Bowman Consulting Group Ltd. Q1 FY2025 earnings call

Key Points

• Welcomed Virginia Grebbien to the Board of Directors. She has extensive experience in the public and private water sectors.
• Strong first quarter with best-ever bookings, gross revenue, net service billing, and cash conversion. Net service billing grew by almost 17% to surpass $100 million.
• Financial performance: Gross revenue up 19% to $112.9 million, net service billing up 17% to $100.1 million. Gross margin increased to 51.4%. SG&A expenses down as a percentage of revenue. Adjusted EBITDA was $14.5 million, up 19.6% from last year.
• Backlog at $419 million, a ~$90 million increase from last year, with a book-to-build ratio well over 1.
• Capital allocation strategy focuses on internal initiatives, acquisitions, and share repurchases. Repurchased $6.7 million of common stock during the quarter, with additional $5.3 million since then. Balance sheet under leveraged with $97 million net debt.
• Committed to innovation in operations, including investment in technology, automation, etc.

Gross revenue in the quarter diversified across segments. Transportation grew 30% accounting for approximately 21% of revenue (up from 19% last year). Power and utilities grew 16% accounting for 19% of revenue (down ~0.5 from last year). Building infrastructure grew 6% accounting for roughly 49% of revenue (down from 56% last year). Emerging markets grew 118% accounting for 11% of revenue (up from 6% last year). Organic net revenue growth in the quarter was approximately 6%, with transportation leading at ~15%, followed by emerging markets at 10%, power and utilities at 6%, and building infrastructure at 2%.

Guidance

• Reaffirmed full-year guidance: Net revenues in the range of $428 million to $440 million with adjusted EBITDA between $70 million and $76 million.
• Expect similar growth pattern to last year, with momentum building through the second and third quarters.

Risks

• Some customers operate in tariff-sensitive sectors, with downstream impacts on project timing decisions, but exposure is minimal and manageable.
• Macroeconomic uncertainty, but new orders and customer base lead to reaffirmation of guidance.

Q: Aaron Spychalla asked about transportation timing, IIJA budget, power segment drivers, and M&A update.

A: Gary Bowman and Bruce Labovitz responded, noting strong outlook for transportation with large orders in pipeline, IIJA funds continuing to flow, drivers in power segment including data centers and grid expansion, and M&A market being competitive with solid pipeline.

Q: Liam Burke inquired about macro, capacity, and technology investment.

A: Gary Bowman and Bruce Labovitz replied, stating strong new bookings across verticals, solid workforce to handle revenue growth, and planned higher CapEx investment in technology for margin and productivity improvement.

Q: Jeff Martin asked about staffing, CapEx, and building infrastructure trends.

A: Bruce Labovitz and Gary Bowman answered, mentioning solid workforce to execute on backlog, planned higher CapEx in technology, and building infrastructure showing strength in residential and commercial with robust activity.

Q: Brent Thielman questioned backlog conversion, M&A pipeline, and AI impact.

A: Bruce Labovitz and Gary Bowman responded, stating backlog conversion generally around 70%-80% within 12 months, M&A pipeline dialogue unchanged despite economic noise, and AI being integrated cautiously with no major impact on business yet