock compensation

 

                           4,214

 

 

                           2,634

 

 

                         11,487

 

 

                           5,341

 

+ transaction related expenses

 

                                 -

 

 

                                 -

 

 

                                 -

 

 

                           1,440

 

+ settlements and other non-core expenses

 

                                 -

 

 

                                 -

 

 

                              215

 

 

                                 -

 

+ acquisition expenses

 

                              110

 

 

                                 -

 

 

                              876

 

 

                                 -

 

Adjusted EBITDA

 $

                        9,624

 

 $

                        4,426

 

 $

                      24,606

 

 $

                      12,697

 

Adjusted EBITDA margin, net

 

14.8

%

 

12.4

%

 

14.6

%

 

13.1

%

BOWMAN CONSULTING GROUP LTD.

GROSS CONTRACT REVENUE COMPOSITION

 

 

For the Three Months Ended September 30,

 
Consolidated Gross Contract Revenue

2022

 

%GCR

 

2021

 

%GCR

 

Change

 

% Change

Building Infrastructure  

 $

       44,765

 

62.8

%

 

 $

     28,303

 

71.3

%

 

 $

     16,462

 

58.2

%

Transportation

 

          13,218

18.6

%

 

          4,033

10.2

%

 

          9,185

227.7

%

Power & Utilities  

 

            8,809

 

12.4

%

 

 

          6,295

 

15.9

%

 

 

          2,514

 

39.9

%

Other emerging markets 1

 

            4,454

6.2

%

 

          1,084

2.6

%

 

          3,370

310.8

%

Total:

 $

     71,246

 

100.0

%

 

 $

   39,715

 

100.0

%

 

 $

   31,531

 

79.4

%

 
Organic  

 $

       47,827

 

67.1

%

 

 $

     38,853

 

97.8

%

 

 $

       8,974

 

23.1

%

Acquired 2

 

          23,419

32.9

%

 

             862

2.2

%

 

        22,557

n/a

Total:  

 $

     71,246

 

100.0

%

 

 $

   39,715

 

100.0

%

 

 $

   31,531

 

79.4

%

1

  Represents renewable energy, mining, water resources and other.

2

  After four quarters post-closing, acquired revenue is reclassified as organic; this results in a change from previously reported numbers.
For the Nine Months Ended September 30,
Consolidated Gross Contract Revenue

2022

 

%GCR

 

 

2021

 

%GCR

 

Change

 

% Change

Building Infrastructure  

 $

     126,093

 

67.8

%

 

 $

     74,511

 

69.0

%

 

 $

     51,582

 

69.2

%

Transportation

 

          26,464

14.2

%

 

        12,344

11.4

%

 

        14,120

114.4

%

Power & Utilities  

 

          24,370

 

13.1

%

 

 

        17,524

 

16.2

%

 

 

          6,846

 

39.1

%

Other emerging markets 1

 

            9,178

4.9

%

 

          3,662

3.4

%

 

          5,516

150.6

%

Total:  

 $

   186,105

 

100.0

%

 

 $

108,041

 

100.0

%

 

 $

   78,064

 

72.3

%

 
Organic and Acquired Gross Contract Revenue

2022

%GCR

2021

%GCR

Change

% Change

Organic

 $

     137,086

73.7

%

 $

   107,179

99.2

%

 $

     29,907

27.9

%

Acquired 2  

 

          49,019

 

26.3

%

 

 

             862

 

0.8

%

 

 

        48,157

 

n/a

Total:

 $

   186,105

100.0

%

 $

108,041

100.0

%

 $

   78,064

72.3

%

1 

  Represents renewable energy, mining, water resources and other.

2 

  After four quarters post-closing, acquired revenue is reclassified as organic; this results in a change from previously reported numbers.

BOWMAN CONSULTING GROUP LTD.

BACKLOG AT SEPTEMBER 30, 2022

(Unaudited)

(Amounts in thousands) Gross Backlog
Building Infrastructure  

 

116,531

Transportation

 

76,228

Power & Utilities  

 

30,216

Other Emerging Markets

 

7,388

   

 $

230,363

 

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