Earnings call transcript Q2 2023

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Operator

Good morning. My name is Emily, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Bowman Consulting Group Second Quarter 2023 Conference Call. [Operator Instructions]

Please note that many of the comments made today are considered forward-looking statements under federal securities laws.

those company's numerous the could publicly risks results differ the are these cause update in company to to the forward-looking subject and from or described revise filings obligated statements. SEC, with statements future is these As not and to expressed uncertainties that

adjusted the service net billing. In call, discuss non-GAAP and company addition, on financial EBITDA certain will today's information, such as

the earnings reconciliations information You release to most investors.bowman.com. can together find with GAAP company's this directly on investor filed in X-K with the and the press information and comparable SEC website the the company's at

management will from answer or call which subsequent published of after they the on Attendees no communications, prepared throughout in will questions Replays but company's attendees. analysis from from the live investor call. available the Q&A taking may call to Management research be webcast deliver website. webcast the on live the will will remarks, be there the be questions on post

may Mr. Bowman, begin you remarks. prepared your

Gary Bowman

you, call. who many on thank Consulting joined earnings webcast. CFO, by Good were XXXX for dedicated today our quarter second joining in the conference Bowman and Thank everyone, joined Bruce you Labovitz, morning, virtually by are our here listening of employees I'm and the Emily.

Everything we're by that everyone day. with extended extremely we associated work every an accomplished client-first and as exhibited mindset a each appreciative effort, hard team result of and of the Bowman and

second additions of welcomed exciting solid will we to quarter, beyond. block as second some and the building half organization the the our a During serve year for which

acquisitions a offerings. and clients, over XXX respect with annualized of $XX compelling Each and strategic five geographies new of revenue We rationale Bowman. roughly completed acquisitions, service service million adding employees complementary presented to these to net

buy-in in growth ours. more compatibility wallet immediate revenue key the opportunities, which integration result synergies work and cross is rapid Cultural with companies customer each well accelerated expansion and of and facilitating the sharing these and to tenets referrals of successful But to of aligned of importantly, cultures promotional share.

added organically six by adding work deliver customers close past ahead. through the of addition timely awarded the over months In expect over acquisition, we been delivery our workforce to during and we've ensure the to expanded staff we professionals the to the to XX year to quarter

infrastructure of means exceeding the quarter in $XX pace Once mode believe and Our demand of coupled industry new continues overall the fueled greater experience our a complemented of remains our activity orders independent in the the a to achieved We expansion grew positive book-to-burn by momentum we transformation. gross innovation backlog with X, and acquisitions. with M&A market our funding for ratio which unprecedented orders million, than as strong in again, quarter. environment incentivized

the also by degree the with quarter, and toward visibility our for future revenue have set we diversification, progress pleased I'm organic encouraged XX% into I'm of services. demand second In growth. delivered broad we our ongoing of

continuously to supported deepening average Organic we primary both strategic I'm how our relationships of realized and multi-pronged well answer relationships often is achieve approach we and of growth the rates pillars we by is and we enjoy. how breadth to customer a all-in expanding top-to-bottom above organic growth. four existing are to have asked growth privileged consistently our The culture. commitment

firms through we and acquire. commitment full First, on rapid of synergy to a integration opportunities company-wide revenue capitalizing the

trust knowledge our to four referrals by consistently and promoted broad depth focuses work long-tenured to utilization We and company and an siloed rewards a discouraging and technology; believe our these by adherence our on our outsized compensation an leadership and customer that investments growth our values from and for culture ownership optimization disciplined operations. commitment deliver that unconstrained enables staff protected organic to individual strong our fourth, rates. of commitment third, while and us success development; sharing, cross philosophy Second, resulting and and foundational to strong supported in professional unparalleled

I'll going discuss financial Bruce? markets, and I'm few turn which, our now minutes a to call to pipeline take our the talk our over M&A to to our after results, Bruce outlook. about

Bruce Labovitz

Thank Terrific. Gary. you,

quarter new to million achieving positive or combined as to during growth margins. second strategic Gross and pleased the $XX.X was consecutive underwrite, the million quarter increased with for $XXX revenue above-average revenue of compared reporting be $XX.X integrate. close, XX% objectives Second year. of toward annual account million active million for second to I'm quarter quarter five with last our of to another today of here and acquisitions on progress $XX.X

Building our their represented gross and each quarter, XX% of quarter representing the included revenue. Year-over-year power Perry our XX%, in McMahon and revenue growth of transportation passed one with of organic over of the infrastructure gross XXXX now gross for both was anniversary which which revenue mark. have acquisitions, XX% year

includes which gross submarkets, Within collection and roughly parks, work, for-sale gross of restaurants, of for represented industrial XX% revenue. centers, data box a the quick-serve convenience quarter, stores residential of including XX% big revenue. MEP accounted broad Commercial, retail approximately

first urban year. not revenue months compared up revenue $XXX.X of gross million component million and $XXX.X was six is huge Year-to-date, office $XX.X to a dense XX% as or base. Suburban commercial last million in of to our the

year, with year, power Perry a been our XX%, growth be Organic representing McMahon power months of our the XX% deliberate six and gross and our to diversification Last building in respectively. revenue This XX% continues at growth and XX%, for included Year-to-date, comparison. the XX% effort transportation initiatives. midpoint represented focus the of infrastructure XX%, has is of represented respectively. again with representing and gross XX% and the building revenue, the transportation of with and infrastructure

revenue service for-sale quarter, the second and of last $XX.X million represented approximately XX% $XX.X to for XX%. the commercial the gross increased to 'XX, of During residential million quarter, half second of or as in first $XX.X million Net XX% accounted roughly compared quarter year. billing in

roughly the XX% in was quarter, service including Perry. billing and net of growth McMahon Organic

XX%, to up net just from last Our remained XXX points basis at year. gross about ratio under high

grow and will While top the ratio our to at goal this as net-to-gross is from line. operate quarter-to-quarter, to ebb we ratio an XX% XX% flow

the six to again XX% of to Net billing as months roughly half $XXX.X McMahon including year. net first XX%, service billing $XX.X million was million compared Organic increased Perry. service or $XXX.X last growth in million the now for of and

services half points with of current Gross assignments. XX.X%, our we first margin in we for was will are XXXX. normal XX.X%, point which and points of is was range, given XX the a basis margins is what the basis gross believe couple experience the which higher in hundred These gross XX line portfolio XXXX. second Year-to-date, quarter quarter margin was of margin than basis below which second

second the labor, and increase in is up in a We company. XXX revenue year. build stock accounted continue the costs compared percentage net costs. attributable half Inclusive not as and bonuses plateau basis was as of in stock compensation points increasing to overhead of balance of quarter about the likewise of increased points that leverage first to toward up basis work and half a last XXX in compensation, was with cost goods SG&A as overhead being being rise fringe the About associated for we sold, public to scale with

half eliminate functionality including integrations, believe, McMahon, some of several of contribute of past to we duplication and months, of XXXX. over few will, the scaling margins Completion the the second in

$XXX,XXX year. net of a the reported quarter, net as last of $XXX,XXX second compared to a loss loss For we

increase buildup For net attributable $X.X to the $XXX,XXX labor costs. XXXX, a loss of to increase first anticipate loss as in net of we compensation both of of year. last of half is we generated This a a noncash profit work to advance compared and net million delivering in

So EBITDA by $XX.X up XX% basis as XX.X%. margin to net last increased XX% Adjusted XXX adjusted points quarter compared second to Adjusted turning million $X.X compared the to EBITDA year. million EBITDA. as was to in to

during For first year. was XX.X% compared to to to the Adjusted margin to year, XX.X%. basis as $XX XX last half adjusted points EBITDA EBITDA net $XX.X as by compared million increased up XX.X% the million

we achieve service consistent margin adjusted As of billing. nonlinear a high our $XXX when to million net continue journey we headcount, and add our we teens along EBITDA net acquisitions

flows law, to absence UTP our front, circumstances to clear long-term tax to our to subject Because be evolving to adopted we expense offset not cash and before the expenses guidance is we specific in liability, our deferred we ours tax, development of believe capital continue On with changes based on we payable. contrary, for the an to to a through working R&D reflects changes relating maintain monitor research of of this capitalization tax a evolving interpretation, therefore, potential position, which is and will of capitalization guidance continue business. the by In uncertain statement tax as Section this XXX, an recently respect rules. the

issue to consequential report We will to industry. monitor continue on this and our

outstanding, On issued June stock recent of between will XXXX, million today, connection and in awards XX, July restricted including vest have shares in still XXXX. and XX.X and X, all acquisitions we with XX, that as December $X.X million shares

have any repurchases We million repurchase stock $XX our under made authorization. not

up over of emerging outpace quarter Backlog $XX revenue other in which million the as infrastructure, XXXX. $XXX part utility acquisitions to revenue. approximately up million, year-end from sales continuing Backlog is revenue June at close of Backlog up to transportation, end XX, made the $XX compared building XX% was approximately is XX% in and part and to is million power XX% from from areas. X% and XXXX,

facility first revolving a with our a to to amended of announced The was America, $XX refer we as change what primary restated the borrowing week, maximum the $XX amendment revolver. to Bank credit increase credit capacity Last facility our million million. an and credit in from on we to facility or revolving closing the

us This gives our increased program. in availability additional M&A flexibility

million. line net XX, outstanding for As over $X million of the reserves cash $XX million had just we with of in June $XX a on

period The quarter. second payroll the day on quarter the extra involved an the falling of payroll last final with

under this the called add outstanding The timing revolver amount quarter. results, While revolver what's at is affect zero end balance GAAP balance so daily. the ebbs sweep, to the of didn't a the the flows did and the

or a million net reduced of under today, outstanding on has As basis. the around $X $XX million been

working in being adjusted million, in approximately the million ratio included on the was million, changes working and EBITDA of midpoint capital. Net forward approximately million the fourth end which debt a X.X capital $XX at toward $X.X of from of before $X which was $XX leverage quarter's Cash quarter operations trailing expended with million flow on $XX.X guidance. resulted

with $XXX connection our million. to the service million $XXX net of million increasing new from billing million added a range our to since In guidance conference call, we a last range $XXX acquisitions are to four $XXX of

the of This $XX We're net million range new to also a $XX approximately the and of of million of to from closings. million million $XX of guidance for $X.X adjusted increasing million. acquisitions and revenue $XX for projected range on adjusted tightening $XX.X timing EBITDA based our accounts to from a million EBITDA

call remarking. I'm the that, Gary for going With his to turn concluding over back to

Gary Bowman

you, Bruce. Thank

going to questions. I'm turn Emily and before markets turning back to briefly our for M&A the call to pipeline our

make and I progress As market good achieving diversification. to revenue toward growth continue rates mentioned, we

quarter, to while space and This our we in services our continued utility power businesses. presence the both and transportation our building deconcentrate infrastructure growing

building XX%. of our At revenue the same year, from as above one gross overall revenue of XX% its and below contribution base our from growing XXX% course revenue a the time, we've while transportation Over to by just total reduced infrastructure XX%, XX%. doubled grew to percentage XX% nearly revenue revenue to by

received by Utilities contribution grew last encouraged total revenue this XX% XX%, several year quarter. revenue to awards by increasing gross its nearly I'm XX% growing and year. from we year-over-year particularly Power while this XX% to

done On relationship confidence partnership work with and front, with Gas the a our great We've our Southwest expanded appreciative long-standing the us I'm had for terrific utility Gas, their Nevada. in with has and of Southwest them. team into we

we're front, continuing projects. renewables infrastructure battery to substantial and the On storage win solar

We planning also impact midsized new the for DOT and build continue projects projects. funded to of infrastructure large with early-stage see

demand far we business and experiencing their continue anticipated. strong for customers data this seen centers much On the our than stronger homebuilding bottom and home they've infrastructure front, out demand year feel building experience that the so are plans market new to

accommodate we to clients customer are us changing box Quick busy Restaurant seeing as their in retail. substantial activity Our big Service habits reconfigure are renewed they sights and keeping

data While and verticals, twinning, our expanding reality digital services and we renewable our digital hydrology continue mapping hidden visualization. services, on and to infrastructure we're also wastewater-related in augmented energy diversify areas solutions concentrating including such developing geospatial capture, as and

as motivated to with Our in service and advancement. diversified offerings the opportunistic be organic integrated but risk line strong respect us capture enables technology greatest to that mitigating share capital extremely a service to enable of of wallet portfolio expansion possible. us investing amount We're to position customer maintain complementary

the be practical introducing While spectrum, engaged is considered intelligence we're tools business. to several been what of end in our hype with we've areas of not artificial intelligence artificial

to AI conditions This help utilizing employ we capital and us problem planning. asset engineers designers mapping computer transportation assist our integrity customers we're and group, helps where enabling identify while example, issues assessment. vision their with in our inspection our technology condition and For payment to with

using informed as such help decisions AI replacement We're smart to our most customers. provide learned data of tools staff make potential possible. in It's to AI generative also We that as our internally with don't design, professional designers to processing and These generate data cost-effective to better, sources the us. more modeling, expertise and us the approach timelier technology solutions intelligent allow technologies their a to our utilize XD combination other GIS. and unleashing

will to to contributions the our we Richter, Hole future and have pleased in second year experiencing leaders we professional are believe - our active active As team. strong the business space this MTX to have were I'm closed staff the very Montes, Fisher, infrastructure we to them we're M&A engineers join from conditions, make we the which quarter, the in results. acquisitions solid enable noted, very and

Vaughn, positive by prospect strategic the half year. meaningful to will outlook be my I time and I'm for of next time. pipeline a I'll completed acquisitions discussing of working developing the opportunities remainder a year on more once we earning and our our the of by reiterating Director several of M&A consistency towards with over our advancing call. towards long-term that of continue second our acquisitions goals I'm our during Tim encouraged confident spent again maintain and this of we conclude newly the the amount achieving on opportunities.

turn now you I'll to the Emily, call for back questions.

Operator

comes with Brent, the Thank D.A. first line you. of Davidson. from Your go Brent [Operator ahead. Instructions] question please Thielman

open. Your line is

Brent Thielman

is appreciate update low forth. great. transactions revenue so sort been you've done the growth customers, from how progress you're on Good organic double-digit revenue the synergies, existing just feel Thanks. leverage that Hi, new to always I customers, business, morning, the how you've the you expanding relevant able like of from an seeing Gary. all you're in into seeing to maybe

Gary Bowman

It's in - a relevant. from to quite It's success acquisitions synergies organic from synergies the is our rate. realizing substantial very contributor the our - growth

Brent Thielman

little a - then And I was

Gary Bowman

Go Brent. ahead,

Brent Thielman

to that. Please, you Gary, adding No. were

Gary Bowman

is referrals, and It's it's and cultural board. our consistent started the target on of that is to that to - synergies parcel of first referrals that on - from since search sharing program, was an compatibility acquisition revenue day maintain we with part been revenue is we and work comes our do cross strategy the realizing our culture and

the very from we've synergies realizing revenue been successful firms. So in acquired

Brent Thielman

Understood.

some through out year? the I assume to vertical revenue And Okay. prospects to backlog lumpiness plenty completion opportunities then view there a to business, I just was activities. Is there. little of that rest the transportation of the the here in in Gary. I there's a the certain that on lower see your vertical little of relative that, for surprised Maybe first appreciate quarter. the the

Gary Bowman

identified lumpy, quite good prospects the very for It year. coming up have we You rest the it. and is some of

Bruce Labovitz

you what supportive noticed? of you said - could you more Brent, be what you

Brent Thielman

I Bruce, but was I'm referencing mistaken, backlog the - quarter-on-quarter. just Maybe

Bruce Labovitz

thought revenue, Backlog. actual okay. revenue. I sorry. about I talked you talked thought you about actual

Brent Thielman

Yes.

Bruce Labovitz

composition talking of the - backlog You're about

Brent Thielman

guess. I vertical, transportation the within just Yes,

Bruce Labovitz

Yes. Sorry.

Gary Bowman

Just timing the of orders.

Brent Thielman

SG&A thanks going And Yes. comments Fair then, forward. enough. for just Bruce, the around

You mentioned some elimination of duplicative costs.

tailwind relatively just I I'm something the because called of that just the getting terms larger McMahon it was with other SG&A for deal you. among you're better doing transaction should are think the unique of about and other size out be overhead know just leverage a transactions wondering also there I here. it. larger. you Is things that a in

Bruce Labovitz

systems. right? There's difference running so has Yes. acquisition fully dual on certainly you're view, is impact system's just - of an of sort the a in integrated costs, of acquisitions scale transition is more point the until But from

dual payrolls of running of auditing. cost You're and processes, duplication accounting of duplication the some

they, more there's are of, some some binary they opportunity. but yes, leverage relativity, it's that or So the creates aren't

- bringing activity. some the out of of certainly year we're the So some efficiency and lot that. as some second had big integration, half completing last seeing acquisitions of as And the a of we're we're

Brent Thielman

it. Got

Okay. quarter. very of through acquired first obviously, And in acquisition million pace the the will first one, terms $XX objectives sort revenue be I in not year half the the mean just the last second anticipate we for active or program, Gary in mean, half, staying, I should here your any of half Bruce? second of

Bruce Labovitz

to But active. number intend going learned. be Yes. lesson to a it, that We're not put certainly continue think to I we on

We do looking as year we get we're to any good as said, about and our be specific by to always expect in do without it setting, last try we time we're but well acquisitions the acquisitions. have exceed that on November. said goal And Gary to is as call talking target for additional the

gives it to we an we right the consistent now. I pipeline been is what The doing, generally pleased be you've out seeing. While active. say you Brent, with been And sweet expect there larger. there's now for continue indication opportunity have have directionally, to Very right? we that So spot with what right we think

Brent Thielman

Understood. guys. Thank you,

Bruce Labovitz

Thanks Brent.

Operator

comes Alex, Riley. Rygiel please with ahead. of Your B. the line go next question Alex from

open. now is line Your

Alex Rygiel

if Gary anything the very in about surprised - strengthening What and weakening that anything, found I'm quarter. - either Bruce, business you that surprised nature? the anything Any you nice what in sorry, or quarter, quarter? or you the economic of

Bruce Labovitz

has is I and the industry recovered. how like pleasant guess bottomed surprise a seems homebuilding soon it

early early but late optimism softening lots of year there. year, base this our some and seen have customer last We amongst -

of a I it's reconfiguration. a with crystallization the trend Restaurants it accommodate necessarily not And their the to We remarks now, of be reconfiguration but drive-through, seems of surprise, this aren't surprise. people Service COVID, like pleasant the more a more Quick in the saw been trend in certainly of carryout. eating continued mentioned maybe has sites - this that So permanent to restaurants during a

Alex Rygiel

then federal investment? buildings funding started evident see And even the within you yet backlog, to business, started business, have driving - or any transportation you to see capital in have customer

Gary Bowman

that We we on that proposals there that are two, quarter funding. or number closing - It's driven yes. are next are. projects of the providing by are opportunities actually the on yes. anticipate we Yes, federal a we're

Bruce Labovitz

the the at whatever project build come the where in of and of of Remember, we predominance these sense willingness and stage that very early the confidence Yes, funding unlocks sort we're available, to will most indication, that directional of to the survey of - funding the they managers that that for there's optimism. sense groups the is. initiate certainly the project. it it's the will But is projects,

so funding to of direct to comfortable feel X:X, that's it - place most. may that we be a where a and there always not - do, is is we And what the to it's issue process, get benefit the correlation process start with the the to started it's fund, a in but funds necessarily RFPs

Alex Rygiel

as transactions you of Bruce, little more like M&A, markets suggested for detail opportunities relevant bit some that that any larger end you sounded increasing at. there's that it targeted it about talk to maybe sort a then, And these relates are of Can in and transactions.

Bruce Labovitz

Yes.

that's our little said, M&A large we the last than high-frequency as I year. we So spectrum higher have think and is a a spot what small. is we've sweet of mean,

mean to acquisitions there. year that basically kinds you You've acquisitions. of higher we're had $XX million last that like million it to We there And where of low-risk, range. McMahon these is acquisitions $X dollar - the But where been impactful in at really in similar looked value scattered with easy-to-do aren't doesn't has focused. last couple

in lot hunting one. that and not are we're have to mean the but of, larger We've for the this of opportunities. that of $X really in And it, is - maybe million play we're a that and spot that the you stumble hunt game there looking doesn't pipeline, a So million but out a million you we're that said sweet million where is $XXX $X for then call the is them. focused $XX on on million $X opportunities; sometimes for million opportunities, let's you $XX kind most. the and potentially few out bear, the of necessarily Where front

Alex Rygiel

guys. helpful. quarter. Keep up, Super Nice it

Bruce Labovitz

Alex. Thanks

Operator

no you. turn I this are questions Bowman, Mr. further There the at back to time. call over

Gary Bowman

the And and morning. to everyone, that for Emily, morning. this in Good all for to Bowman hard the thanks, continued listening you work and for support. our continued all call the folks Thanks, put thanks investors

Operator

call. today's This concludes conference

may You disconnect. now

Bowman Consulting (BWMN) 8 Aug 232023 Q2 Earnings call transcript