Bowman Expands Oil and Gas Footprint With Acquisition of UP Engineering

Rhea-AI Summary

Bowman Consulting Group (NASDAQ: BWMN) has announced a definitive purchase agreement to acquire UP Engineering, a San Antonio-based firm specializing in civil engineering and surveying services. UP Engineering focuses on oil and gas, industrial, commercial, and residential projects throughout Texas.

The acquisition will strengthen Bowman's position in the oil and gas industry and is expected to operate at an annualized net service billing run rate of approximately $3.0 million, being immediately accretive. The deal will be financed through a combination of cash, seller notes, and a convertible note, conforming with previously discussed target multiples and operating metrics.

Positive

• Immediate revenue contribution of $3.0M annualized net service billing
• Expansion into high-growth oil and gas market in Texas
• Deal expected to be immediately accretive
• Strategic enhancement of oil and gas industry capabilities

Negative

• Potential dilution risk from convertible note financing

Insights

Financial Analyst

This strategic acquisition represents a calculated move by Bowman to strengthen its position in the lucrative Texas oil and gas market. The $3.0 million annual net service billing run rate, while modest relative to Bowman's $393.9 million market cap, offers several strategic advantages:

The mixed financing structure, utilizing cash, seller notes, and convertible notes, demonstrates prudent capital management, preserving liquidity while maintaining flexibility for future opportunities. This approach typically indicates confidence in achieving synergistic benefits while managing integration risks.

The Texas energy market context makes this acquisition particularly timely. With the state accounting for 43% of U.S. crude oil production and experiencing continued growth in domestic exploration, UP Engineering's established presence provides Bowman with enhanced market access and specialized expertise. The acquisition addresses three critical strategic objectives:

• Geographic Expansion: Strengthens Bowman's Texas footprint, a important market for energy sector engineering services
• Service Diversification: Adds specialized oil and gas engineering capabilities, complementing existing infrastructure services
• Client Base Enhancement: Provides access to UP's established client relationships in the industrial and energy sectors

The immediate accretive nature of the deal suggests potential for rapid value creation through operational synergies and cross-selling opportunities. UP's decade-long track record in Texas, combined with Bowman's national infrastructure expertise, positions the combined entity to capture increased market share as domestic energy production continues to expand.

RESTON, Va.--(BUSINESS WIRE)-- Bowman Consulting Group Ltd. (NASDAQ: BWMN), a national engineering services firm offering infrastructure, technology and program management solutions, today announced it has entered into a definitive purchase agreement to acquire UP Engineering, a San Antonio, Texas-based firm specializing in civil engineering and surveying services. UP serves clients throughout Texas with a focus on oil and gas, industrial, commercial and residential projects.

“This acquisition enables Bowman to build on our already solid foundation in the oil and gas industry,” said Gary Bowman, chairman and CEO of Bowman. “UP’s reputation for reliability, efficiency and innovation in the Texas market aligns well with our mission to deliver operational excellence across market sectors, services and geographies. As the oil and gas industry accelerates its focus on domestic exploration and drilling, this acquisition strengthens our market position, enables us to capture new opportunities in a high-growth area and helps deliver additional long-term value to our stakeholders.“

“UP’s success over the past 10 years is a testament to our dedicated team and our ability to retain a loyal base of clients through our commitment to superior service,” said Natasha Uhlrich, president of UP Engineering. ”By joining Bowman, we will be part of a growing and nationally respected engineering firm that shares our vision and commitment to delivering the highest standards in the industry. Together, we will expand our impact, strengthen our capabilities and continue to deliver the high-quality service that has defined us. We look forward to this exciting new chapter with Bowman.”

Financed with a combination of cash, seller notes and a convertible note, the acquisition conforms with previously discussed target multiples and operating metrics. Bowman anticipates the acquisition will initially operate at an annualized net service billing run rate of approximately $3.0 million and be immediately accretive. More detailed information on M&A activities, pipeline and guidance updates are provided in connection with quarterly and annual communications. Bowman will release fourth quarter and full-year 2024 results after the stock market closes on Tuesday, March 11, 2025.

About UP Engineering

Founded in 2016 and based in San Antonio, Texas, UP Engineering is a civil engineering and surveying firm dedicated to delivering high-quality solutions for oil and gas, commercial, residential, mixed-used, industrial, and infill development projects. With deep expertise in local regulations and a track record of successful projects and loyal clients, UP has built an outstanding reputation in the markets it serves. For more information, visit www.upengineering.com.

About Bowman Consulting Group Ltd.

Headquartered in Reston, Virginia, Bowman is a national engineering services firm delivering infrastructure, technology and project management solutions to customers who own, develop and maintain the built environment. With over 2,300 employees in more than 100 locations 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 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250214575562/en/

Investor Relations Contact:

Betsy Patterson

ir@bowman.com

General Media Contact:

Renee Narvaez

pr@bowman.com

Source: Bowman Consulting Group

FAQ

What is the expected revenue contribution from UP Engineering to BWMN?

UP Engineering is expected to contribute approximately $3.0 million in annualized net service billing run rate to Bowman Consulting Group.

How is Bowman (BWMN) financing the UP Engineering acquisition?

The acquisition is being financed through a combination of cash, seller notes, and a convertible note.

What markets does UP Engineering serve that will benefit BWMN?

UP Engineering serves the oil and gas, industrial, commercial, and residential markets throughout Texas.

When will BWMN release more details about the UP Engineering acquisition?

More detailed information will be provided in Bowman's fourth quarter and full-year 2024 results, to be released on March 11, 2025.