Bowman Consulting Group (NASDAQ:BWMN) released first-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.
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View the webcast at https://edge.media-server.com/mmc/p/pnbq3ai5/
Summary
Bowman Consulting Group reported double-digit growth in gross contract revenue, net service billing, and adjusted EBITDA for Q1 2026, with a record backlog of over $650 million.
The company raised its full-year 2026 guidance, expecting over 20% revenue growth and adjusted EBITDA margin between 17.25% and 17.75%.
Significant growth was seen in the power sector with 37% revenue increase year-over-year, and transportation at 13%.
The company made a strategic acquisition of Smith and Associates in Las Vegas to enhance capabilities and presence, especially for a significant client.
There is a strong focus on technological initiatives, including AI and automation, to enhance client engagement and operational efficiency.
Bowman Consulting Group secured a large government contract, contributing to growing backlog and expected to have a significant impact in the second half of the year.
Management expressed confidence in achieving significant organic growth and maintaining a high book-to-burn ratio for sustained revenue.
Full Transcript
OPERATOR
Good morning, My name is Rivka and I will be the conference operator today. At this time I would like to welcome everyone to the Bowman Consulting Group first quarter 2026 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 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 those 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 service billing. You can find this information together with the reconciliations to the most directly comparable GAAP information in the Company’s earnings press release filed with the SEC and on the Company’s investor relations website at investors.bowman.com Management will deliver prepared remarks, after which they will take questions from research analysts. A replay of this call will be available on the Company’s Investor Relations website. Mr. Bowman, you may begin your prepared remarks.
Mr. Bowman
Great. Thank you Rivka Good morning everyone and thank you for joining our first quarter 2026 earnings call. Bruce Leibovitz, our CFO, and Dan Swayze, our Chief Operating Officer are with me today. First, I’d like to welcome all Bowman employees on today’s call, including those from Smith and Associates Land surveying in Las Vegas who are the newest members of the Bowman team. After my introductory remarks, I’ll turn the call over to Bruce who will cover our financial performance and technology initiatives. Dan will provide more detail on the opportunities we’re seeing across our end markets. Now turning to the first quarter from a performance standpoint, we delivered double digit growth in gross contract revenue, net service billings and adjusted EBITDA. Our backlog reached a record level of over $650 million. These results were driven by both organic execution and continued contribution from our acquisition strategy. We saw growth across our diversified end markets. Demand remains robust and we continue to benefit from markets where we have deep expertise, strong client relationships and increasingly integrated service delivery. Our capabilities are increasingly important in high barrier, high demand sectors where our expertise, national scale and ability to self-perform work position us to win and execute consistently. All this reinforces what we’re seeing in the business strong demand, durable revenue streams and increasing opportunities to expand both organically and through targeted acquisitions. Based on our performance and outlook, we raised our full year 2026 guidance and now expect over 20% revenue growth for the year. For 2026 we expect net revenue to be in the range of 520 to 540 million dollars and we expect to report adjusted EBITDA margin between 17.25% and 17 and 3/4%. So with that I turn the call over to Bruce.
Bruce Leibovitz (Chief Financial Officer)
Thanks Gary and good morning everyone. I’ll begin with a review of our financial performance for the first quarter and then I’ll turn the call over to Dan to bridge Q1 to year end. After that I’ll return to share some thoughts on how we’re thinking about technology and automation and begin to draw a line towards its impact on the future of Bowman the first quarter culminating with a record March that capped off a solid start to 2026. Our results reflect the durability of our end markets, the scalability, of our operating platform and disciplined execution of our long term strategic plan. Gross contract revenue of 126.5 million represented a 12% increase over Q1 last year at a 90% net to gross ratio. Net service billing was 114.2 million, up 14% year over year. The increase was anchored by 6% organic growth enhanced by strong performance from recent acquisitions. Looking ahead, we expect to see our net to gross ratio come down by about three to five points based on new awards and new service lines with higher sub-cost ratios. Power was our fastest growing sector with 37% growth of gross revenue year over year. Transportation followed at 13% with natural resources at 6% and building infrastructure at 1%. Dan will talk more about where growth is coming from. Growth of organic net Service billing was 6% year over year with the highest organic growth rate coming from natural resources at 16%, followed by transportation at 13%, power at 5% and building infrastructure at 2%. I will point out that there is a significant amount of organic growth embedded in power and utilities revenue characterized as inorganic. For now, our mix of gross revenue continues to evolve with power up to 28% and building infrastructure down to 41% in just one year. Data center activities have more than doubled to just over 6% of revenue over the course of the next several quarters. We do expect to see a noticeable shift in mix as natural resources will expand by virtue of a significant new award being classified in that category. Contract costs represented approximately 48% of gross contract revenue at a 52% gross margin. When we combine a bit of a slow start in January and February with mobilization expenses for assignments that began in Q2 total overhead as a percentage of revenue was up around 0.5% compared to last year. I’ll also point out that 2026 is the year we exit emerging growth company status, which generates some incremental costs this year that will normalize next year with accelerating revenue and relatively stable overhead. However, we expect to see total overhead once again trend down as a percentage of revenue moving forward. For the quarter, we reported a GAAP loss of $3.7 million. Unlike adjusted EBITDA, that result includes non cash amortization of acquired intangibles, acquisition related expenses, financing costs and other non reoccurring items, including those associated with the CEO transition. Adjusted EBITDA amounted to $16.8 million, up nearly 16% at a margin that expanded year over year to 14.7%. We generated $11.6 million of cash from operations in the quarter, representing approximately 70% conversion of adjusted EBITDA to cash. It’s nice to finally report a quarter with no deferred R&D tax adjustments on the cash flow. During the quarter, we used cash to repurchase approximately $9.2 million of our stock and advance future organic growth initiatives through investments in data capture, automation and internal use software, among others. Big fund spending on geospatial and data collection assets associated with specific new future revenue opportunities represented about half of our CapEx in the quarter, along with another million or so of OPEX spending which is not added back to adjusted EBITDA. To accommodate anticipated increases in capital expenditures this year, we expanded our revolving credit facility to $250 million, which provides sufficient liquidity to support continued investment in organic growth and acquisitions. Backlog increased to approximately $653 million, up 56% year over year and 36% sequentially from year end. Backlog growth in the quarter was entirely organic, net of one unusually large organically generated contract award backlog grew at a 20% annualized pace. As Gary mentioned, we’re raising our 2026 net revenue guidance to a range of 520 to 540 million and increasing our margin forecast. The guidance increase implies more than 20% growth of organic net revenue this year and nearly 28% year over year growth of adjusted EBITDA at the midpoints in terms of revenue cadence, we expect the remaining 3/4 will build on each other as some consequential assignments ramp up through the second half, with third quarter being at or near the midpoint of the second and fourth quarters. It’s notable that this is a bit of a change from prior years with that I’m going to turn the call over to Dan.
Dan Swayze (Chief Operating Officer)
Thank you Bruce. Today I’m going to spend a few minutes bridging the revenue gap from Q1 to our full year forecast. Backlog is a foundation of any revenue bridging exercise and we have discussed in prior calls, somewhere between 70 and 80% of our backlog typically converts to revenue within a 12 month period with timing influenced by contract structure, phasing and notice to proceed for the remainder of the year. Approximately 60% of our expected revenue is supported by existing backlog with a balance driven by sell and deliver activity. As we move through the year, the mix naturally shifts more heavily towards backlog conversion. Looking at Q2 through Q4, approximately $250 million of our remaining revenue supported by backlog, leaving the remaining 40% or roughly 170 million to be delivered through new bookings within the year. When accounting for normal conversion timing between bookings and revenue, that translates to just under 0.7 times book to burn ratio to achieve our full year guidance. This remains at a manageable level, giving our ability to deliver book to burn above one times on a consistent basis. The priority is ensuring our resources and capacity are aligned at the right time to deliver high quality on schedule outcomes for our customers, something we actively plan for and manage every day. Let me cover where I believe our greatest opportunities are for new bookings. Transportation is in a strong position to continue delivering results. Required book to burn is lower than average based on substantial existing backlog coverage for this year’s forecast. With many long term and reoccurring revenue assignments across infrastructure design, construction, engineering, corridor management and inspection services, we are well positioned to deliver power and energy longer than desired. Timelines to secure power from …
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