BWMN - Earnings call 3 2023 | Bowman Consulting Group Ltd.

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Operator

Good morning. My name is Alyssa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bowman Consulting Group Third Quarter 2023 Conference Call. [Operator Instructions] Please note that many of the comments made today are considered forward-looking statements under federal securities laws.

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

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

Throughout from most with find will earnings company's deliver attendees for the research in may you may management investor investors.bowman.com. which the call and published will from the webcast to but after prepared reconciliations information company's can the with your be release GAAP they together or begin prepared of filed taking Q&A and You be will to communications, in company's the remarks, website. call the this available on Mr. call, press live the Replays the remarks. will post Management SEC directly webcast X-K the investor comparable no live Bowman, information at answer questions questions on the subsequent attendees. analysts. there be the on on website

Gary Bowman

gross IPO, just today Labovitz, over and while the indicator maintaining X-year a XX%. EBITDA Gross here the are of net adjusted produce reach of to high-teen joined solid on I'm approached EBITDA $XXX margin able X.X revenue gross and spread. by adjusted to revenue time what a margin exceeded Financial growth usual, our Officer. long revenue years XX% ago, million past At is XX% our objectives $XXX Bruce our about our strategic a As to we were run net rate quarter This million, Chief term. to

to and achieve results Reno's goals. demonstrate quarter trajectory this Our year-to-date clearly those

and here like the have other Corporation acquisitions all to first all team. a during to to call, fourth Bowman new formally Excellence closed close earnings their quarter. not two third joined the did Engineering the with I'd from any quarter, employees who we our along moment employees Dentist welcome take recently Accordingly, we in acquisitions While

and and develop we're a to to grow embracing enduring testament values to our continue retain we the advancing. talent culture ability attract, to As that committed and is all

good make in the initiatives to of XX% which by XX% meaningfully up IPO. diversification from year continue on our in revenue, revenue, nonbuilding of increase reached the total infrastructure the progress of revenue contribution our our evidenced We as ongoing

and continue $XX be stimulate believe roughly committed Reduction Investment approach, deadlines small government billion to are grants, believe our spending various infrastructure We and EVs, represents are new the $XXX the projects likewise our funding which million IIJA. the sectors term. This We recent Jobs respect energy which standing and We're We're batteries clean step the policy for experience XX% all customers, underway. represents projects monetary of more this than will for to new in Act. existing resourcing billion we in million benefits published energy, for manufacturing to initiatives, trillion announced projects According long-term initiatives, for active. With related water early from to have clean in projects including a funding other storage, by further tailwinds infrastructure to announcing is regarding start rush to funding demand clean still through been of qualification experiencing the of secured industry and of $XXX another Inflation resiliency Bowman and forward. around as clearly added to and strong available transportation, date. in both Infrastructure $XXX public funded transportation the long-term customers resorting near stages what we fund, over in the less sectors than including sustainable secure signals in of manufacturing U.S., us responded services announced to private significant and Act and energy, and the $X.X have the over spending, This percentage under new acquisitions. just for incentives program the and propelling the into been in this initiatives announcements community recently funding under IRA to

turn Now a financial I'm minutes call M&A over pipeline going our and to review our outlook. discuss XXXX to to the I which to will after Bruce our results, take Bruce. our few markets,

Bruce Labovitz

quarter quarter for demonstrating breakout capacity in our efficiency. growth operational was us revenue third and a of terms The for

compared we reflection the time. year.Year-over-year Year-over-year, quarter last organic service believe every gross of quarter the press million the was of third provide as quarter. net over next release quarter third representative or quarter revenue we the and for which to last a one the XX% not billing to last achieve the compared year. service result growth quarter what disclosures we XX%. increased for predictive but demonstrating continue of to XX% non-GAAP organic Net the quarter reconciliations As will in billing, revenue we one, was our of the in over $XX.X a Gross of in are to or of million third just to growth to third can we're grow, for X% be increased trends the $XX.X

under gross transportation of at quarter, infrastructure Residential power represented revenue with revenue represented XX% utilities building Nonresidential and our XX% revenue. accounting infrastructure of infrastructure representing gross nearly gross of represented XXXX, In of we third of revenue. the revenue or residential, what revenue, sale-related would characterize represented as around During XX% revenue. nearly just building XX% XX% gross building XX%. XX% XX% gross just of and for for with

third months XX%. quarter gross there making XX up to on goals, basis XX% with is million the be Year-to-date, lower diversification nine Year-to-date, revenue, margin pleased increased year. compensation, of million the the towards was of revenue last $XXX.X margin our XX.X% margin of growth gross under basis service million in allocation compared the normal While have sold are fringe of gross Gross is quarter in months the under noncash points cost to goods respectively. and XX%. in the mix Net organic been million which of on for we noncash year. the organic just XX% costs, net to service the and net respectively. first nine utilization, of achieved. to and $XXX more margin nine revenue was gross cost quarter was to just months second Year-to-date points is for margin of year-to-date, billing gross the last year year. as below of gross COGS. fluctuations to Included Year-to-date, first would for stock XX and X.X% long-term revenue $X.X XX% these We for was last business be year. we're XX% Year-to-date, quarter growth progress are gross XX%, $X.X impacts last which consider the billing which was of first based than these of and

our service help was SG&A, to percentage are normal for billing expand optimistic noncash the business XXX over up evolutions million industry these $XX and these as basis million believe margins technologies quarter we we're While which for stock margins included a was that this net $X points result of year-to-date of time. labor continue disruptive of of current in our model, net but a the will in outsized for compared increased and quarter. second in last in to third This combination predictable billing year, of points investments SG&A second sequential revenue the service is the year. compared percentage generated XXX the reduction sequentially down quarter to quarter quarter of basis made period when as this the compensation

the in is quarter to compared to million XX% quarter. benefit brings date million, a margin up quarter, we credits points windfalls income points reported the of EBITDA which vesting large year. XX%. to in from as to adjusted inclusive million, and increased XXX $X.X is basis $X.X margin XX% grant million derived stock last XX.X% net second was up the value.Adjusted For Year-to-date net EBITDA adjusted tax R&D year-to-date related to EBITDA $XX.X net $X.X of than quarter fair XXX basis third to up part Adjusted higher income to and million third net values tax a EBITDA $XX.X in

As uneven the revenue margins of and can timing based be we mix. grow, intra-year on expenses

margin indicator. a As developed such, over directional recommend multiple investors focus on we periods as

capacity the was composition hand display $XX of on We're cash utility number million debt to believe is million flow $XX.X X.Xx Backlog made of before With outpace not any represents at the line, the We flow new varies margin XX under Cash our adjusted quarter of in work it $XX up the the leverage working to We're from generally pleased our was the we're XX% and baseline, least changes power months generation. of nine and over from debt with of is programmatic the Cash XX-month to trailing million, operations was for just from Backlog that is is While to positive million June quarters turn other represents nearly long-term sheet. approximately areas. the expect yet. $XX $XX on of be capital quarter capped don't This the and and at four in XXth. but nine over that's of growth $XX backlog. emerging our XX% months, million end around infrastructure, is generate just in $XXX flow was through pleased state of XX% revenue quarter's this ratio continues period, under the backlog down backlog over cash potential, operations at balance ability case recognition. end assignments. Net little a I XX% in of in which with at based net progress a pleased quarter. million building revenue the and performed $XX.X months on with EBITDA. a million. our on that roughly of under transportation, our contracted million X%

to our uncertain practices our ability position awards. capitalization. on to we're continue evolving if cash added as on our in to that to front, expending reflected possibility change. to in operations. research September million IRS virtu guidance, XX.X the expenses flows the have development XX, as proceed On afford shares Because in recent cash since other connection liability the as restricted with we with accruals that from a tax in R&D changes issued guidance sheet, and future, us is the its it before uncertain to balance shares we it The our of consideration. capitalizing this is costs along working expense to law, as continue continue to an our expense contingent This them. currently including the tax on maintain UTP is today, deferred opposed and accrued outstanding, to On belief position a changes for relating tax will operations monitor the the with we is issued the Based business we tax characteristics with but neutralizes capital liabilities actually were of stock noncurrent from cash UTP On through statement included impact spent, as all not of back later tax cash. respect

equity third of order-based valuations, buying quarter, on transaction undervaluation we our what of established the based business, under program and authorization. of group was an believe our repurchase stock we multiples During $XX limit comparable the the to the performance our peer million relative a

share. and we have shares $XX.XX average nearly per During to XX,XXX price the quarter, subsequent at purchased of an

While flexible are commitment capital and to to communicate of our protect value. advance numbers shareholder they these should big, deployment

of in peers, a calculating a reconciliation as In average vesting, be first metric we provide stock introduced an metric. marginal costs may adjusted add to which to add-backs, with press expense stock and recalculate calculated to new back not release. who adjusted tax this our impact of we of noncore then compensation along not tax in metric, course. When normal expenses. peer our other add in effective associated stock I nonrecurring EPS add-backs. with that non-GAAP periodic We a should windfall be non-GAAP quarter, noncash computing the the tax present expense, compensation compensation EPS with other our do of tax This EPS acquisitions others want exclusive any these rate effect we we likewise apply that consistent GAAP pre-IPO evaluated reiterate group back consistently noncash with this measure our or for shortfall

use way benefit, feel accurate peers. for may the reflective be and to us present is While to against is most to it us it believe this useful advantageous We the not approach. tax necessarily we the evaluate information investors most to our

continue will to forward. we such, press in releases it include As our going

our on our the XXXX based year clients' backlog, current guidance understanding intentions As and end we're we of near forecast a our preliminary year, the for tightening our of business and XXXX outlook for introducing development. for next

$XX narrowing million, adjusted be billing EBITDA $XXX our net to to range $XXX to in we're of to forecast million the in the service of $XX million. XXXX, range For with million

are to range in of guidance XXXX, with EBITDA $XX For million. the $XXX initiating $XX we to of million million million, $XXX adjusted

always, acquisitions. over back As I'm going With contemplate concluding Gary remarks. to that, these for to do the future call not turn

Gary Bowman

and terms going over call take discuss we of back the evolved, of to there demand incremental support. general infrastructure for turning for a in services Since What before services of operator pipeline for and our planning can hasn't to breadth provide meet our M&A I'm the much market which strong. moment been wallet our share is planning here the and market to we to profile our remains and we engineering, last reported that markets, scope change has the in and share results, demand strategic however, the our questions. the

Our penetration bus encouraged larger by we transportation service scope is of light on that rail wins continues I'm to Coast expand market covering and aviation. highways, Florida new throughout traffic take our of Rhode transportation our and group recent and and assignments and the and expanding as Island. railroad in roads, infrastructure, East assignments particularly growing bridges clients,

over new client continue to of In to offerings roster hiring. footprint XX expect power through add our and market, strategic to the grow service and departments we our We utility and continue several to acquisitions next months. the transportation

into client a Nevada high-pressure we as client from our base largest growing underground design. pipeline station as on we Southern gas expansion for be announced Mid-Atlantic between. our series electric California in multiyear programs a grow us our markets new engagement working with continues to for several Florida and construction and We utility expand for Our to recently we whom of gas market replacement, practice and are and

engaged gas We to revenue build efforts in are throughout both our actively California. and pipeline Nevada

Central team regions. we increasing practice Engineering services Excellence now the on midstream our for projects Midwest Tulsa, and demand board in pipeline the energy With in upstream and are throughout experiencing

On the our close renewables EV-related generators commercial among infrastructure with front, solar battery storage revenue facilities behind. and are faster-growing

growth our from us building much restaurants, and group We facilities of nonresidential that coming quick-serve with commercial assignments. are continue to very keeping municipal experience other infrastructure in clients centers, nonurban Data busy.

in optimistic about and mid- demand On build for owners rent homebuilders, their the and front, developers residential long-term multifamily the appear profiles markets.

application system and In wastewater thousands areas multiple nationally. for recent homebuilder recently emerging calls, new we process demand uptick wastewater to a pilot commitment As in a and evidenced tanks innovative market, have top-tier surveying to in to design for and extraction restore of assignments. years for lines. rest a by award completed with with large renewed there we've storage comments wins experiencing design for investing appears elevated made Within in creation come. We Arizona, program on lot operators the water earnings sewage in had several be the an finished mine inventory big been contracts markets, reclamation secular water systems, meet including engineering an solvent to transport mining and stronger of

about While to geospatial I a it is industry. having impact service us, technically want the in for line our is talk

within Our Bowman. vision mapping high-resolution Bowman investments end-to-end focused our a been technologies. comprehensive at are on advanced geospatial for future we making have its Several acquisitions and capability imaging developing surveying, of in and

UAS customers. advance with across operators us with travel including geospatial they survey investments customers all today, level the based mapping recognize and interaction for and a in of new tremendous their the in altitude to to of Recent and enabled at dimensional for clients the both opportunity and value As about have manner vendors digital our speed as on modeling, as technologies, our settings. These XX% create these skills associated associated X and interstate highway Lidar and virtual our markets. ground in with technologies proposition UAVs, traditional our operate for secure utilizing and example, generates can technologies, develop requirements advanced utilize equipment with both mobile of us group visualizations assignments broadly defined the imaging. currently geomatics low revenue X We high-resolution

balance to through acquisitions. both this Our to grow service us continue positions sheet and aggressively, investment technology

to equipment, early twin identify a pace going of design technologies AI and our help us satisfy complement more. evolving geographies, an beneficial believe, among focused capabilities, that pleased Bowman theme provide M&A digital long which differentiation industry full core and report margins industry. on solutions within efficient focused adjacency modeling our at the suite remains is disruptive respect introduction generative I of growth in and elites I adopters solutions and We're enhancing for deliver GIS mapping rapid approaches skill size program public, transact profile. we related the and This accelerating delivery at software, pipeline imaging investing of are technologies, to whereby and our evolving timelier to engaging am being client with committed with over We're manner. of commitment short and needs Our sets. a will, the digital technologies, services, in systems, and in time. moment opportunities to adjacency, our create technologies of better high-resolution demand target businesses the technological to a and I that that Since am services we actively digital of with and new that term. in

by remainder to maintain into I'll you acquirers outlook to and of year turn XXXX. during for our and next as the the Bowman, to the will clients, positive for participating expect this I thank everything our you remainder toward employees year in towards today's We we conclude this we our reiterating achieving communities. be of call back and shareholders all a continue to year you for you active our Thank now questions for progress and our answers. Operator, goals. long-term strategic do that and call,

Operator

Your from question Craig Hallum. the comes of [Operator first line Instructions] Spychalla with Aaron

Aaron Spychalla

you on seeing see just if you're to forward? coming there and we and to touch how that some of Can and transportation unfold drivers move of infrastructure some and power you're you're starting this as the utilities, expecting dollars out the

Gary Bowman

for still in the the of driven call, the there's the just of I those similar they're Clearly, innings, improve by on and as programs. drivers I There's IIJA, We're IRA IIJA facilities. underlying, both funding. know the, a early driver strong secular these to programs. mentioned need in the currently

of starting the in the are We to to stronger. years next see some is going but much flow, that and outlook year be ensuing

Aaron Spychalla

Then macro just of seeing you're expansion. mean maybe good bidding? rates second, extent can you impacting about the higher see talk the some the of kind and backlog that I to

talk about you can please? little Just bit, that a

Bruce Labovitz

you interest I rates, assume? Higher mean,

Aaron Spychalla

Yes, the broader just and of uncertainty macro impact some any just there. you're of interest kind rates seeing and

Bruce Labovitz

by driven very residential in seeing that slowed We're is that we down. impact rates, certainly has interest little the feel market

to think, seeing, that We a little of for as as adverse cap forth recession very are of I tables that some seeing people build-to-rent shoots impending so on far of adverse and effects redo our as Overall, projects. green business. coming their or the rates, being life effect we're back as interest

Operator

Rygiel from line Your with next of Riley. question comes the Alex B.

Alexander Rygiel

questions here. A couple quick of

thing? centers, the of buildings, the little First, that Bruce, commercial break maybe bit greater? you Just pie data commercial trying of a office understand to could kind slice down

Bruce Labovitz

participant the that a an list big followed this convenience very restaurant box category warehouse get not and that in a we I be or large in three is That don't facility. office. a concentric be circle combination then Urban, structures. Yes. of today, Downtown probably commercial, too commercial. at small followed of of active sort quick-serve market sort store commercial, large station, commercial talked or think would talk industrial in store, by all. the we're of composition I of centers We that convenience as store could which model data probably by Last the the about about as what of gas really say granular think to of biggest would

it Then life ring, of we The a that second we're healthy exurban, part probably that, the third redevelopment as is circle about or more active or is of or of from and commercial the third warehouse, would fairly converted market. transit-oriented, in active suburban mostly market. old say, generation That's that to data residential. center that's the makeup reuse, commercial its a flex converted second of of being facility to in

Alexander Rygiel

these can the could Then talk macro us acquisitions or margins, for gross margins. about talk or accretive sort it's the you a -- to Maybe from standpoint, go-forward acquisitions, headwinds to gross not talk about about when or we you tailwinds basis? margins to whether -- a make obviously, hard on tell you dilutive as of are your

Bruce Labovitz

acquisitions with start has lower I'll dollar lower frequency, and of profile. the our Yes. been strategy high risk

sort think period It utilization we offerings. margin. does term we stay depend that we gross margin. utilization, from fringe in or either They introduced technologies higher a consistent because with a them over get the Did accretive into little sort short range. that is margin will at long existence As of very their -- more set positively a such, of to We Gross and margin a our existing. to can I We'll there's the we they one going of suggest some between drive think, that it's driving fringe create. along for one a wouldn't of time this, disparate gross. is period At really they time, point, point in XX% the that allocate the the gross in us of answer are no they said, I scale be run, bit such question? because direct costs. low on with incoming so in them going that of profile all such think has virtue that over size margin portfolio, this by margin to disparate periodically product little impact any

Alexander Rygiel

bit to did. XXXX. on views going construction. a Coming single-family might into multifamily to What that? of just residential are concern Then that residential last your question. and one multifamily slow little Sure start maybe There seems down back be to

Bruce Labovitz

Multifamily build as of a A part been is rent, are to overall part characterize has maybe the multifamily. of some fairly our slowdown. over portfolio. the could small some We horizontal large years past seeing couple which

really that starting We clients. see market getting more we're maybe ready heat the and from is back frankly, feel up. are optimistic that very our We hearing anecdotal, to it's spirits that, to

Gary Bowman

they the countercyclical residential people to some are elements other house. because we're market the generally market which housing At want of each to that until they serving. buy house, it change. rent working We're residential want distribution a don't overall agnostic remains The is to of to component to decide what point, a time at of demand any may the buy given is

Operator

Your next question from D.A. of the comes line Chornous with Oliver Davidson.

Oliver Chornous

think you wondering, XQ. cash was generation continue in that, in that's had we strong guys XQ? I Do to going real

Bruce Labovitz

think continues generation, cash pace, at tougher we're of a it quarter path is a positive whether always exact a that on good little for for bit us. the fourth We quarter

holidays. Just that the a with calendar is human-driven can and business interrupt

predictive fourth strong continue in be fourth I quarter. but be -- think the of think is It will exactly still exactly be don't I it's lighter, to might the different. meaningfully third will it little a

Oliver Chornous

rate the Which anticipate in guidance XXXX? 'XX, growth do for What in some seeing if embedded any? organic you contraction is areas

Gary Bowman

of areas rate the contraction is seen per we've the in inferred of rebound that currently interest there. business, residential We're of feel areas sensitive contraction. We programming not say, like the really has, contraction on XX% to guidance, areas XX% to our se.

contraction. no but rebound, strong a necessarily programmed haven't We

Bruce Labovitz

Yes.

what to we and of some don't we At stew everything no can is mix organic. grow it way business the look really it how bought it on We it year-over-year. based take we you point, as. out what's say, there's new obviously. ask that's I acquisition, important the we okay, think have forward it like in base it's and acquisitive, grow of think break and when annualizes We characterize we the the

Oliver Chornous

the some indicated would no overall from the earlier, guess plan M&A I for that organic numbers guys huge separate pending then pretty significantly. there's growth You

Bruce Labovitz

closed that would today. acquisitions not we the in Well, won't is it acquisition guidance include our I I think the always haven't occurs, not issued time be suggest the don't guidance acquisition that is we in pipeline. and will in any that contemplated at there guidance. future in that the meaningful that We say there it upcoming when impact it but included the should

Operator

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

Gary Bowman

good coming owners for to quarter want hard year. everybody us Thanks looking again. a same turned quarter, next looking up show Everybody, for forward of by just wrap to up seeing to I all we in talk the a this dedication in and thanking Bowman upcoming our work, time which that in have the at good faith year. you everybody of to and about till holiday forward you we're conferences, and at

Operator

today's concludes call. conference This

now disconnect. may You

Bowman Consulting (BWMN) 7 Nov 232023 Q3 Earnings call transcript