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

BWMN

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