Bowman Consulting Group Ltd.

quarter 2025 conference call. All lines will be placed on mute for the presentation portion of the call with the opportunity for questions and answers at the end. Please note that many of the comments made today are considered forward-looking statements under federal security laws. As described in the company's filing 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, adjusted net income, and net servicing billing. You can find this information together with the reconciliation to most directly comparable GAAP information in the company's earnings press release file with the SEC on the company's investor relations website at investors.bowman.com. Management will deliver prepared remarks, as to which they will take questions from research analysts. Replacement of the call will be available on the company's investor relations website. Mr. Bowman, you may begin your prepared remarks.

Thank you, Jasmine. Good morning, everyone. Thank you for joining our third quarter earnings call. Bruce Labovitz, our CFO, is here with me this morning. I'm going to start today's call with a welcome to all new Bowman employees who joined us this quarter. After my introductory remarks, I'll turn the call over to Bruce, who will cover our financial performance. I'll then end the call with closing statements before opening it to Q&A. Let's turn to slide three. The third quarter marked an important milestone in our continued evolution. For the first time, we surpassed a $500 million annualized gross revenue pace. This is a meaningful achievement, and the fact that we are ahead of schedule on this milestone demonstrates both the strength of our business model and the capabilities of our skilled team of professionals. For the third quarter, we delivered 11% year-over-year growth in both gross and net revenue and a 7.6% growth in adjusted EBITDA while maintaining healthy cash flow generation and a solid balance sheet. Our net revenue for the quarter was $112 million and was supported by strong activity in transportation and power and utilities and energy. Together, these end markets grew over 20% during the quarter, and account for more than 40% of our top line. Importantly, our backlog grew nearly 18% year-over-year to $448 million. This sustained growth reflects continued demand across our end markets. Our book-to-bill ratio continues to be above one, a clear indicator of the momentum we are seeing as we head toward the end of 2025 and into 2026. in fact bookings in the fourth quarter are once again outpacing the prior quarter we've worked hard over the past year to regain our footing and i'm proud to report that today we're a larger more efficient more resilient organization than ever before our growing base of recurring public sector work and a solid foundation of private demand positions us well for the years ahead with that i'm going to turn the call over to bruce to review the financials in more detail bruce

Great. Thank you, Gary, and good morning, everyone. While the third quarter marked an important milestone for Bowman in terms of reaching the $500 million annualized gross revenue rate, it also represents our achievement of two basic commitments we made to our shareholders this time last year, to prioritize gap profitability and to improve our conversion of earnings to cash. This year, we've been hypervigilant about delivering on these two basic commitments, because unlike political, macroeconomic, and labor market uncertainties, These are outcomes we control. We're pleased to have delivered on these commitments. For the third quarter and the nine months ending September 30th, we dramatically increased GAAP net income to $6.6 million and $10.9 million, respectively, compared to net income of $700,000 and a loss of $2.9 million for the same period last year. Concurrently, we more than doubled our cash flow from operations to $26.5 million from $12.4 million, affirming the capital efficiency of our effort. We achieved this improved performance in part through consistent and sequential growth in build revenue throughout this year, with an 11% year-over-year increase in net revenue in the third quarter, with no erosion of our net-to-growth ratio. Organic net revenue, which excludes revenue from acquisitions closed after September 30, 2024, grew 6.6% for the third quarter, and now stands at approximately 11% through nine months. Also contributing to our improved profitability was our ability to achieve the benefits of scale with revenue growth rates that outpace overhead growth rates. To that end, as revenue grew year over year, total overhead, we define as COGS and SG&A, was down 290 basis points as a percentage of net revenue for the quarter at 89.5%, and down 500 basis points for the nine months at 89%. This disciplined approach to overhead growth will be a significant contributor to sustained positive GAAP earnings and an industry-leading margin profile. Turning to some non-GAAP metrics, adjusted EBITDA in the quarter increased by 8% to 18.3 million, representing a 16.3% margin on net revenue with adjusted EPS of 61 cents doubling Q3 2024. Through nine months, adjusted EBITDA is up nearly 25% to 53 million, at a margin of 16.6% on net revenue, a 150 basis point year-over-year expansion, with adjusted EPS of $1.26, again doubling adjusted EPS in the same period last year. Absolute growth in revenue was broad-based, with transportation up 20%, power utilities and energy up 17%, and building infrastructure up 8%. Natural resources and imaging, to which we allocated all CERDX-related manned aerial and high-resolution mapping revenue last year, saw a slight decline as we now allocate that revenue in a more deliberate manner across verticals. On an organic basis, building infrastructure grew 6%, transportation grew 10%, power and utilities grew 13%, and natural resources and imaging grew around 1%. In previous quarterly calls, we've been asked about the relative gross margins of our primary verticals. We've suggested we believe they are relatively equal apart from transportation, which has a lower contribution margin based on the nature of its primarily cost plus contracts. To corroborate this assertion, we calculated the gross margin of East Vertical for the third quarter during which gross margin was 53% and concluded that our representation was accurate. During the quarter, gross margins by vertical were 56% for both building infrastructure and power and utilities, 57% for natural resources and imaging, and 46% for transportation. With building infrastructure, gross margin is benefited by more fixed fee contracting. With natural resources and imaging, gross margin is advantaged from a disproportionate use of labor leveraging technology. With transportation, We enjoy meaningfully longer and larger government contracts that have lower labor multipliers, but generally generate higher utilizations and overhead leverage, along with lower turnover costs. We will include this gross margin analysis in our quarterly presentations going forward. We ended the quarter with a record $448 million backlog, up 18% year over year, with 38% of that backlog from building infrastructure, 30% for transportation, 23% from power and utilities, and 9% from natural resources and imaging. This imbalance relative to revenue should indicate continuing diversification of our revenue mix, but it's likely not as dramatic as the percentages in backlog today reflect. Operating cash flow totaled $10.2 million for the quarter and sits at $26.5 million year to date, both more than twice last year's levels. While we are pleased with this significant increase in conversion, we're confident there is room for continuing improvement. Our balance sheet remains a strength and provides a solid foundation for growth. We ended the quarter with $16 million in cash and $57 million drawn on our revolver, a net debt of approximately $105 million with a net leverage ratio of 1.5 times trailing 12 months adjusted EBITDA. After quarter end, we expanded our revolver to $210 million from $140 million adding PNC Bank to the existing Bank of America and TD Bank Syndicate. As a result, we have roughly $150 million in available liquidity for investment and growth initiatives. Our internal innovation incubator, the Big Fund, continues to produce high-value ideas and opportunities that present the prospect of tangible returns for us long term. We're actively engaged in advancing concepts that, Accelerate revenue growth through the deployment of proprietary AI-enabled asset control kits, which extend engagement with clients throughout the asset lifecycle. With concepts that expand the application of the proprietary technology tools we acquired in the recent ORCIS acquisition, which drastically reduce the time it takes to perform repetitive feasibility and planning functions, thereby unlocking additional labor utilization. Also concepts that connect all Bowman operating systems and platforms with AI-enabled capabilities which empower employees to ask Bowman plain English questions, the timely informed answers to which improved business acquisition efforts and streamline proposal generation, estimation, and profitable project execution. Lastly, we're working on ideas that modify, extend, and evolve the inherent capabilities and uses of our high-end geospatial assets to expand their applications, improve the quality of capture, extend revenue opportunities, shorten delivery times, and increase return on investment. All investments in innovation are measured against defined return thresholds, ensuring innovation spending meets the same rigorous financial discipline as acquisitions. To date, we've expended a little bit over $300,000 on advancing these ideas, the cost of which are not added back to adjusted EBITDA, and the benefits of which are not yet contemplated in our current projections. And while not a big fund project, we also completed the upgrade of our accounting and enterprise management platform this quarter, an effort that consumed a meaningful amount of time and energy, but will be a solid foundation for our next phase of growth. These costs were likewise not added back to adjusted EBITDA. It wouldn't be an earnings call if I didn't reference tax, so here goes. Following enactment of OB3, we filed message change notifications with the IRS that allowed us to unwind our uncertain tax position with retroactive audit protection. The change in law and associated adoption by Bowman of the new standards released approximately $52 million of deferred tax assets and other non-current liabilities on our balance sheet and released $3.5 million in P&I accruals, which had previously run through the tax expense. In addition to committing to GAAP profitability and cash flow conversion, we also committed to the reduction of non-cash stock compensation as a percentage of revenue. For the first nine months of 2025, stock-based compensation totaled $14.2 million, or 4.4% of net service billing, down from 7.3% a year earlier. Excluding about $1 million of pre-IPO related issuances, adjusted stock-based compensation was approximately 4.1% of net revenue. As we've discussed in the past, these pre-IPO grant expenses represent the run out of gap costs related to awards issued prior to our IPO in 2021, and are not part of normalized long-term incentive costs. We expect total non-cash stock compensation for 2025 and 26 to be roughly $19 and $20.5 million respectively, which is consistent with our pledge to reduce equity compensation as a percentage of revenue while balancing its benefits for recruiting, retention, and efficient capital allocation. Thank you for your continued confidence and with that, I'll turn the call back over to Gary.