Bowman Announces Third Quarter 2023 Financial Results

Rhea-AI Summary

Bowman Consulting Group Ltd. (Nasdaq: BWMN) has released its financial results for the three and nine months ended September 30, 2023. The company achieved record gross revenue and showcased the potential of its strategic growth initiative through increased scale. Positive industry trends in transportation, energy, and manufacturing funding are driving infrastructure spending and supporting the company's optimism.

RESTON, Va.--(BUSINESS WIRE)-- Bowman Consulting Group Ltd. (Nasdaq: BWMN) (“Bowman” or the “Company”), a national engineering and infrastructure services firm supporting owners and developers of the built environment, today released financial results for the three and nine months ended September 30, 2023.

“I am extremely pleased with our strong third quarter results,” said Gary Bowman, Chairman and CEO of Bowman. “We delivered record gross revenue and demonstrated the margin leverage and operating cash flow our strategic growth initiative can deliver over time through increased scale. Tailwinds associated with transportation, energy and manufacturing funding are propelling infrastructure spending and continue to support our optimism about our ability to advance our revenue diversification efforts. Our backlog grew by 30% year-over-year, and we ended the quarter with a full pipeline of impactful new client assignments we expect to book during the fourth quarter. Acquisition activity has continued with two additional closings since the end of the third quarter with more expected by year-end. We feel confident about our markets, our employees, our positioning, and our prospects for a successful finish to 2023 and strong 2024.”

Financial highlights for the three months ended September 30, 2023, compared to September 30, 2022:

• Gross revenue of $94.4 million, compared to $71.2 million, a 33% increase
• Year-over-year organic gross revenue growth¹ of 11%
• Net service billing² of $82.1 million, compared to $64.9 million, a 27% increase
• Year-over-year organic net service billing growth of 9%
• Net income of $1.2 million, compared to a net income of $3.4 million
• Adjusted EBITDA² of $15.1 million, compared to $9.6 million, a 57% increase
• Adjusted EBITDA margin, net ² of 18.3% compared to 14.8%, a 350 bps increase
• Gross backlog² of $299 million, compared to $230 million, a 30% increase

Financial highlights for the nine months ended September 30, 2023, compared to September 30, 2022:

• Gross revenue of $253.3 million, compared to $186.1 million, a 36% increase
• Year-over-year organic gross revenue growth¹ of 22%
• Net service billing² of $223.5 million, compared to $169.0 million, a 32% increase
• Year-over-year organic net service billing growth of 20%
• Net income of $1.1 million, compared to a net income of $4.5 million
• Adjusted EBITDA² of $35.8 million, compared to $24.6 million, a 46% increase
• Adjusted EBITDA margin, net ² of 16.0% compared to 14.6%, a 140 bps increase

Activity Under Stock Repurchase Program:

In November 2022, the Company's Board of Directors authorized a stock repurchase program, ("Stock Repurchase Program") to repurchase up to $10.0 million of the Company’s common stock. Repurchases of stock to cover taxes upon vesting do not apply to the program. During and subsequent to the three months ended September 30, 2023, pursuant to the Stock Repurchase Program, the Company has so far repurchased a total of 28,704 shares of its common stock at an average price of $25.94. As of November 6, 2023, the Company has $9.3 million remaining under the Stock Repurchase Program.

Introducing non-GAAP Adjusted Earnings per Share:

In connection with the release of financial results for the three and nine months ended September 30, 2023, the Company introduced the new non-GAAP financial metric of adjusted earnings per share (“Adjusted EPS”). To calculate Adjusted EPS, the Company adds back non-reoccurring expenses specific to acquisitions, non-cash stock compensation expense associated with pre-IPO grants, and other expenses not in the ordinary course of business. With respect to the elimination of any non-cash stock compensation expense, the Company computes an adjusted tax expense or benefit which accounts for the elimination of any periodic windfall or shortfall tax effects resulting from the difference between grant date fair value and vest date value. With respect to all other eliminations, the Company applies its average marginal statutory tax rate, currently 25.6%, to derive the tax adjustment associated with the elimination of these expenses. A reconciliation of non-GAAP Adjusted EPS to GAAP EPS, both basic and diluted, is included with this press release for reference.

For the three months ended September 30, 2023, compared to September 30, 2022:

• Basic Adjusted EPS was $0.36 compared to $0.48
• Diluted Adjusted EPS was $0.34 compared to $0.46

For the nine months ended September 30, 2023, compared to September 30, 2022:

• Basic Adjusted EPS was $0.79 compared to $1.02
• Diluted Adjusted EPS was $0.73 compared to $0.98

Narrowing FY 2023 Guidance and Introducing FY 2024 Guidance

The Company is adjusting its full year 2023 outlook for Net Service Billing² to be in the range of $306 to $312 million and Adjusted EBITDA² in the range of $48 to $52 million. The Company is introducing its full year 2024 outlook for Net Service Billing² to be in the range of $345 to $360 million and Adjusted EBITDA² in the range of $56 to $62 million. The current outlook for 2023 and 2024 is based on completed acquisitions as of the date of this release and does not include contributions from any future acquisitions. Management discusses the Company’s acquisition pipeline and its prospective impact during regularly scheduled earnings calls.

Q3 2023 Earnings Webcast

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

Date: November 7, 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 Includes reclassification of Project Design Consultants and Anchor Engineering acquisitions as organic revenue.
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 a national engineering services firm delivering infrastructure solutions to customers who own, develop, and maintain the built environment. With over 2,000 employees and more than 80 offices throughout the United States, Bowman provides a variety of planning, engineering, geospatial, construction management, commissioning, environmental consulting, land procurement and other technical services to customers operating in a diverse set of regulated end markets. Bowman trades on the Nasdaq under the symbol BWMN. 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.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except per share data)
	September 30, 2023				December 31, 2022
	(Unaudited)
ASSETS
Current Assets
Cash and equivalents	$	14,431			$	13,282
Accounts receivable, net		85,229				64,443
Contract assets		28,904				16,321
Notes receivable - officers, employees, affiliates, current portion		934				1,016
Prepaid and other current assets		15,933				7,068
Total current assets		145,431				102,130
Non-Current Assets
Property and equipment, net		28,088				25,104
Operating lease, right-of-use assets		38,205				30,264
Goodwill		75,731				53,210
Notes receivable		903				903
Notes receivable - officers, employees, affiliates, less current portion		1,383				1,417
Other intangible assets, net		38,177				27,950
Deferred tax asset, net		24,893				13,759
Other assets		1,149				1,020
Total Assets	$	353,960			$	255,757
LIABILITIES AND EQUITY
Current Liabilities
Revolving Credit Facility	$	22,379			$	–
Accounts payable and accrued liabilities		43,499				40,293
Contract liabilities		7,911				6,370
Notes payable, current portion		10,257				10,168
Operating lease obligation, current portion		8,289				6,949
Finance lease obligation, current portion		6,396				5,297
Total current liabilities		98,731				69,077
Non-Current Liabilities
Other non-current obligations		32,441				356
Notes payable, less current portion		13,157				16,276
Operating lease obligation, less current portion		35,670				28,087
Finance lease obligation, less current portion		14,880				14,254
Pension and post-retirement obligation, less current portion		4,880				4,848
Total liabilities	$	199,759			$	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; 17,164,788 shares issued and 14,634,602 outstanding, and 15,949,805 shares issued and 13,556,550 outstanding, respectively		171				159
Additional paid-in-capital		196,731				162,922
Accumulated other comprehensive income		546				578
Treasury stock, at cost; 2,530,186 and 2,393,255, respectively		(24,425	)			(20,831	)
Stock subscription notes receivable		(112	)			(173	)
Accumulated deficit		(18,710	)			(19,796	)
Total shareholders' equity	$	154,201			$	122,859
TOTAL LIABILITIES AND EQUITY	$	353,960			$	255,757

BOWMAN CONSULTING GROUP LTD.
CONDENSED CONSOLIDATED INCOME STATEMENT
(Amounts in thousands except per share data)
(Unaudited)
		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2023				2022				2023				2022
Gross Contract Revenue		$	94,434			$	71,246			$	253,290			$	186,105
Contract costs: (exclusive of depreciation and amortization below)
Direct payroll costs			33,383				27,641				94,287				73,353
Sub-consultants and expenses			12,310				6,343				29,811				17,086
Total contract costs			45,693				33,984				124,098				90,439
Operating Expenses:
Selling, general and administrative			41,735				31,916				113,717				82,819
Depreciation and amortization			4,500				3,138				12,785				8,350
(Gain) on sale			(110	)			(11	)			(347	)			(44	)
Total operating expenses			46,125				35,043				126,155				91,125
Income from operations			2,616				2,219				3,037				4,541
Other expense			1,495				595				3,852				2,086
Income (loss) before tax expense			1,121				1,624				(815	)			2,455
Income tax (benefit) expense			(62	)			(1,773	)			(1,901	)			(2,079	)
Net income		$	1,183			$	3,397			$	1,086			$	4,534
Earnings allocated to non-vested shares			146				504			$	140			$	731
Net income attributable to common shareholders		$	1,037			$	2,893			$	946			$	3,803
Earnings per share
Basic		$	0.08			$	0.26			$	0.08			$	0.36
Diluted		$	0.08			$	0.25			$	0.07			$	0.34
Weighted average shares outstanding:
Basic			12,814,971				11,304,946				12,304,751				10,669,221
Diluted			13,793,120				11,768,411				13,437,841				11,129,478

BOWMAN CONSULTING GROUP LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	For the Nine Months Ended September 30,
	2023				2022
Cash Flows from Operating Activities:
Net Income	$	1,086			$	4,534
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		7,172				6,366
Amortization of intangible assets		5,613				1,984
Gain on sale of assets		(347	)			(44	)
Bad debt		630				527
Stock based compensation		18,280				11,487
Accretion of discounts on notes payable		459				–
Deferred taxes		(11,134	)			(833	)
Deferred rent		–				(323	)
Changes in operating assets and liabilities, net of acquisition of businesses
Accounts receivable		(14,581	)			(12,356	)
Contract assets		(8,118	)			(104	)
Prepaid expenses and other assets		(4,370	)			(4,376	)
Accounts payable and accrued expenses		19,752				5,122
Contract liabilities		(2,171	)			186
Net cash provided by operating activities		12,271				12,170
Cash Flows from Investing Activities:
Purchases of property and equipment		(2,081	)			(901	)
Fixed assets converted to lease financing		–				196
Proceeds from sale of assets and disposal of leases		347				54
Payments received under loans to shareholders		115				151
Acquisitions of businesses, net of cash acquired		(15,442	)			(14,806	)
Collections under stock subscription notes receivable		62				75
Net cash used in investing activities		(16,999	)			(15,231	)
Cash Flows from Financing Activities:
Proceeds from common stock offering, net of underwriting discounts and commissions and other offering costs		–				15,475
Borrowings under revolving credit facility		22,379				–
Repayments under fixed line of credit		(381	)			(547	)
Repayment under notes payable		(8,715	)			(2,720	)
Payments on finance leases		(4,989	)			(4,575	)
Payments for purchase of treasury stock		(3,594	)			(2,368	)
Proceeds from issuance of common stock		1,177				1,021
Net cash provided by financing activities		5,877				6,286
Net increase in cash and cash equivalents		1,149				3,225
Cash and cash equivalents, beginning of period		13,282				20,619
Cash and cash equivalents, end of period	$	14,431			$	23,844
Supplemental disclosures of cash flow information:
Cash paid for interest	$	2,815			$	1,131
Cash paid for income taxes	$	900				383
Non-cash investing and financing activities:
Property and equipment acquired under finance lease	$	(6,724	)		$	(6,623	)
Note payable converted to common shares	$	(672	)		$	–
Issuance of notes payable for acquisitions	$	(6,277	)		$	(16,059	)

BOWMAN CONSULTING GROUP LTD.
RECONCILIATION OF EPS TO ADJUSTED EPS
(amounts in thousands except per share data)
		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2023				2022				2023				2022
Net Income (GAAP)		$	1,183				3,397				1,086				4,534
+ tax expense (benefit) (GAAP)			(62	)			(1,773	)			(1,901	)			(2,079	)
Income (loss) before tax expense (GAAP)			1,121				1,624				(815	)			2,455
+ acquisition related expenses			555				391				2,177				1,436
+ amortization of intangibles			1,948				743				5,613				1,984
+ non-cash stock comp related to pre-IPO			1,744				2,060				5,207				6,113
+ other non-core expenses			560				–				674				215
Adjusted income before tax expense			5,928				4,818				12,856				12,203
Adjusted income tax (benefit) expense			620				(1,555	)			1,665				(822	)
Adjusted net income		$	5,308			$	6,373			$	11,191			$	13,025
Adjusted earnings allocated to non-vested shares			655				947				1,438				2,100
Adjusted net income attributable to common shareholders		$	4,653			$	5,426			$	9,753			$	10,925
Earnings per share (GAAP)
Basic		$	0.08			$	0.26			$	0.08			$	0.36
Diluted		$	0.08			$	0.25			$	0.07			$	0.34
Adjusted earnings per share (Non-GAAP)
Basic		$	0.36			$	0.48			$	0.79			$	1.02
Diluted		$	0.34			$	0.46			$	0.73			$	0.98
Weighted average shares outstanding
Basic			12,814,971				11,304,946				12,304,751				10,669,221
Diluted			13,793,120				11,768,411				13,437,841				11,129,478
Basic Adjusted Earnings Per Share Summary - Non-GAAP		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2023				2022				2023				2022
Earnings per share (GAAP)		$	0.08			$	0.26			$	0.08			$	0.36
Pre-tax basic per share adjustments		$	0.38			$	0.16			$	0.97			$	0.78
Adjusted earnings per share before tax expense		$	0.46			$	0.42			$	1.05			$	1.14
Tax expense (benefit) per share adjustment		$	0.05			$	(0.14	)		$	0.14			$	(0.08	)
Adjusted earnings per share - adjusted net income		$	0.41			$	0.56			$	0.91			$	1.22
Adjusted earnings per share allocated to non-vested shares		$	0.05			$	0.08			$	0.12			$	0.20
Adjusted earnings per share attributable to common shareholders		$	0.36			$	0.48			$	0.79			$	1.02
Diluted Adjusted Earnings Per Share Summary - Non-GAAP		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2023				2022				2023				2022
Earnings per share (GAAP)		$	0.08			$	0.25			$	0.07			$	0.34
Pre-tax diluted per share adjustments		$	0.35			$	0.16			$	0.89			$	0.76
Adjusted earnings per share before tax expense		$	0.43			$	0.41			$	0.96			$	1.10
Tax expense (benefit) per share adjustment		$	0.04			$	(0.13	)		$	0.12			$	(0.07	)
Adjusted earnings per share - adjusted net income		$	0.39			$	0.54			$	0.84			$	1.17
Adjusted earnings per share allocated to non-vested shares		$	0.05			$	0.08			$	0.11			$	0.19
Adjusted earnings per share attributable to common shareholders		$	0.34			$	0.46			$	0.73			$	0.98

BOWMAN CONSULTING GROUP LTD.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(amounts in thousands except per share data)
Condensed Combined Statement of Operations Reconciliation		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2023				2022				2023				2022
Gross contract revenue		$	94,434			$	71,246			$	253,290			$	186,105
Contract costs (exclusive of depreciation and amortization)			45,693				33,984				124,098				90,439
Operating expense			46,125				35,043				126,155				91,125
Income from operations			2,616				2,219				3,037				4,541
Other expense			1,495				595				3,852				2,086
Income tax expense (benefit)			(62	)			(1,773	)			(1,901	)			(2,079	)
Net income		$	1,183			$	3,397			$	1,086			$	4,534
Net margin			1.3	%			4.8	%			0.4	%			2.4	%
Other financial information 1
Net service billing		$	82,124			$	64,903			$	223,479			$	169,019
Adjusted EBITDA			15,057				9,624				35,783				24,606
Adjusted EBITDA margin, net			18.3	%			14.8	%			16.0	%			14.6	%
Gross Revenue to Net Service Billing Reconciliation		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2023				2022				2023				2022
Gross contract revenue		$	94,434			$	71,246			$	253,290			$	186,105
Less: sub-consultants and other direct expenses			12,310				6,343				29,811				17,086
Net service billing		$	82,124			$	64,903			$	223,479			$	169,019
Adjusted EBITDA Reconciliation		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2023				2022				2023				2022
Net Service Billing		$	82,124			$	64,903			$	223,479			$	169,019
Net Income		$	1,183			$	3,397			$	1,086			$	4,534
+ interest expense			1,538				538				3,545				1,223
+ depreciation & amortization			4,500				3,138				12,785				8,350
+ tax (benefit) expense			(62	)			(1,773	)			(1,901	)			(2,079	)
EBITDA		$	7,159			$	5,300			$	15,515			$	12,028
+ non-cash stock compensation			7,158				4,214				18,480				11,487
+ transaction related expenses			63				–				186				–
+ settlements and other non-core expenses			560				—				674				215
+ acquisition expenses			117				110				928				876
Adjusted EBITDA		$	15,057			$	9,624			$	35,783			$	24,606
Adjusted EBITDA margin, net			18.3	%			14.8	%			16.0	%			14.6	%

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 September 30,
Consolidated Gross Revenue	2023	%		2022	%		Change		Change
Building Infrastructure	51,909	55.0	%	44,765	62.8	%	7,144		16.0	%
Transportation	19,769	20.9	%	13,218	18.6	%	6,551		49.6	%
Power and Utilities	18,586	19.7	%	8,809	12.4	%	9,777		111.0	%
Emerging Markets1	4,170	4.4	%	4,454	6.2	%	(284	)	(6.4	)%
Total	94,434	100.0	%	71,246	100.0	%	23,188		32.5	%
(dollars in thousands)	For the nine months ended September 30,
Consolidated Gross Revenue	2023	%		2022	%		Change		% Change
Building Infrastructure	144,862	57.2	%	126,093	67.8	%	18,769		14.9	%
Transportation	51,658	20.4	%	26,464	14.2	%	25,194		95.2	%
Power and Utilities	47,481	18.7	%	24,370	13.1	%	23,111		94.8	%
Emerging Markets1	9,289	3.7	%	9,178	4.9	%	111		1.2	%
Total	253,290	100.0	%	186,105	100.0	%	67,185		36.1	%
(dollars in thousands)	For the three months ended September 30,
Organic v Acquired Revenue 2	2023	%		2022	%		Change		% Change
Baseline organic revenue	79,003	83.7	%	71,078	99.8	%	7,925		11.1	%
Acquired revenue	15,431	16.3	%	168	0.2	%	15,263		n/a
Total	94,434	100.0	%	71,246	100.0	%	23,188		32.5	%
(dollars in thousands)	For the nine months ended September 30,
Organic v Acquired Revenue 2	2023	%		2022	%		Change		% Change
Baseline organic revenue	226,240	89.3	%	185,937	99.9	%	40,303		21.7	%
Acquired revenue	27,050	10.7	%	168	0.1	%	26,882		n/a
Total	253,290	100.0	%	186,105	100.0	%	67,185		36.1	%

¹ Adjusted for change, represents mining, water resources and other. Effective 12/31/2022, we reclassified renewables as power & utilities. For nine months ended September 30, 2022, $4.4 million of renewables revenue was reclassified accordingly for consistency.
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.
GROSS BACKLOG BY CATEGORY AT SEPTEMBER 30, 2023
(Unaudited)
Category	Percentage
Building Infrastructure	54 %
Transportation	25 %
Power and Utilities	19 %
Emerging Markets	2 %
TOTAL	100 %

 

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Investor Relations Contacts:

Bruce Labovitz

ir@bowman.com

(703) 787-3403

Larry Clark

lclark@bowman.com

(310) 622-8223

Source: Bowman Consulting Group

FAQ

What is the company name mentioned in the press release?

The company mentioned in the press release is Bowman Consulting Group Ltd.

What is the stock symbol of Bowman Consulting Group Ltd.?

The stock symbol of Bowman Consulting Group Ltd. is Nasdaq: BWMN.

What are the key points from the financial results?

The key points from the financial results include record gross revenue, margin leverage, and strong operating cash flow. The company's strategic growth initiative is showing positive results through increased scale.

What industries are driving infrastructure spending?

Transportation, energy, and manufacturing funding are driving infrastructure spending according to the press release.