Bowman Consulting Group Ltd.

Good morning. My name is Lydia and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Blomen Consulting Group second quarter 2022 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would want to withdraw your question, please press star followed by two. 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. In addition, on today's call, the company will discuss certain non-GAAP financial information, such as adjusted EBITDA and net service billing. You can find this information together with the reconciliations to the most directly comparable GAAP information, the company's earnings press release and 8K filed with the SEC and on the company's investor website at investors.bowman.com. Management will deliver prepared remarks after which they will be taking live questions from public research analysts. Throughout the call, attendees on the webcast may post questions for management to answer on the call or in subsequent communications. but there will be no live Q&A from the webcast attendees. Replays of the call will be available on the company's investor website. Mr. Bowman, you may begin your prepared remarks.

Thank you, Lydia. Welcome, everyone, to the Bowman Consulting Group second quarter 2022 earnings call. I'm Gary Bowman, the chairman and CEO of Bowman, joined this morning by Bruce Leibovitz, our chief financial officer. Before we get started, I'd like to extend a welcome to everyone from PDC and Faber Engineering, our two most recent acquisitions. The talented professionals joining us from Southern California and Florida Panhandle expand our reach, add to our client network, and add to our depth of talent. We're excited to have these transactions complete, and we've already realized some significant cross-selling successes with both of these firms. In addition, I'd like to thank all the members of the Bowman team who are tirelessly delivering the exceptional growth that we've been experiencing. Our people focus their efforts on delivering value to our clients and supporting each other by sharing work and cross-selling and by creating an inclusive culture that we're all proud of. As outlined in our press release last night, the second quarter of 2022 picked up where the first quarter left off with continuous strong growth and record results. Our net revenue in the quarter puts us on a pace of over $200 million a year for the first time. We continue to deliver on our strategy of driving both organic and acquisitive growth with an organic net revenue growth rate of roughly 30% year over year. Looking to the second half of the year, we're confident in the likelihood of continued growth, even in light of potentially challenging economic conditions. The mix of our business, we believe, insulates us from any meaningful impacts from rising interest rates and volatile energy prices. As such, and in connection with our ongoing acquisition program, we are raising our guidance for the full year. Now I'm going to turn the call over to Bruce, who will discuss our financial results in detail, and then I'll return to talk a little bit about our markets and our M&A program. Bruce, go ahead.

Great. Thank you, Gary. Welcome, everybody. We're pleased to be here today talking about another record quarter. It's hard to believe that we're finally at a point where we are now comparing two quarters, both of which were where we operated as a public company. Gross revenue for the second quarter increased 25.9 million to 62.4 million, or 71%. Year-over-year organic gross revenue was 27%. Net revenue for the quarter increased 23.9 million to 56.4 million, or 74%. Year-over-year organic growth for net revenue was 32%. It's important to note that this is true organic growth in the volume of work billed, not simply the impact of increased pricing. We saw growth in orders and net revenue across all our markets, resulting from the implementation of our growth plan, which focuses on cross-selling to existing customers throughout our national offices, creating revenue synergies from acquisitions, and focusing our efforts on increasing our work with existing clients and winning new assignments. Adjusted EBITDA for the second quarter increased 3.4 million, or 81%, to $7.6 million as compared to the year-ago period. This represents an adjusted EBITDA margin net of 13.4%. which is up 50 basis points as compared to last year. You can find the reconciliation for non-GAAP metrics in our press release. Gross revenue for the six months ended June 30th increased 46.6 million to 114.9 million, or 68%. Year-over-year organic growth of gross revenue was 31%. Net revenue for the six months ended June 30th increased $42.8 million to $104.1 million or 70%. Year-over-year organic growth for net revenue was 34%. In our business, it is a positive when the growth of net revenue outpaces the growth of gross revenue. Adjusted EBITDA for the six months ended June 30th increased $6.7 million or 81% to $15 million. This represents an adjusted EBITDA margin net of 14.4%, which is up 90 basis points compared to last year. Gross margin for the second quarter was 50%, virtually identical to the same period last year. Overhead for the quarter was 45% of gross revenue as compared to 47% in the prior year, which is a positive trend that illustrates our operating leverage through the efficiency of scale. Gross revenue for the second quarter was comprised of roughly 68% building infrastructure, 15% transportation, 13% power and utilities, and 4% what we refer to as other emerging markets, which includes water resources, mining, and other energy transition services. Diving a bit deeper into the building infrastructure market, we note that roughly 44% of the 68% of gross revenue that was building infrastructure was residential in nature, including for sale housing, multifamily housing, and mixed use developments. Of that 44% that was residential in nature, 49% related to for sale home building activities. As such, for residential services, for sale residential services represented approximately 15% of total gross revenue for the quarter. Gross revenue for the six months ended June 30th, comprised of roughly 71% building infrastructure 12% transportation, 13% power and utilities, and 4% other emerging markets. Again, diving a bit deeper into the building infrastructure market for the six months, we note that likewise, roughly 44% of the 71% of gross revenue that was building infrastructure was residential in nature, of which 49% was related to for sale home building activities. As such, again, for sale residential services represented approximately 15% of total gross revenue for the six months. We think it's important to highlight this because there seems to be a sense in the marketplace that we are highly dependent on for sale residential home building type activities and that a downturn in that market could have a substantial drag on our future results. While it is a meaningful component of our overall business, it is not overweighted in its potential impacts to our future results. Our balance sheet remains strong with net debt of approximately 6M dollars and a net leverage ratio. Well, before well, below 1. Our capex remained consistent at roughly 3.7% of gross revenue for the 6 months with our capex spending funded through our capital lease facilities. All of which have plenty of available capacity remaining. Inclusive of a nearly $10 million change in networking capital adjustment, principally comprised of increased accounts receivable as a result of rapid organic growth, we generated in excess of $4 million of cash from operating activities during the six-month end of June 30th. We ended the quarter with nearly $26 million in cash and our full $25 million of availability under our revolving credit facility. We recently received preliminary approval from B of A to increase the credit facility to $50 million and have received expressions of interest from other sources of non-bank debt capital to provide unsecured debt facilities as needed. At this time, we're confident that we have sufficient access to capital to continue executing on our strategic growth plans well into next year without raising any additional equity capital. That does not mean we will not continue to use our equity as a component of consideration in acquisitions. But to be clear, at this point in time, we do not anticipate a public market equity raise in the foreseeable future. With respect to equity, on June 30, 2022, we had roughly 13,264,000 shares outstanding. There have been no meaningful additional equity issuances since the end of the quarter. In July, in connection with the PDC acquisition, We issued a convertible note with up to 285,000 unregistered shares subject to conversion at $14 per share over two years. Upon conversion, the shares would have a six-month holding period. None have been converted as of today. Our backlog on June 30th was 205.6 million. This is an increase of 38.6 million, or 23%, as compared to December 31st, 2021, and an increase of $82 million or 66% as compared to June 30, 2021. Backlog is comprised of roughly 53% building infrastructure, 30% transportation, 15% power and utilities, and 2% other emerging markets. Consistent with gross revenue, approximately 13% of our June 30 gross backlog relates to for sale residential housing. As Gary mentioned, We're increasing our fiscal year 2022 guidance for net service billing to a range of 202 to 220 million with adjusted EBITDA in a range of 29 to 33 million. This increase from previously issued guidance of 185 to 200 and 25 to 29 is the result of both recent acquisitions and expected continuation of organic growth. Keep in mind, Our guidance only includes acquisitions that have been completed as of the day the guidance is issued. Future acquisitions could have an accretive impact to our forecast. The integration of our acquisitions into our systems is an ongoing process, which generally takes between three and six months to complete for each acquisition. Our dedicated integration team and our corporate accounting group are doing a great job bringing all of these different systems, processes, cultures, and organizations together into one unified platform. I want to say a particular thank you to those folks for all their hard work. I'll now turn the call back over to Gary.