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Bowman Consulting Group Ltd. (BWMN)·Q2 2025 Earnings Summary

Executive Summary

  • Record Q2: revenue $122.1M (+16.8% YoY) and net service billing $108.0M (+14.9% YoY); Adjusted EBITDA $20.2M with record 18.7% margin; GAAP diluted EPS $0.34; Adjusted diluted EPS $0.55 .
  • Wall Street beat: revenue $122.1M vs $120.0M consensus*; Primary/adjusted EPS $0.55 vs $0.058 consensus*; EBITDA near inline/slight miss at $16.2M vs $16.9M* (company emphasized Adjusted EBITDA $20.2M) .
  • Guidance raised: FY25 net revenue to $430–$442M (from $428–$440M) and Adjusted EBITDA to $71–$77M (from $70–$76M) .
  • Backlog/catalysts: gross backlog $438.2M (+24.7% YoY); strong bookings, “book-to-bill well over one,” with Q3 bookings pacing ahead; data center demand and transportation tailwinds highlighted; BIG Fund ($25M) to drive efficiency and recurring revenues .
  • Capital allocation: $6.7M buybacks at $22.19/share; new $25M repurchase program authorized June 2025; leverage 1.6x TTM Adjusted EBITDA and $80M revolver availability; cash $15.5M .

What Went Well and What Went Wrong

  • What Went Well

    • Margin inflection and operating leverage: “$8M sequential increase in net revenue achieved with essentially flat total overhead,” validating scale effect; non‑cash stock comp down sequentially (to ~$3.1M) helping margins .
    • Bookings and backlog strength: “Record bookings… well balanced across our markets… book‑to‑bill well over one,” with Q3 bookings outpacing Q2; backlog $438.2M (+24.7% YoY) .
    • Strategic positioning in data centers: reclassified into Power & Utilities; e3i acquisition extends “inside the walls” capabilities (substations, chiller systems, power distribution, thermal strategies), enabling larger scopes and higher-margin, longer duration work .

  • What Went Wrong

    • Cash conversion seasonality: Q2 operating cash flow $4.3M (vs $12.0M in Q1) due to bonus payments and back‑loaded growth driving receivables; management expects full‑year conversion to mid‑high 60s% of Adjusted EBITDA .
    • Labor inflation: CFO expects some second‑half wage pressure to dilute peak quarterly margin, though still projecting higher H2 margins vs H1 and aiming to exceed the FY guide if Q2 levels persist .
    • Mix and overhead sensitivities: Gross margin can fluctuate with utilization; management focused on labor pyramid and integration to maintain leverage; Building Infrastructure organic growth slower (+3.8% net) than Transportation (+20.7%) .

Financial Results

Headline metrics by quarter

MetricQ4 2024Q1 2025Q2 2025
Gross Contract Revenue ($USD Millions)113.2 112.9 122.1
Net Service Billing ($USD Millions)98.6 100.1 108.0
GAAP Diluted EPS ($)0.33 (0.11) 0.34
Adjusted Diluted EPS ($)0.71 0.07 0.55
Adjusted EBITDA ($USD Millions)17.0 14.5 20.2
Adjusted EBITDA Margin, net (%)17.2% 14.5% 18.7%
Cash from Operations ($USD Millions)11.9 12.0 4.3

Consensus vs actual (S&P Global consensus; “Primary EPS” aligns with adjusted EPS)

MetricQ4 2024Q1 2025Q2 2025
Revenue Consensus Mean ($USD Millions)*110.4111.3120.0
Primary EPS Consensus Mean ($)*0.056(0.09)0.058
Revenue Actual ($USD Millions)113.2 112.9 122.1
Adjusted Diluted EPS Actual ($)0.71 0.07 0.55

Segment (vertical) gross revenue mix

VerticalQ2 2024 ($M / %)Q2 2025 ($M / %)YoY %
Building Infrastructure$52.4 / 50.2% $56.6 / 46.3% 7.9%
Transportation$19.2 / 18.4% $24.6 / 20.2% 28.0%
Power & Utilities$22.9 / 21.9% $26.8 / 22.0% 17.1%
Natural Resources & Imaging$9.9 / 9.5% $14.1 / 11.5% 42.0%
Total$104.5 / 100% $122.1 / 100% 16.8%

Select KPIs

KPIQ4 2024Q1 2025Q2 2025
Gross Backlog ($USD Millions)399.0 418.8 438.2
Organic Net Service Billing Growth (YoY)9% 6% 8.4%
Non‑cash Stock Comp ($USD Millions, quarter)5.46 6.63 3.09
Backlog Mix (BI / Transp / P&U / NRI)41% / 35% / 15% / 9% 39% / 33% / 20% / 8% 40% / 31% / 21% / 8%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueFY 2025$428–$440M $430–$442M Raised
Adjusted EBITDAFY 2025$70–$76M $71–$77M Raised

Notes: Management reiterates guidance excludes future, not-yet-closed M&A .

Earnings Call Themes & Trends

TopicQ4 2024 (prior two quarters context)Q1 2025 (prior quarter)Q2 2025 (current)Trend
AI/Tech & InnovationIntends to invest in “service line expansions and technology tools” in 2025 .Capital allocation includes “strategic investment in innovation” .Launched $25M BIG Fund to back AI, GIS, 3D modeling; pursue recurring revenues and efficiency gains .Accelerating, formalized initiative
Data centersCategory still within Building Infrastructure; strong bookings late 2024 .No specific DC shift disclosed.Reclassified into Power & Utilities; e3i acquisition extends inside‑facility engineering; power availability is key constraint .Expanding scope and wallet share
TransportationStrong growth in late 2024 .Robust orders; net service billing up; backlog mix 33% .Strongest organic growth (+21% net); increasing larger project bids/wins .Structural tailwind
Macro/PolicyMinimal adverse impact from shifting gov’t priorities in 2024 .“Relatively insulated” from macro uncertainties .“One Big Beautiful bill” benefits via bonus depreciation and R&D expensing; anticipate pull‑forward renewables permitting .Incremental policy tailwind
Margin/Cost17.2% Adj. EBITDA margin in Q4 .14.5% Adj. EBITDA margin; still improving YTD .18.7% record; labor efficiency, flat overhead drive scale effect; expect some labor inflation but higher H2 margins vs H1 .Positive operating leverage

Management Commentary

  • CEO (release): “The second quarter marked another period of outpaced growth… New orders were especially strong in transportation, renewables, and energy transmission… Our record Adjusted EBITDA margin and backlog reflect… confidence of our clients” .
  • CFO (call): “$8M sequential increase in net revenue was achieved with essentially a flat total overhead… the scale effect where revenue is growing faster than overhead” .
  • CEO (call): On data centers, “Power has displaced latency as the primary problem to solve… we’ve moved data centers out of building infrastructure and into our power market sector… E3i… positions us to compete for broader scopes of work” .
  • CFO (call): BIG Fund targets “geolocation/GIS… 3D modeling… AI tools” with internal pilots to increase recurring revenue and break down proposal friction .

Q&A Highlights

  • Transportation outlook: Robust public spending and synergy from acquisitions; strength across construction management, bridge renewal, highway design .
  • Power & Utilities / Transmission: Geospatial wins and aerial capabilities supporting large transmission projects; increasing contribution expected .
  • Margins and second-half outlook: Some labor inflation expected; aiming for H2 collective margins above H1; repeating Q2 margins would exceed FY guide .
  • BIG Fund deployment: Opportunistic, with pilots in ports/harbors, water resources, civil production; expects deployment through 2025–2026 with returns starting to show .
  • M&A cadence and stock comp: Near-term ebb allowed focus on organic efficiencies; strategy shifts to fewer/larger deals; stock comp structure adjusted to reduce dilution while maintaining ownership culture .

Estimates Context

  • Q2 2025 vs consensus: Revenue $122.1M vs $120.0M*, a ~1.8% beat; Primary/adjusted EPS $0.55 vs $0.058*, a large beat; EBITDA $16.2M (GAAP) vs $16.9M*, slight miss while Adjusted EBITDA was $20.2M .
  • Trend vs prior quarters: Q1 revenue $112.9M vs $111.3M* and Primary EPS $0.07 vs $(0.09)* (beat); Q4 2024 revenue $113.2M vs $110.4M* and Primary EPS $0.71 vs $0.056* (beat) .
  • Implications: Strong adjusted EPS outperformance and raised FY guide may prompt upward estimate revisions for margins and EPS; EBITDA estimate frameworks should clarify GAAP vs Adjusted EBITDA given company’s use of Adjusted EBITDA for guidance .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Margin inflection is real: Record 18.7% Adjusted EBITDA margin driven by labor efficiency and flat overhead; management signals H2 collective margins above H1 .
  • Demand durable across verticals: Transportation and power/transmission driving double‑digit growth; backlog at $438M and growing supports visibility into H2 and 2026 .
  • Data center pivot expands TAM: Reclassification plus e3i acquisition positions Bowman to capture higher‑value, end‑to‑end scopes as power becomes core bottleneck; expect mix shift into Power & Utilities .
  • Innovation as a lever: $25M BIG Fund focuses on AI/GIS/3D to boost utilization, margin, and recurring revenue models—potential multiple expansion driver if execution delivers .
  • Capital allocation remains balanced: Opportunistic buybacks, under‑levered balance sheet (1.6x) and ample liquidity ($80M revolver available) support organic and inorganic growth without immediate equity needs .
  • Estimate setup: Repeat of Q2 margin profile could drive further beats vs EPS consensus; clarify EBITDA basis (GAAP vs adjusted) when benchmarking to street models .
  • Policy tailwinds: Bonus depreciation and R&D expensing under the recent tax bill support cash EPS and renewables permitting activity into 18 months .