Bowman Announces Second Quarter 2023 Financial Results

RESTON, Va., August 07, 2023--(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 six months ended June 30, 2023.

"We continue to execute on our strategic growth and revenue diversification plans," said Gary Bowman, Chairman and CEO of Bowman. "We generated record revenue and adjusted EBITDA during a quarter where we closed on five acquisitions representing approximately $36 million of annualized revenue. Our orders were strong, and our backlog increased by nearly $90 million as compared to last year. During the second quarter we increased headcount by 17%, with the majority coming through acquisitions, where we believe there is a meaningful amount of utilization optimization to be achieved over time through both revenue synergies and work sharing. We continue to feel confident about our execution and performance as reflected by our increased financial guidance."

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

• Gross revenue of $82.8 million, compared to $62.4 million, a 33% increase

• Year-over-year organic gross revenue growth¹ of 13%

• Net service billing² of $73.8 million, compared to $56.4 million, a 31% increase

• Year-over-year organic net service billing growth of 12%

• Net loss of $(0.6) million, compared to a net loss of $(0.3) million

• Adjusted EBITDA² of $11.1 million, compared to $7.6 million, a 46% increase

• Adjusted EBITDA margin, net ² of 15.0% compared to 13.4%, a 160 bps increase

• Gross backlog² of $295 million, compared to $206 million, a 43% increase

Financial highlights for the six months ended June 30, 2023, compared to June 30, 2022:

• Gross revenue of $158.9 million, compared to $114.9 million, a 38% increase

• Year-over-year organic gross revenue growth¹ of 22%

• Net service billing² of $141.4 million, compared to $104.1 million, a 36% increase

• Year-over-year organic net service billing growth of 20%

• Net loss of $(0.1) million, compared to a net income of $1.1 million

• Adjusted EBITDA² of $20.7 million, compared to $15.0 million, a 38% increase

• Adjusted EBITDA margin, net ² of 14.7% compared to 14.4%, a 30 bps increase

Business combinations and acquisitions during the second quarter 2023:

• Closed on the acquisition of Richter & Associates – April 2023

• Closed on the acquisition of Fisher Engineering – May 2023

• Closed on the acquisition of Hole Montes – May 2023

• Closed on the acquisition of MTX Surveying – June 2023

• Closed on the acquisition of Infrastructure Engineers – June 2023

Financing Activities during and subsequent to the second quarter 2023:

On August 2, 2023, the Company announced that it had entered into a First Amendment to its Amended and Restated Credit Agreement (the "Revolving Credit Facility"). The amendment increased the maximum allowable borrowing under the Revolving Credit Facility to $70 million from $50 million, adjusted certain provisions relating to interest rate spreads and unused fees, and extended the term of the Revolver to July 31, 2025. Other general terms of the Revolving Credit Facility remained unchanged.

Increasing FY 2023 Guidance

The Company is increasing its full year 2023 outlook for Net Service Billing to be in the range of $300 to $315 million and Adjusted EBITDA in the range of $47 to $52 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 discusses the Company’s acquisition pipeline and its prospective impact during regularly scheduled earnings calls.

Q2 2023 Earnings Webcast

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

Date:		August 8, 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 McMahon Associates and Perry 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 an established professional services firm delivering innovative engineering solutions to customers who own, develop, and maintain the built environment. With over 1,900 employees more than 75 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 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)
	June 30, 2023				December 31, 2022
	(Unaudited)
ASSETS
Current Assets
Cash and equivalents	$	9,746			$	13,282
Accounts receivable, net		81,874				64,443
Contract assets		26,050				16,321
Notes receivable - officers, employees, affiliates, current portion		938				1,016
Prepaid and other current assets		11,723				7,068
Total current assets		130,331				102,130
Non-Current Assets
Property and equipment, net		26,874				25,104
Operating lease, right-of-use assets		39,476				30,264
Goodwill		77,106				53,210
Notes receivable		903				903
Notes receivable - officers, employees, affiliates, less current portion		1,387				1,417
Other intangible assets, net		39,763				27,950
Deferred tax asset, net		21,098				13,759
Other assets		1,082				1,020
Total Assets	$	338,020			$	255,757
LIABILITIES AND EQUITY
Current Liabilities
Revolving Credit Facility	$	21,189			$	–
Accounts payable and accrued liabilities		32,878				40,293
Contract liabilities		10,046				6,370
Notes payable, current portion		12,438				10,168
Operating lease obligation, current portion		8,153				6,949
Finance lease obligation, current portion		6,001				5,297
Total current liabilities		90,705				69,077
Non-Current Liabilities
Other non-current obligations		28,827				356
Notes payable, less current portion		16,734				16,276
Operating lease obligation, less current portion		36,610				28,087
Finance lease obligation, less current portion		14,619				14,254
Pension and post-retirement obligation, less current portion		4,881				4,848
Total liabilities	$	192,376			$	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; 17,130,179 shares issued and 14,600,293 outstanding, and 15,949,805 shares issued and 13,556,550 outstanding, respectively		171				159
Additional paid-in-capital		189,351				162,922
Accumulated other comprehensive income		557				578
Treasury stock, at cost; 2,529,886 and 2,393,255, respectively		(24,417	)			(20,831	)
Stock subscription notes receivable		(125	)			(173	)
Accumulated deficit		(19,893	)			(19,796	)
Total shareholders' equity	$	145,644			$	122,859
TOTAL LIABILITIES AND EQUITY	$	338,020			$	255,757

BOWMAN CONSULTING GROUP LTD.
CONDENSED CONSOLIDATED INCOME STATEMENT
(Amounts in thousands except per share data)
(Unaudited)
		For the Three Months Ended June 30,								For the Six Months Ended June 30,
			2023				2022				2023				2022
Gross Contract Revenue		$	82,755			$	62,399			$	158,855			$	114,860
Contract costs: (exclusive of depreciation and amortization below)
Direct payroll costs			32,075				25,071				60,919				45,746
Sub-consultants and expenses			8,963				5,983				17,501				10,743
Total contract costs			41,038				31,054				78,420				56,489
Operating Expenses:
Selling, general and administrative			38,340				28,065				71,965				50,868
Depreciation and amortization			4,719				2,823				8,285				5,213
(Gain) on sale			(226	)			(27	)			(237	)			(32	)
Total operating expenses			42,833				30,861				80,013				56,049
Income (loss) from operations			(1,116	)			484				422				2,322
Other expense			1,143				994				2,358				1,491
Income (loss) before tax expense			(2,259	)			(510	)			(1,936	)			831
Income tax (benefit) expense			(1,625	)			(190	)			(1,839	)			(306	)
Net income (loss)		$	(634	)		$	(320	)		$	(97	)		$	1,137
Earnings allocated to non-vested shares			–				–			$	–			$	191
Net income (loss) attributable to common shareholders		$	(634	)		$	(320	)		$	(97	)		$	946
Earnings (loss) per share
Basic		$	(0.05	)		$	(0.03	)		$	(0.01	)		$	0.09
Diluted		$	(0.05	)		$	(0.03	)		$	(0.01	)		$	0.09
Weighted average shares outstanding:
Basic			12,276,173				10,761,172				12,022,550				10,346,089
Diluted			12,276,173				10,761,172				12,022,550				10,427,602

BOWMAN CONSULTING GROUP LTD.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
	For the Six Months Ended June 30,
		2023				2022
Cash Flows from Operating Activities:
Net Income (loss)	$	(97	)		$	1,137
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization		4,620				3,971
Amortization of intangible assets		3,665				1,241
Gain on sale of assets		(237	)			(32	)
Bad debt		289				365
Stock based compensation		11,169				7,274
Accretion of discounts on notes payable		264				–
Deferred taxes		(7,339	)			–
Deferred rent		–				(237	)
Changes in operating assets and liabilities, net of acquisition of businesses
Accounts receivable		(10,885	)			(10,254	)
Contract assets		(5,267	)			(510	)
Prepaid expenses and other assets		(4,174	)			(5,124	)
Accounts payable and accrued expenses		9,535				5,877
Contract liabilities		523				560
Net cash provided by operating activities		2,066				4,268
Cash Flows from Investing Activities:
Purchases of property and equipment		(632	)			(368	)
Fixed assets converted to lease financing		–				22
Proceeds from sale of assets and disposal of leases		237				32
Payments received under loans to shareholders		108				118
Acquisitions of businesses, net of cash acquired		(15,408	)			(7,950	)
Collections under stock subscription notes receivable		48				47
Net cash used in investing activities		(15,647	)			(8,099	)
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		21,189				–
Repayments under fixed line of credit		(283	)			(365	)
Repayment under notes payable		(4,743	)			(1,433	)
Payments on finance leases		(3,309	)			(2,921	)
Payments for purchase of treasury stock		(3,586	)			(2,368	)
Proceeds from issuance of common stock		777				607
Net cash provided by financing activities		10,045				8,995
Net increase (decrease) in cash and cash equivalents		(3,536	)			5,164
Cash and cash equivalents, beginning of period		13,282				20,619
Cash and cash equivalents, end of period	$	9,746			$	25,783
Supplemental disclosures of cash flow information:
Cash paid for interest	$	1,547			$	713
Cash paid for income taxes	$	745				383
Non-cash investing and financing activities:
Property and equipment acquired under capital lease	$	(4,385	)		$	(4,262	)
Issuance of notes payable for acquisitions	$	(7,825	)		$	(3,697	)

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 June 30,								For the Six Months Ended June 30,
			2023				2022				2023				2022
Gross contract revenue		$	82,755			$	62,399			$	158,855			$	114,860
Contract costs (exclusive of depreciation and amortization)		$	41,038			$	31,054			$	78,420			$	56,489
Operating expense		$	42,833			$	30,861			$	80,013			$	56,049
Income (loss) from operations		$	(1,116	)		$	484			$	422			$	2,322
Other expense		$	1,143			$	994			$	2,358			$	1,491
Income tax expense (benefit)		$	(1,625	)		$	(190	)		$	(1,839	)		$	(306	)
Net income (loss)		$	(634	)		$	(320	)		$	(97	)		$	1,137
Net margin			(0.8	)%			(0.5	)%			(0.1	)%			1.0	%
Other financial information 1
Net service billing		$	73,792			$	56,416			$	141,354			$	104,117
Adjusted EBITDA			11,053				7,576				20,725				14,983
Adjusted EBITDA margin, net			15.0	%			13.4	%			14.7	%			14.4	%
Gross Revenue to Net Service Billing Reconciliation		For the Three Months Ended June 30,								For the Six Months Ended June 30,
			2023				2022				2023				2022
Gross contract revenue		$	82,755			$	62,399			$	158,855			$	114,860
Less: sub-consultants and other direct expenses			8,963				5,983				17,501				10,743
Net service billing		$	73,792			$	56,416			$	141,354			$	104,117
Adjusted EBITDA Reconciliation		For the Three Months Ended June 30,								For the Six Months Ended June 30,
			2023				2022				2023				2022
Net Service Billing		$	73,792			$	56,416			$	141,354			$	104,117
Net Income (loss)		$	(634	)		$	(320	)		$	(97	)		$	1,137
+ interest expense			1,112				350				2,007				685
+ depreciation & amortization			4,719				2,823				8,285				5,213
+ tax (benefit) expense			(1,625	)			(190	)			(1,839	)			(306	)
EBITDA		$	3,572			$	2,663			$	8,356			$	6,729
+ non-cash stock compensation			6,888				4,038				11,322				7,274
+ transaction related expenses			123				–				123				–
+ settlements and other non-core expenses			113				215				113				215
+ acquisition expenses			357				660				811				765
Adjusted EBITDA		$	11,053			$	7,576			$	20,725			$	14,983
Adjusted EBITDA margin, net			15.0	%			13.4	%			14.7	%			14.4	%
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 June 30,
Consolidated Gross Revenue	2023	%	2022	%	Change	Change
Building Infrastructure	48,616	58.7%	42,571	68.2%	6,045	14.2%
Transportation	15,870	19.2%	9,276	14.9%	6,594	71.1%
Power and Utilities	15,585	18.8%	9,326	14.9%	6,259	67.1%
Emerging Markets1	2,684	3.3%	1,226	2.0%	1,458	118.9%
Total	82,755	100.0%	62,399	100.0%	20,356	32.6%
(dollars in thousands)	For the three months ended June 30,
Organic v Acquired Revenue 2	2023	%	2022	%	Change	Change
Baseline organic revenue	70,414	85.1%	62,249	99.8%	8,165	13.1%
Acquired revenue	12,341	14.9%	150	0.2%	12,191	n/a
Total	82,755	100.0%	62,399	100.0%	20,356	32.6%
(dollars in thousands)	For the six months ended June 30,
Consolidated Gross Revenue	2023	%	2022	%	Change	Change
Building Infrastructure	92,953	58.5%	81,332	70.8%	11,621	14.3%
Transportation	31,889	20.1%	13,247	11.5%	18,642	140.7%
Power and Utilities	28,909	18.2%	18,075	15.7%	10,834	59.9%
Emerging Markets1	5,104	3.2%	2,206	2.0%	2,898	131.4%
Total	158,855	100.0%	114,860	100.0%	43,995	38.3%
(dollars in thousands)	For the six months ended June 30,
Organic v Acquired Revenue 2	2023	%	2022	%	Change	Change
Baseline organic revenue	139,857	88.0%	114,710	99.9%	25,147	21.9%
Acquired revenue	18,998	12.0%	150	0.1%	18,848	16.4%
Total	158,855	100.0%	114,860	100.0%	43,995	38.3%
1 Adjusted for change, represents mining, water resources and other. Effective 12/31/2022, we reclassified renewables as power & utilities. For six months ended June 30, 2022, $2.5 million of renewables revenue was reclassified accordingly for consistency.
2 Revenue from acquired companies is reclassified as organic revenue in the first full quarter following the 12-month anniversary of closing. This results in a change from previously reported numbers.

BOWMAN CONSULTING GROUP LTD.
GROSS BACKLOG BY CATEGORY AT JUNE 30, 2023
(Unaudited)
Category	Percentage
Building Infrastructure	56.0	%
Transportation	25.0	%
Power and Utilities	16.0	%
Emerging Markets	3.0	%
TOTAL	100.0	%

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Contacts

Investor Relations Contacts:

Bruce Labovitz
ir@bowman.com
(703) 787-3403

Larry Clark
lclark@bowman.com
(310) 622-8223