Bowman announces record third quarter results; exceeds consensus estimates and raises guidance
Reston, va.--(business wire)--bowman consulting group ltd. (nasdaq: bwmn) (“bowman” or the “company”), a national engineering services firm supporting owners and developers of the built environment, today released record financial results for the three months ended september 30, 2022. “we have once again reported a record quarter that exceeded estimates,” said gary bowman, chairman and ceo of bowman. “we continue to generate growth across all our markets and increase our backlog through bookings that outpace deliveries. our acquisitions program has proven successful as we continue to acquire strategic partners at attractive multiples and realize meaningful synergies, leading to acquired revenue growth of 24% collectively since acquisition. we are optimistic about the fourth quarter and expect continued growth in revenue, earnings, and operating cash flow into 2023. we are once again increasing our full year outlook and are introducing 2023 guidance that reflects confidence in our ability to continue to deliver these industry leading results.” financial highlights for the three months ended september 30, 2022, compared to september 30, 2021: gross revenue of $71.2 million, compared to $39.7 million, a 79% increase year-over-year organic gross revenue growth of 23% net service billing1 of $64.9 million, compared to $35.7 million, an 82% increase year-over-year organic net service billing growth of 25% net income of $3.4 million, compared to a net income of $0.4 million adjusted ebitda1 of $9.6 million, compared to $4.4 million, a 118% increase adjusted ebitda margin, net 1 of 14.8%, compared to 12.4%, a 240-basis point increase gross backlog1 of $230 million, compared to $139 million, a 65% increase financial highlights for the nine months ended september 30, 2022, compared to september 30, 2021: gross revenue of $186.1 million, compared to $108.0 million, a 72% increase year-over-year organic gross revenue growth of 28% net service billing1 of $169.0 million, compared to $97.1 million, a 74% increase year-over-year organic net service billing growth of 31% net income of $4.5 million, compared to a net income of $0.9 million adjusted ebitda1 of $24.6 million, compared to $12.7 million, a 94% increase adjusted ebitda margin, net 1 of 14.6%, compared to 13.1%, a 150-basis point increase business highlights during the third quarter: closed on the acquisition of project design consultants – july 2022 closed on the acquisition of anchor engineering – august 2022 business highlights after the third quarter: closed on the acquisition of spatial acuity – november 2022 closed on the acquisition of sei engineering – november 2022 increasing fy 2022 guidance and introducing fy 2023 guidance the company is increasing its full year 2022 outlook for net service billing to be in the range of $230 to $234 million and adjusted ebitda in the range of $33 to $35 million. this represents an increase from the previous guidance for net service billing of $205 to $220 million and adjusted ebitda of $29 to $33 million. the company is introducing its full year 2023 outlook for net service billing to be in the range of $270 to $290 million and adjusted ebitda in the range of $42 to $48 million. the current outlook for 2022 and 2023 is based on completed acquisitions as of the date of this release and does not include contributions from any future acquisitions. management will discuss the company’s acquisition pipeline during its upcoming earnings call. q3 2022 earnings webcast bowman will host an earnings webcast to discuss the results of the quarter as follows: date: november 11, 2022 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 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 1,700 employees in more than 68 offices 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. 2022 2021 2022 2021 $ 71,246 $ 39,715 $ 186,105 $ 108,041 direct payroll costs 27,641 15,531 73,353 42,873 sub-consultants and expenses 6,343 3,967 17,086 10,967 total contract costs 33,984 19,498 90,439 53,840 selling, general and administrative 31,916 18,373 82,819 48,328 depreciation and amortization 3,138 1,598 8,350 4,506 gain on sale (11 ) (46 ) (44 ) (99 ) total operating expenses 35,043 19,925 91,125 52,735 2,219 292 4,541 1,466 595 314 2,086 706 1,624 (22 ) 2,455 760 (1,773 ) (379 ) (2,079 ) (139 ) $ 3,397 $ 357 $ 4,534 $ 899 504 71 731 165 $ 2,893 $ 286 $ 3,803 $ 734 earnings per share basic $ 0.26 $ 0.03 $ 0.36 $ 0.10 diluted $ 0.25 $ 0.03 $ 0.34 $ 0.10 weighted average shares outstanding: basic 11,304,946 8,920,505 10,669,221 7,003,462 diluted 11,768,411 8,935,274 11,129,478 7,008,440 bowman consulting group ltd. and affiliates condensed consolidated balance sheets (amounts in thousands except per share data) current assets cash and equivalents $ 23,844 $ 20,619 accounts receivable, net 61,550 38,491 contract assets 11,772 9,189 notes receivable - officers, employees, affiliates, current portion 1,162 1,260 prepaid and other current assets 9,825 4,850 total current assets 108,153 74,409 non-current assets property and equipment, net 22,683 20,202 goodwill 55,264 28,471 notes receivable 903 903 notes receivable - officers, employees, affiliates, less current portion 1,183 1,218 other intangible assets, net 15,734 12,286 other assets 809 681 $ 204,729 $ 138,170 current liabilities accounts payable and accrued liabilities $ 28,541 $ 17,921 contract liabilities 7,689 4,623 notes payable, current portion 9,843 4,450 deferred rent, current portion 729 724 capital lease obligation, current portion 7,473 5,136 total current liabilities 54,275 32,854 non-current liabilities other non-current obligations 522 - notes payable, less current portion 15,807 8,407 deferred rent, less current portion 3,851 4,179 capital lease obligation, less current portion 10,021 10,020 deferred tax liability, net 3,456 4,290 common shares subject to repurchase - 7 total liabilities $ 87,932 $ 59,757 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; 15,723,109 shares issued and 13,384,491 outstanding, and 13,690,868 shares issued and 11,489,579 outstanding, respectively 157 137 additional paid-in-capital 156,966 120,842 treasury stock, at cost; 2,338,618 and 2,201,289, respectively (19,857 ) (17,488 ) stock subscription notes receivable (202 ) (277 ) accumulated deficit (20,267 ) (24,801 ) total shareholders' equity $ 116,797 $ 78,413 $ 204,729 $ 138,170 bowman consulting group ltd. and affiliates condensed consolidated statements of cash flows (amounts in thousands) (unaudited) 2022 2021 net income $ 4,534 $ 899 depreciation and amortization - property, plant and equipment 6,366 4,283 amortization of intangible assets 1,984 223 gain on sale of assets (44 ) (99 ) bad debt 527 266 stock based compensation 11,487 5,341 deferred taxes (833 ) (1,340 ) deferred rent (323 ) (6 ) changes in operating assets and liabilities, net of acquisition of businesses accounts receivable (12,356 ) (10,015 ) contract assets (104 ) (961 ) prepaid expenses and other assets (4,376 ) (1,462 ) accounts payable and accrued expenses 5,122 6,132 contract liabilities 186 (31 ) net cash provided by operating activities 12,170 3,230 purchases of property and equipment (901 ) (609 ) fixed assets converted to lease financing 196 - proceeds from sale of assets and disposal of leases 54 100 amounts advanced under loans to shareholders - (473 ) payments received under loans to shareholders 151 88 acquisitions of businesses, net of cash acquired (14,806 ) (3,000 ) collections under stock subscription notes receivable 75 170 net cash used in investing activities (15,231 ) (3,724 ) proceeds from initial public offering, net of underwriting discounts and commissions and other offering costs - 47,104 proceeds from common stock offering, net of underwriting discounts and commissions and other offering costs 15,475 - net borrowings under revolving line of credit - (3,481 ) repayments under fixed line of credit (547 ) (540 ) repayment under notes payable (2,720 ) (735 ) payments on capital leases (4,575 ) (3,208 ) payment of contingent consideration from acquisitions - (2 ) payments for purchase of treasury stock (2,368 ) (582 ) proceeds from issuance of common stock 1,021 297 net cash provided by financing activities 6,286 38,853 net increase in cash and cash equivalents 3,225 38,359 cash and cash equivalents, beginning of period 20,619 386 cash and cash equivalents, end of period $ 23,844 $ 38,745 bowman consulting group ltd. and affiliates combined statements of cash flows (amounts in thousands) (unaudited) 2022 2021 cash paid for interest $ 1,131 $ 647 cash paid for income taxes $ 383 1,040 property and equipment acquired under capital lease $ (6,623 ) $ (5,704 ) stock redemption for exercise of stock option - $ 139 issuance of notes payable for acquisitions $ (16,059 ) $ (3,450 ) bowman consulting group ltd. reconciliation of gaap to non-gaap financial measures (unaudited) condensed combined statement of operations reconciliation 2022 2021 2022 2021 $ 71,246 $ 39,715 $ 186,105 $ 108,041 33,984 19,498 90,439 53,840 35,043 19,925 91,125 52,735 2,219 292 4,541 1,466 595 314 2,086 706 (1,773 ) (379 ) (2,079 ) (139 ) $ 3,397 $ 357 $ 4,534 $ 899 4.8 % 0.9 % 2.4 % 0.8 % $ 64,903 $ 35,748 $ 169,019 $ 97,074 9,624 4,426 24,606 12,697 14.8 % 12.4 % 14.6 % 13.1 % gross revenue to net service billing reconciliation 2022 2021 2022 2021 $ 71,246 $ 39,715 $ 186,105 $ 108,041 6,343 3,967 17,086 10,967 $ 64,903 $ 35,748 $ 169,019 $ 97,074 adjusted ebitda reconciliation 2022 2021 2022 2021 $ 3,397 $ 357 $ 4,534 $ 899 + interest expense 538 216 1,223 650 + depreciation & amortization 3,138 1,598 8,350 4,506 + tax expense (1,773 ) (379 ) (2,079 ) (139 ) $ 5,300 $ 1,792 $ 12,028 $ 5,916 + non-cash stock compensation 4,214 2,634 11,487 5,341 + transaction related expenses - - - 1,440 + settlements and other non-core expenses - - 215 - + acquisition expenses 110 - 876 - $ 9,624 $ 4,426 $ 24,606 $ 12,697 14.8 % 12.4 % 14.6 % 13.1 % bowman consulting group ltd. gross contract revenue composition for the three months ended september 30, 2022 %gcr 2021 %gcr change % change $ 44,765 62.8 % $ 28,303 71.3 % $ 16,462 58.2 % 13,218 18.6 % 4,033 10.2 % 9,185 227.7 % 8,809 12.4 % 6,295 15.9 % 2,514 39.9 % 4,454 6.2 % 1,084 2.6 % 3,370 310.8 % $ 71,246 100.0 % $ 39,715 100.0 % $ 31,531 79.4 % $ 47,827 67.1 % $ 38,853 97.8 % $ 8,974 23.1 % 23,419 32.9 % 862 2.2 % 22,557 n/a $ 71,246 100.0 % $ 39,715 100.0 % $ 31,531 79.4 % 1 2 2022 %gcr 2021 %gcr change % change $ 126,093 67.8 % $ 74,511 69.0 % $ 51,582 69.2 % 26,464 14.2 % 12,344 11.4 % 14,120 114.4 % 24,370 13.1 % 17,524 16.2 % 6,846 39.1 % 9,178 4.9 % 3,662 3.4 % 5,516 150.6 % $ 186,105 100.0 % $ 108,041 100.0 % $ 78,064 72.3 % 2022 %gcr 2021 %gcr change % change $ 137,086 73.7 % $ 107,179 99.2 % $ 29,907 27.9 % 49,019 26.3 % 862 0.8 % 48,157 n/a $ 186,105 100.0 % $ 108,041 100.0 % $ 78,064 72.3 % 1 2 bowman consulting group ltd. backlog at september 30, 2022 (unaudited) 116,531 76,228 30,216 7,388 $ 230,363
