BWMN earnings call analysis

NASDAQ:BWMN Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Becky | Conference Operator: Good morning, my name is Becky and I will be the conference operator today. At this time I would like to welcome everyone to the Bowman Consulting Group fourth quarter and fiscal year 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 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, 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 earning 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 now begin your prepared remarks. Gary Bowman | Founder & CEO: Okay, thanks, Becky. Good morning, everyone, and thanks for joining our year-end earnings call. Bruce Labovitz, our CFO, is with me this morning, along with Dan Swayze, our Chief Operating Officer. First, I'd like to welcome all new Bowman employees who joined us this quarter, including those from RPT Alliance who joined in December. After my introductory remarks, I'll turn the call over to Bruce, who will cover our financial performance and technology initiatives. And then Dan will discuss operational successes, including where we're winning and why. I'll end the call with some closing statements before opening it to Q&A. Going forward, we plan to periodically introduce members of our leadership team to provide deeper insight into specific aspects of our business. Let's start with fourth quarter and full year results. You know, it's hard to believe that 2025 was our fourth full year as a public company and the final year of our emerging growth company status. I'm pleased to report that we delivered another record year as we advanced our efforts to become an ENR top 50 firm. We achieved our goals of generating double digit in gross revenue, double digit growth in gross revenue, organic net revenue, and adjusted EBITDA. In addition, we increased our capture rate for public contracts with growth of approximately 28%. We entered 2026 with a record backlog of over $479 million, of which 20% improvement over the prior year. We strengthened our position in our existing markets through acquisitions, ACWA hires, and organic workforce expansion. Our increasing breadth of services, growing scale, and redoubled commitment to relationship building produced new order growth for the year that was particularly strong in power utilities, transportation, and natural resources. all of which are markets where we are seeing increased durable long-term demand. Our book-to-burn ratio continues to be over one times a level which I'm proud to say we have achieved consistently since our public debut in 2021. The first quarter of 2026 is so far no exception, with sales this quarter outpacing the fourth quarter. With the successful acquisition and integration of several consequential acquisitions during the year, and these results as a springboard, I'm confident we're positioned for another breakout year in 2026. With that, I'll turn the call over to Bruce to review our financial performance in greater detail. Bruce? Bruce Labovitz | Chief Financial Officer: Great. Thanks, Gary. I'm going to start with a little off-script nod to Gary in light of his recent announcement. When I came to Bowman in 2013, we were a $50 million company with around 450 employees. Gary's vision of achievement at the time was a diversified $100 million revenue company where people could thrive and grow. For the past 13 years, he's been deliberate in his leadership with a conviction about growth and a steadfast commitment to our culture. So with $490 million in revenue to end the company's 30th anniversary year and 2,500 committed professionals living our values every day, I think it's fair to say Gary's qualified for membership in the Overachievers Club. On behalf of everyone at Bowman, I want to publicly thank you for all you've done. Gary Bowman | Founder & CEO: That's nice, Bruce. Thank you. Bruce Labovitz | Chief Financial Officer: Okay. Turning to the fourth quarter and full year 2025. I'm pleased to be here today discussing another breakout year for Bowman. With quarterly gross revenue of $129 million, we've now had two consecutive quarters at a revenue run rate of greater than $500 million. Net service billing, which we use interchangeably with net revenue, was $114.6 million in the quarter, up 16.2% compared to last year. At an 89% net-to-growth ratio, up 200 basis points over last year, growth was disproportionately achieved through net revenue. For the full year, growth and net revenue were up 14.9 and 14.5% to $490 million and $434.8 million, while maintaining a net-to-growth ratio of 89%. We again generated double-digit growth of organic net revenue at 12.4%. Gross margin for the quarter was 55%, up 190 basis points from last year, and 53.4% for the full year, up 120 basis points over last year. SG&A for the full year was down 250 basis points compared to the prior year. Combined overhead for the year, in other words, the combination of all labor, both direct and indirect with SG&A, was down 400 basis points compared to the prior year. We believe this reflects an evolving mix of business and the scaling strategy we've been working towards for several years. Pre-tax net income for the year was 11.2 million as compared to a loss of 8.9 million in the prior year. Net income was 12.8 million for the full year as compared to $3 million for the prior year. With issues related to research and experimentation capitalization resolved, Tax benefits had a lesser impact on our fourth quarter and the full year results. Moving forward, taxes projected to have a more normalized impact on our statements, including simplifying the calculation of changes in working capital on our operating cash flows, no longer splitting the effect above and within the working capital. With Section 174 capitalization no longer an issue, it's key to note that we do still benefit from other permanent research and development credits that reduce our effective tax rate and never expire. We believe the turnaround in pre-tax GAAP profitability this year is a result of the improved labor utilization, scale, and full integration strategy we've been executing to achieve efficiency and operations. We're pleased to see meaningful increase in EPS, both GAAP based and adjusted. On a GAAP basis, our basic and diluted EPS of 74 cents and 73 cents were up 300% year over year. On an adjusted basis, Our basic and diluted EPS of $1.72 and $1.68 were up nearly 40% for the prior year. Holding our share count through buybacks also helped. With absolute growth in all market verticals this year, we continue to advance our objective of increased revenue diversification. Revenue distribution continued to shift positively in 2025, with transportation at 21.2, power and utility at 22.4%, natural resources 11.5 percent, and building infrastructure down to 44.9. We expect this trend and trajectory to continue in 2026. Our geospatial operations continue to be increasingly consequential and represented approximately 26 percent of 2025's gross revenue as a service that was spread across all markets. In the aggregate, around 30 percent of total gross revenue was derived from government or public funded work assignments, an area where we expect to continue to grow over the short and long term. Organic net revenue growth was 11% in the fourth quarter and 12.4% for the full year, excluding up E3I, SOA liaison, and RPT. Broken down by vertical for the quarter and for the full year, natural resources led the way with 29% and 27% growth. Power and utilities delivered 11% and 13% growth. Transportation grew 6% and 22%. and building infrastructure was up 9 and 6%. The organic growth rate in transportation in the fourth quarter was a function of delayed contracting and notices to proceed in Q3 of 2024. While we caught up in Q4 of 2024, the delay created a skewed growth curve for the year. All is well within our transportation business, and we continue to win consequential new awards. I think it's also worth pointing out the steady increase in organic net revenue growth in building infrastructure throughout the year. We're optimistic that this represents a developing trend for that market. Backlog increased 20% to $479 million on December 31st, 2025, up from $399 million at the end of 2024. While every vertical is up, the biggest gainer was power and utilities, where we were particularly active with business development and acquisitions. Excluding purchased backlog in place at year end, the increase was 18.5% at $473 million. Sales of new work after closing an acquisition would not be considered acquired backlog. In the case of RPT, while we have very strong visibility into projects and schedules, work is released in more frequent phases that keep their forecasts high but their backlog low relative to the overall companies. Cash from operating activities for the full year increased by nearly 50% to $35.8 million from $24.3 million in the prior year. Networking capital increases adjusted for the UTP changes represented the equivalent of a roughly four-month investment in growth revenue. Reducing that investment by 25% through process automation and operational efficiencies could add seven to eight percentage points to cash flow conversion. This is high on our to-do list in 2026. Net debt at the end of the year was $179 million, including the all-cash acquisition of RPT on December 5th. Leverage was 2.45 times trailing 12 months, and 2.06 times the midpoint of our 2026 guidance. We expect to increase cash flow from operations during the year to continue to reduce this debt throughout 2026. On March 3rd, we executed a third amendment to our credit facility with B of A, TD Bank, and PNC to increase the maximum borrowing to $250 million. We increased the facility to ensure we have sufficient access to affordable capital to continue funding investments in organic growth innovation and efficiency, accretive acquisitions, and stock repurchases. As of today, we have available liquidity of approximately $150 million. During 2025, we periodically repurchased $18.8 million worth of our common stock at an average price of $27.51 per share. We continue to view stock repurchases as a means of addressing liquidity and valuation dislocations, as opposed to a commitment to the return of capital. Assuming market stability and a rational evaluation of our equity, our top priorities remain investment in organic and inorganic growth. We remain steadfast in our commitment to investment and innovation. The big fund, our internal technology incubator, is funding ideas presented by our employees to make impactful investments that advance our capabilities, improve the efficiency of our workforce, and decouple revenue growth from headcount growth increase the value of our services, and extend customer engagement. It's admittedly a tricky time in our industry with respect to innovation and AI. We need to be sure we're prioritizing investment in processes and services relating to deliverables sold at stable values, as opposed to efficiencies that merely cannibalize the work of work sold by the unit. We're making significant investments this year in our fleet of geospatial imaging assets, including high resolution, high altitude scanners, along with improved capture vehicles including planes, UAVs, drones, and boats, all of which increase collection rates and data processing efficiencies by as much as 30 to 40 percent. We continue to integrate the technologies we've developed in-house with tools we purchased in the recent ORCIS acquisition. And we're launching PAC, our Port Asset Conditions Kit, which provides GIS-enabled digital twin-based lifecycle asset management to port and marine operators. As opposed to the traditional software as a service subscription model, we've put forward a services powered by software model that engages our integrated digital platforms with customers through a professional services arrangement that combines process automation and professional intervention. As we develop our suite of AI and GIS enabled tool sets, we believe we're well positioned to monetize the library of assets in our growing digital services and advisory practice into a unique value proposition for our customers and shareholders. In connection with yesterday's release, we increased our full year 2026 guidance to a range of $495 million to $510 million and an adjusted EBITDA margin of 17 to 17.5%. At an 88% net to gross ratio, this would represent $563 million to $580 million of gross revenue. This increased net revenue guide includes the recent RPT acquisition without contemplating any future acquisitions. At the midpoint of our net revenue guidance, this represents approximately 16% absolute growth over last year. Proforma, to exclude RPT's 2025 revenue from the basis and from next year, from this year, we're projecting just over 12% organic net revenue growth. We expect revenue during the year to again be nonlinear, with the first and fourth quarters representing around 47% of net revenue, and the second and third to be around 53% of net revenue. This should not be construed as quarterly revenue guidance, but rather as a guideline for relative weighting of the quarters throughout the year. I'm now going to turn the call over to Dan Swayze, our Chief Operating Officer, who's joining us today to provide insight into the question of where we're winning and why. Dan has been with Bowman for over three and a half years. and has spent two decades in senior leadership roles in civil and energy-related engineering. At Bowman, Dan's focus as the Chief Operating Officer is on the management and execution of our portfolio of services across markets. Dan, welcome. Dan Swayze | Chief Operating Officer: Thank you, Bruce, and good morning, everyone. I know a lot of our team is listening to the call today, and I sincerely thank them for all they do and their commitment to Bowman. I'm very proud of our team. Today, I'm going to focus on where we are winning in the market and why those wins are becoming increasingly repeatable. In other words, our right to win. Over the past several years, we have been deliberate about building differentiated capabilities in markets where technical depth, geographical reach, capacity, execution consistency, and integrated end-to-end ability creates a competitive advantage. Our acquisition strategy across the country created integrated service delivery teams in our various markets. In our data center and mission critical practice, we are increasing our win rate by meeting our clients where they are. Data center programs are rarely single service projects. They are multi-phase, multi-service opportunities. For example, combining the electrical and mechanical engineering forces from our E3 acquisition, the fire and life safety design services from our Fisher acquisition, with our established capabilities in civil planning and engineering, we have a strong service offering our clients can rely on. Our ability to deliver consistent technical standards across jurisdictions while maintaining strong relationships positions us as a long-term partner rather than a one-time design provider. As major operators continue to deploy capacity into new regions, we are following them into those markets, pairing local engineering knowledge with the strength of our national platform. As a result, we are expanding wallet share and deepening our engagements in a durable growth market. This approach increases client stickiness. The power utility sector remains a robust market for our organization, expanding electric, oil, and gas, as well as renewables. Bowman is actively involved in supporting the development and expansion of new power supplies for utilities, addressing the evolving and urgent need for bridging power for data centers, and the rapid deployment of compressor stations for the midstream movement of natural gas. The services we provide for our natural gas clients are provided through a combination of several of our acquisitions, including MTX Surveying, RPT Alliance, excellent engineering, and Burke engineering. Our approach leverages a comprehensive suite of services seamlessly integrating a unique collection of geospatial expertise and equipment with proven engineering solutions to address the evolving needs of our clients. This multi-service end-to-end strategy ensures we can consistently deliver innovative, reliable, one-stop shop outcomes across a diverse landscape of our clients' needs. Being in early establishes incumbency, and incumbency is an important element to our right to win. Our geospatial engagements often create pull-through opportunities for related engineering and advisory services. Our recent investments in new aircraft and advanced LIDAR sensors directly strengthens our competitive position. These advanced capabilities allow us to support complex infrastructure initiatives, including utility expansion, both in electricity and natural gas, damage assessments, land acquisition, land development, and other large-scale public works projects. As an example, we were recently renewed for a five-year agreement with the U.S. Army Corps of Engineers to provide photographic mapping and related survey services. Being awarded this renewal with this renewed agreement reflects both past performance and technical differentiation. We're also continuing to build strength in transportation across the U.S. where our extensive history of timely delivery and our expansive portfolio of creative bridge and highway design create a meaningful competitive opportunity. Our comprehensive transportation services offerings are an amalgamation of our acquisitions of McMahon, Spies-Lewis, and Exeltec, and our legacy teams in Chicago area providing end-to-end solutions. Transportation agencies prioritize demonstrated experience and capacity to deliver on comparable assets. The depth of our expertise and project experience in these regions drives repeated wins. Across these markets and others we participate in, the pattern is consistent. We win where specialized technical expertise matters. Past performance and incumbency create barriers to entries to our competitors. Our national presence enhances client value, and where our integrated geospatial and engineering delivery improve client outcomes. Our operational investments, including workflow modernization, data integration, and selective automation using AI and machine learning support these markets by improving throughput and timely delivery of superior outcomes. These investments are in service of a larger objective to strengthen our competitive standing in the market where we see durable demand and long-term growth potential. We are not pursuing growth indiscriminately. We are concentrating on efficient use of capital, leveraging our talent, and embracing technology in markets where we have established credibility and where our integrated platform creates measurable differentiation and competitive advantage. The result, we continue to successfully deepen client relationships enhance our right to win multi-service assignments, and strengthen our foundation for sustained revenue growth. Our competitive position in the industry has never been stronger, and our right to win continues to broaden throughout our markets. With that, I'll turn it over to Gary. Gary Bowman | Founder & CEO: Great. Thanks, Dan. Gary Bowman | Founder & CEO: As Bruce mentioned, our focus on execution, organic growth, and strategic acquisition was evident in our results. We exited 2025 with strong momentum, some of the best margins in the E&C group, and a backlog that foreshadows another year of double-digit revenue growth. We enter 2026 with a renewed focus on disciplined growth and continued operational improvement along our service platform. While change in the occupant of the CEO chair is ahead of us, the core of this company, its senior leadership and professional workforce is as intact cohesive and aligned in its mission. With the exceptional talent we have at every level of this organization, I'm really excited for the future of the company I founded some 30 years ago. With that, I'll now turn the call back to Becky for questions. Becky | Conference Operator: Thank you. If you did wish to ask a question, please press star followed by one on your telephone keypad now. If you feel your question has been answered or for any reason you would like to remove yourself from the queue, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Aaron Spiekele from Craig Hallam. Your line is now open. Please go ahead. Aaron Spiekele | Analyst, Craig Hallum: Yeah, good morning. Thanks for taking the questions. Morning, Aaron. Morning. First, maybe on the RPT acquisition. Good morning. Thanks. On RPT, can you just maybe talk a little bit about what that brings to your offering, an early read on just how integration is going there and kind of potential synergies within the platform? Bruce Labovitz | Chief Financial Officer: Yeah, I'll start off with the second part of the question. Actually, integration there is well ahead of any other acquisition that we've done. It's uh, pretty much, uh, you know, integrated from an operating and financial perspective. Uh, it's on its way from a platform perspective. And so, uh, we jumped right on that one because the, you know, the opportunity is, is, is right ahead of us, uh, to, to grow that business in connection with the rest of the components of, of BOM. And so, so it's integrated. Uh, it, it really extends our, our product offering at LNG. I'll let Dan talk for a second about the, uh, the extension of the LNG and data center product offering. Dan Swayze | Chief Operating Officer: Yeah, if you go back to what we talked about a minute ago and you think about our right to win, RPT's skill set and client reach puts us right into the whole midstream movement of natural gas, feeding liquefied natural gas centers, and also gives us that opportunity to provide more consulting and engineering services for those building pipelines. Bruce Labovitz | Chief Financial Officer: I'll also say we've already been successful in several cross-selling efforts where the combination of services has gotten us into projects that we otherwise probably wouldn't have been necessarily a lead contender for. Aaron Spiekele | Analyst, Craig Hallum: All right. Thanks for the call there. And then maybe second on EBITDA margins, you know, good performance in the quarter, 17.3. You know, just thinking about the guidance. for 2026, you know, were there anything, you know, noteworthy from a, from a driver perspective in the fourth quarter and what are some of the factors you're incorporating for, for 2026? And how are you thinking about potential for, for upside there? Bruce Labovitz | Chief Financial Officer: Yes. Again, I think Aaron, we've, we've demonstrated that, you know, that margin is, is not necessarily always consistent, you know, throughout the quarters, but that we look at the year as, as being able to deliver from what was a 16 high 16s, this year to what we think will be a mid-17s, you know, next year. So, it's continuous improvement in margin. It always has to do with the timing of the acquisition of labor relative to the starts of projects. That's our biggest driver of margin in any particular period is the, you know, how well we time the collection of labor and with the realization of revenue. think that we continue to as we scale uh grow grow margin over overhead uh and and as we implement you know better and better workflow processes automated processes we we optimize labor so i think we can increase by another you know we're projecting another you know 50 to 50 plus basis points of of margin expansion this year uh 80 80 points and uh i think those are the key drivers Aaron Spiekele | Analyst, Craig Hallum: All right. Thanks for taking the questions, Gary. Congrats on the retirement, and best of luck to everyone moving forward. Gary Bowman | Founder & CEO: Thank you, Aaron. Bruce Labovitz | Chief Financial Officer: Thanks, Aaron. Becky | Conference Operator: Thank you. Our next question comes from Mincho from Texas Capital Bank. Your line is now open. Please go ahead. Aaron Spiekele | Analyst, Craig Hallum: Good morning, Mincho. Mincho | Analyst, Texas Capital Bank: Thank you very much, and congrats on a really strong year. Good morning. You know, you mentioned that the building segment saw some organic growth this quarter and that there were some developing trends. Can you talk a little bit about just the opportunities that you're seeing there? Bruce Labovitz | Chief Financial Officer: So, as I put it, we're optimistic that this is a developing trend. I'm not sure we're ready to call it yet. I think one thing that we are expecting to see at some point is a focus on affordability of housing. And we're already seeing it at the state level. You're seeing the requirements for permitting being loosened and stimulus for more affordable housing. That's where we really thrive is in creating supply for builders and for the home building and multifamily market. We saw some good positive movement there. It is geographical in nature. Some pockets of the country are better at times than others, but we're optimistic that that's an early indicator of some opportunity for bigger growth in that market again. Mincho | Analyst, Texas Capital Bank: Excellent. Got it. Also, on slide 8, provided some gross margin by verticals, and I was just wondering if you can talk about how that has been trended over the last few years. I'm assuming that it's kind of expanded just with the scale that you have. But can you talk a little bit about expectations for 2026, just directionally across the board? Bruce Labovitz | Chief Financial Officer: I mean, you broke up a little bit there. So I think the question was about the gross margins by vertical and expectations on those for the year. I'm going to assume that was the question. Yes. And so it's consistent with where we were in the third quarter when we started reporting on gross margin by vertical, with transportation being more of a cost plus kind of market, but with longer term commitments and longer engagements that reduce turnover costs there and create stability and workforce. And we think that the other three markets continue to have favorable gross margins, and I don't see anything that's going to erode those throughout the course of this year. If anything, processes, you know, process automations can help to improve those slightly. Mincho | Analyst, Texas Capital Bank: Great. Thank you. And then just finally, your natural resources segment obviously had strong organic growth this quarter and just in the year. And I don't think Dan spoke too much about that segment, but can you just provide a little more detail about where that demand is coming from? seeing any green shoots there. Bruce Labovitz | Chief Financial Officer: Yeah, so in some respect, that's a little bit of the catch-all for what doesn't fit into other categories, but it includes environmental, it includes mining, it includes water resources, it includes agricultural imaging and ortho imaging, and it includes land services associated with assisting landowners in acquisition of easements and other rights of way. when it's not land acquisition for a power utility or for a road bridge or highway. So it's a large category for us in terms of the number of things that fit in there. A lot of exciting projects that are developing in that area, particularly with water resources, particularly with high altitude aerial imaging and in the land services business. Mincho | Analyst, Texas Capital Bank: Great. Thank you very much. Andy Whitman | Analyst, Baird: Thank you, ma'am. Thanks, Beth. Becky | Conference Operator: Thank you. Our next question comes from Andy Whitman from Baird. Your line is now open. Please go ahead. Andy Whitman | Analyst, Baird: Yeah, great. Good morning, and thanks for taking my questions. I have a few here. Good morning. So where do I want to start? I guess, I don't know, maybe I'm reading into it too closely, but in your press release, I talked about 2026 being, I forgot the exact terminology, more of an organic year. Am I reading, that sounds like a little bit of change. You said in your script here that your priorities are still in organic growth and inorganic growth. And so it just feels like maybe there's a change there. Is there more kind of organic focus in 26 than in the past? And If that is correct, why the change? I don't have a value judgment here. This is not to say you should be doing more M&A or not. I'm just kind of curious if there is a change there, why there's a change there. Gary Bowman | Founder & CEO: Andy, this is Gary. There's not a fundamental change. We're still committed to inorganic growth. They were a little narrower in our focus with strategic opportunities and moving toward bigger opportunities. So you're seeing maybe less frequent, certainly less frequent announcements. But we are just as committed to ever to a strong growth of, a strong combination of inorganic and organic growth. Bruce Labovitz | Chief Financial Officer: I think there is an evolving nature of the market, that there's opportunity to invest in the expansion of our services through investment in technologies and innovation, and that's all organic. So we continue to be investing in expansion of our capabilities, expansion of the capability of our workforce to generate revenue. But as Gary said, I think will do less frequent small, but still be focused on acquisition, and in the meantime, be focused on internal investment in organic growth. But thanks for bringing it up, because I think it's an important point of distinction there. I want to clarify that. Andy Whitman | Analyst, Baird: Yeah. Okay, great. And then, Bruce, in your comments, you talked about some things that are going to be kind of a priority on collecting working capital this year. Could you just elaborate on that a little bit more? It does feel like there is some working capital opportunity, maybe at lots of different places, including your receivables. I just thought it'd be worth checking in here again with those a little bit higher than you've been for a while. What is a realistic goal here for DSOs maybe? Yeah, so we'll progress here through 26. Bruce Labovitz | Chief Financial Officer: Yeah, one thing I will point out that, you know, we're already so far past the end of the year, it's hard to remember that at the end of the year, there was a government shutdown, and that did slow collection on a portion of our receivables, not because they weren't collectible, but just because, you know, getting them processed was slower in a, you know, in a portion of our business. So I think there's a little bit of extension of receivables from that artificial impact. Getting work through working capital is an important focus for us. Certainly getting work to be billable, not necessarily that we aren't earning it, but getting it to the point of billing and collecting it, you know, is something that, you know, we're working towards, you know, narrowing down. And so I think reducing, let's say, work in process, which is a component of working capital, will be, you know, will be a focus this year. uh and you know we're always we're always working on collections andy it's it's a you know it's one of the great challenges that that you know never seems to to completely get solved but uh between that between you know the we we had a um we we implemented a new uh not a new we we upgraded our erp system throughout in 2025 and we think that'll help facilitate the the process of of processing work to to Gary Bowman | Founder & CEO: follow on Bruce's point, always work on the collections, the 30, 31 some years we it's in our DNA. We, uh, uh, we, we, we have to keep the cash flowing. Andy Whitman | Analyst, Baird: Yep. Okay. Uh, my next few here are maybe just kind of more kind of model focused or whatever, but some of these are kind of important. So Bruce, you talked about a more normalized tax rates. Um, Are you still, what is the effective tax rate that you think is applicable here in 26? Bruce Labovitz | Chief Financial Officer: Yeah, I would say that it is, you know, based on our statutory, less our RD credits, it's somewhere in that high team 20 kind of range. Andy Whitman | Analyst, Baird: Okay. Great. And then just, this is really myopic, but I think notable. As I look at 2025 in the market, That's the total, that's the number that we should use basically on the, on the company's income statement. It's high teens, low twenties. Yeah. Yep. Is that correct? Yeah. Okay. So I was looking back at 2025 and the margin progression for 2020. I'm sorry. You're trying to say something. Go ahead. Bruce Labovitz | Chief Financial Officer: No, I wasn't. Andy Whitman | Analyst, Baird: Go ahead. Oh, sorry. I thought, I thought I heard you chime in. Okay. So the second quarter net adjusted EBITDA margin was higher than the third quarter net adjusted EBITDA margin in 2025. That's usually for companies like yours, the third quarter margin is higher than the second quarter. So I guess my question is, you talked about revenue seasonality in your prepared remarks, but just on this one specifically, it feels like I want to put the higher margin in the third quarter than the second quarter. Am I thinking about that correctly, or is there a reason that that pattern from last year would repeat again here in 2026? Bruce Labovitz | Chief Financial Officer: TAB, Mark McIntyre, No, I don't think it's necessarily a repeatable pattern from last year, I think we had a we had some we talked about it in the second quarter of last year, there were a few. TAB, Mark McIntyre, Exceptional items that that you know sort of hit on all cylinders, I think that you know I wouldn't necessarily say that that is indicative of of our of a pattern permanently. Andy Whitman | Analyst, Baird: TAB, Mark McIntyre, yeah okay just wanted to make sure um. I'm trying to think if there's anything else here. Yeah. Okay. I think I'm good there. Thank you very much. You're out if you have more. Thanks, Andy. Sounds great. Thanks, Andy. Becky | Conference Operator: Thank you. Our next question comes from Tomo Sano from JP Morgan. Your line is now open. Please go ahead. Tomo Sano | Analyst, JP Morgan: Hello, everyone. Morning. Thank you. Although we have only recently met, I'd like to express our respect and appreciation for your leadership and culture as you prepare for your retirement. Gary Bowman | Founder & CEO: Thank you, Tomo. That's very kind. Tomo Sano | Analyst, JP Morgan: Thank you. So I'd like to kick off. You raised your 2026 net revenue guidance to $495 to $510 million, and which segments or prospects projects driving these out-of-water revisions, and are you currently 479 million backlog? What proportion do you expect to convert to revenue in 2026, please? Bruce Labovitz | Chief Financial Officer: Generally speaking, Tomo, we turn somewhere between 70% and 80% of backlog in a year, in a 12-month period. Sometimes it gets a little longer, sometimes it gets a little shorter, but generally speaking, we think of 70% to 80% of backlog in any moment has a 12-month tail to it. In terms of where we think we're going to continue to see growth, obviously power is an area that we expect to contribute to the growth year over year. A big chunk of that guidance increase was from the acquisition of RPT that happened after third quarter's conference call. So that's all power related in that bit of the increase. The rest of it is is between natural resources and transportation. Tomo Sano | Analyst, JP Morgan: Thank you, Bruce. And follow-up on upcoming CEO transitions. Could you talk about how you're ensuring management's abilities and continuities, and are there any qualitative KPIs or targets related to successions and strategic continuity, please? Gary Bowman | Founder & CEO: We're effective communication. We're doing retention, economic retention packages for some key people. And really, the communication, the assurance of the continuation of our culture. So, you know, a qualitative view of success in the succession. There's certainly retention of our key staff, retention of our leadership, and continued forward execution of our strategic plan. Bruce Labovitz | Chief Financial Officer: Yeah, we've got 2,500 people who depend on the continued success of this company every day. And, you know, we take that responsibility very seriously. And, you know, the board takes that responsibility very seriously. And so we are all wholly committed to the long-term success of this. We're all invested in the long-term success of this company and And in seeing this through without any disruption in service to our customers, in service to our employees, and in value generation to our shareholders. Gary Bowman | Founder & CEO: I'll also follow up there, Tomo. As a member of the board, I'm not on the search and selection committee, but certainly I have input. But I would not have made this move if I didn't have great confidence in the board getting this right, both for the legacy, my legacy, candidly, personal legacy, and my personal economics. I'm still the largest shareholder, single shareholder in the company. And I tend to continue to own a tremendous amount of this stock in the long run. So I have a real vested interest in the success. Tomo Sano | Analyst, JP Morgan: Thank you very much. That's all from me. Thanks, Tomo. Becky | Conference Operator: Thank you. Our next question comes from Liam Burke from B Reilly Securities. The line is now open. Please go ahead. Gary Bowman | Founder & CEO: Good morning, Liam. Thank you. Good morning, Gary, Bruce, Dan. Good morning. Gary, congratulations on your retirement. Gary Bowman | Founder & CEO: Thank you, Liam. Gary Bowman | Founder & CEO: When you reach critical mass here on the front end of the infrastructure project, Has there been any competitive pushback from some of the larger specialty contractors that are looking to move into your space, since it is probably the most profitable piece of the project? Bruce Labovitz | Chief Financial Officer: Are you talking about in the power space or just infrastructure writ large, Liam? Power space? Gary Bowman | Founder & CEO: Let's go on the infrastructure at large, Gary. Bruce Labovitz | Chief Financial Officer: Yeah, there's a real line of distinction in the industry between, I'd say, the construction companies, I think that's what you're asking about, and the engineering firms, and there's a collegial relationship between. We've not felt threatened. Dan, you can tell if you've felt it from the ground up from, let's say, specialty construction contractors trying to make their way into the engineering world. Dan Swayze | Chief Operating Officer: No, in some cases, we're working for those contractors, so it's not really a threat that we see. Bruce Labovitz | Chief Financial Officer: Yeah, if anything, I'd say it's drawn the other way is that there's such a resource constraint in this space that, you know, it's an all-hands-on-deck kind of mindset, and there are functions of the construction process that the specialty contractors need help with, right? The equipment providers, the GC contractors, GCs need help. There's no effort to share risk on that part of the process, but there is an effort to bring in help. Gary Bowman | Founder & CEO: Fair enough. Across the board, you had good growth across all your business segments. Do you see any pockets of weakness, or is it just your diversification to be able to move right past it? Bruce Labovitz | Chief Financial Officer: Right now, I would say that there are no pockets of weakness. There's no negative connotation in any of the markets or segments. Obviously, we're keeping an eye on the growth rate of the building infrastructure space. It's still our biggest, and it's still continuing to grow, and we have hopes for it to accelerate. And so I wouldn't characterize it as weakness. It's getting attention from us to make sure that we keep our staffing right. and our, you know, and all of our overhead right for that group. But on the others, it's a, as I use the same phrase, it's all hands on deck effort to try to keep up with power and transportation and other resources. Gary Bowman | Founder & CEO: Great. Bruce Labovitz | Chief Financial Officer: The good news, Liam, as we've talked about is that in our workforce, it's very fungible across the four markets. So we don't have silos of workforce that are only able to do one thing. You know, the base of our labor pyramid, you know, really is very cross-disciplined and cross-market capable. And so, you know, we focus on that kind of business model deliberately. Gary Bowman | Founder & CEO: Great. Thanks again. Gary Bowman | Founder & CEO: Thank you. Thank you, Liam. Becky | Conference Operator: Thank you. Our next question comes from Jeff Martin from Roth Capital Partners. Your line is now open. Please go ahead. Bruce Labovitz | Chief Financial Officer: Good morning, Jeff. Jeff Martin | Analyst, Roth Capital Partners: Thank you. Good morning, Gary, Bruce, and Dan. Good morning. Bruce and Gary, I wonder if you could touch on RPT. I know that they were constrained for growth and you've owned it roughly three months now. Just curious how much you've been able to staff up for RPT during the initial three months and maybe give us a glimpse at what's your hiring plans for that business in particular, as well as touch on just general availability of labor and ability to staff up in front of larger contracts in general. Gary Bowman | Founder & CEO: As Gary, I'll jump in. As we were doing our due diligence on RPT and certainly part of the attraction is all the opportunities in the space that they are in. And they're being down there, it's a single office operation in Houston, but being in Houston, there are pockets of the oil and gas industry that are, especially the oil industry, maybe up until this past week, that have been soft and it's been a good availability of labor down there. So we've found the ability for the RPT group to staff up as flexible as any of our pieces of business. Bruce Labovitz | Chief Financial Officer: I think it's been also them becoming part of a much larger organization has given them access to staffing that has availability of utilization as well. So, we've camped down the shortage by adding capacity from our system. The other thing that we've been doing a lot of now is insourcing things that they used to outsource. And so we're finding they're using survey, they're using our fire protection, they're using our mechanical, and we're grabbing more work from their clients, which is, again, putting a little more stress on the need for people. But it's what we do for a living is making sure that we can meet demand with supply. Jeff Martin | Analyst, Roth Capital Partners: Great. Wanted to touch on geospatial. You mentioned roughly 20, I think 26%, 24% of your net revenue. Sounds like you're making investments, further investments in geospatial. Maybe you can elaborate, you know, kind of some of the general demand trends you're seeing there. And if you could also touch on the competitive dynamic for geospatial, that'd be helpful. Bruce Labovitz | Chief Financial Officer: You know, Jeff. Geospatial is pretty much at the core of everything that we do. A lot of the work we do originates with imaging. It processes through imaging and utilizes survey and scanning and three-dimensional iteration throughout the lifecycle of the asset. So we don't think of it as a vertical because it's a service that really supports every bit of business that we do. It's kind of at the epicenter of our services portfolio. So we are making investments in that space because it's evolving so quickly. And those that are ahead have distinct advantages. And geospatial is one of those service lines that creates, as Dan mentioned, incumbency. And incumbency is such a valuable asset in the lifecycle of asset work. We're buying high-resolution scanners. We're buying imaging technology that does underwater LIDAR. We're buying vehicles that collect data, whether that's from the air or from the water. We're improving the operational efficiency of our high-altitude fleet, which spends a lot of time, let's say, chasing weather, and if we can shorten the shorten the chase, we get more productivity out of it, and there's plenty of work to be done there. So geospatial is, we think, you know, it is really a critical part of the overall product we deliver, and so we want to be a leader in our fleet. Jeff Martin | Analyst, Roth Capital Partners: Great. And could you tie that into your CapEx and, you know, property equipment acquired under capital lease projections or estimates for this year? Bruce Labovitz | Chief Financial Officer: It's generally included. I mean, it's included in that bucket. We may, again, we talk about an average of 3%, 4% spending on CapEx. Episodically, it may be, you know, a little bit higher and a little bit lower in years. This may be one of the little bit higher years. as we continue to improve that fleet. But as revenue is growing, you know, you absorb that CapEx from a percentage perspective as well. So I don't think it's going to, you know, in any way put it off the charts, but, you know, it could pop at a point or so this year. But then these are long-lived assets. So, you know, you buy them in one year, they last for several years. Jeff Martin | Analyst, Roth Capital Partners: Thank you. And, Gary, congratulations on your retirement. Bruce Labovitz | Chief Financial Officer: Thank you, Jeff. Jeff, look forward to seeing you guys in a couple of weeks. Becky | Conference Operator: Thank you. Our next question comes from Sharif Alsabahi from Bank of America. The line is now open. Please go ahead. Bruce Labovitz | Chief Financial Officer: Good morning, Sharif. Nandita Nayan | Analyst, Bank of America: Hey, everyone. This is Nandita. Bruce Labovitz | Chief Financial Officer: Hey, everyone. Nandita Nayan | Analyst, Bank of America: This is Nandita Nayan for Sharif. Hey, I'm good, Gary. How are you? Gary Bowman | Founder & CEO: Good. Thanks. Nandita Nayan | Analyst, Bank of America: Priti Krishtel- awesome so i'm just just quickly on the full year guide, as you know, you raise the net revenues for the full year, but the ebitda guide was maintained. Priti Krishtel- Just could you just talk about you know the margin profile and maybe of like recent acquisitions like rpt doesn't you know comment like lower margins with you know other costs optimization measures in the business holding margin steady at like 17 17.5. Or on the flip side, you know, is it slightly accretive and are there other temporary investments in the business that we should be aware of that's, you know, holding margins back a little bit? Bruce Labovitz | Chief Financial Officer: Yeah, so I'm not sure I'd characterize it as holding margins back in a sense that, you know, if we continue to grow margin, we're growing it, you know, we're committing to grow it, you know, another half to 50 to 50 plus basis points during the year. So we're very much focused on expanding margin over time. RPT is a high margin business. But again, as a percentage of our overall business, even being a significantly higher margin business doesn't necessarily drag the whole business along from a margin perspective. We think that being able to get 17.5% margins is a pretty high bar for the industry. And I think that as you asked about contributors to that, certainly this concept that we introduced about um decoupling revenue growth from headcount growth doesn't mean shrinking your workforce but it means growing revenue faster than you grow workforce and that increases margin and that's from the tools that we're employing uh and investing in is one of the earlier questions about organic investment and investing in these in these processes and and service line expansions we think will add margin over time uh we've talked about that you know we believe that this is a high teens margin of business without innovation and an even higher one with. And, you know, it's a journey that we continue to be on. Nandita Nayan | Analyst, Bank of America: That's helpful. And also, guys, you know, net leverage is, I think, around, you mentioned, 1.9 times, you know, higher than historical levels. Just would you remind us of our target range again? And, you know, I believe, like, historically, it's been around, I think, 0.8 times on average. Could we you know, see leverage structurally closer, maybe like to the high end of your range for like a certain period of time as Bowman kind of gets more acquisitive, or is there a plan to deliver to historical levels over the near to medium term? Bruce Labovitz | Chief Financial Officer: Yeah, so we've typically been in the one and a half kind of range, you know, the mid ones. we made this acquisition of RPT on December 5th, so didn't get any of the benefit at year end for any of the EBITDA from that acquisition, but had all the leverage on our balance sheet. When we look ahead, it's about, on a pro forma basis, about two. That's before we start paying that down with cash flow that we'll generate from this year. So we hit 50% cash flow generation this year. We think that's going to continue to improve. So at at an EBITDA of, you know, in the 17s margin on, you know, on 500 million in revenue, there's going to be a good deal of cash flow to be used to pay that down. Now, we'll continue to be growth-oriented, and to the extent that we identify another acquisition, you know, we would certainly you know, there could be additional leverage from it, but there'd also be significant amount of EBITDA from it. So I think that you'll see us structurally, you know, try to achieve a below two, keep it in that, you know, one and a half to two range, which has been our sort of our target, but it would be consistent that episodically we will be higher as we invest, you know, in growth. Nandita Nayan | Analyst, Bank of America: Erika Moritsugu- got it and just lastly um you know, on the 25 million big fun, could you just give us a sense of how much has been committed versus funded just kind of the runway there thanks i'll turn it over. Bruce Labovitz | Chief Financial Officer: James Forrest, Norcal PTAC, I would say that that we're roughly about halfway into it in terms of committed. James Forrest, Norcal PTAC, It doesn't mean it's all been extended there's a lot of proof of concept, a lot of proof of returns of you know, and a lot of. of other factors to, you know, that over the next 12 to 18 months we would, you know, fund the projects that have come forward. Some of it is the investment in assets in geospatial that will facilitate some of these additional services. But I'd say we're about halfway into ideas that would be funded. Nandita Nayan | Analyst, Bank of America: Okay, perfect. That's great color. I'll turn it over. And Gary, congrats. Gary Bowman | Founder & CEO: Thanks so much. Thanks, Adita. Becky | Conference Operator: Thank you. As we have no further questions on the line, I will now hand back to Gary Bowman for final comments. Gary Bowman | Founder & CEO: Thanks again, Becky. Well, thanks for everybody for joining us on the call today. We're very pleased with where we're at, pleased with the prospects for the year, and thanks certainly to all the employees and to our investors for all the faith that you put into us. Have a great day, everyone. Becky | Conference Operator: Thank you. This concludes today's call. You may now disconnect your lines. jsPDF 3.0.3 D:20260606090031-00'00'

NASDAQ:BWMN Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Jasmine | Investor Relations / Conference Call Moderator: 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. Gary Bowman | Chief Executive Officer: 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 Bruce Labovitz | Chief Financial Officer: 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. Gary Bowman | Chief Executive Officer: OK. Thank you, Bruce. As Bruce mentioned, our improved profitability and working capital management once again drove strong cash flow this quarter, with cash conversion now at about 50% year to date. Our margins and cash efficiency place us solidly in line with the best performing firms in the EMC space. Now, let me take a few minutes to share a summary of our market performance and outlook as we move into 2026. Transportation remains one of our most stable and resilient end markets, delivering double-digit growth year to date. Our expanding client base spans a broader range of state and municipal transportation agencies than ever before. We're deeply engaged across state DOT programs and large local agencies throughout the Pacific Northwest, Midwest, and East Coast, where our teams are supporting multi-year bridge, roadway, and multimodal infrastructure programs. Our longstanding relationship with DOTs continue to be a key competitive advantage, creating recurring opportunities as agencies seek partners with both specialized technical expertise and the capacity to scale across geographies. We currently have strong bridge and roadway pipelines with backlog visibility through 2026. We continue to benefit from recurring construction management and inspection programs with multiple state agencies including a major multi-year assignment with Illinois. Our ports and harbors practice, which is part of our transportation segment, continues to gain momentum with coastal and port authorities, extending our reach into critical intermodal and maritime infrastructure projects in regions including Houston, Philadelphia, and the Pacific Northwest. We have a growing active backlog in ports and harbors with anticipated winds continuing through 2026 and existing and new geographies. Overall, we expect transportation to maintain steady, healthy growth. Less than 25% of IIJA funds have been released so far for permitted transportation projects, which we believe, coupled with state programs, ensures multi-year nationwide demand runway. We expect transportation will continue to provide the backbone of stability and recurring revenue across our portfolio. Our power, utilities, and energy division continues to be our fastest-growing market, up 38% year-over-year and driven by national investment in electrification, renewables, grid modernization, and data infrastructure. The recent acquisitions of Sierra Overhead Analytics, ORCAS, and Ladies in Power Engineering significantly enhance our strategic positioning within this high-growth market. Sierra and its affiliate Arcus expand our capabilities in technology-enabled engineering, adding automation, precision mapping, hydrology, and optimization tools that improve project delivery and efficiency across renewable energy, data center, and utility-scale infrastructure design. These digital solutions strengthen our ability to provide faster, smarter, and more cost-efficient design workflows to clients in the power and energy transition space. The addition of LASIN establishes our platform in high voltage overhead transmission line design, immediately positioning us to compete in one of the fastest growing recurring revenue segments of the power industry. LASIN's expertise enhances our credentials with major utilities and transportation operators, transmission operators, while complementing our advanced geospatial and aerial imaging services for power corridor mapping. Together, these acquisitions broaden our reach across the generation to grid continuum, connecting our existing strengths in site design, renewables, and data centers with the infrastructure that delivers power across the U.S. Looking forward, power, utilities, and energy represent a long-term growth engine for us. We expect continued revenue and margin expansion in 2026 as integration matures, our national footprint expands, and our clients increasingly turn to us for end-to-end power infrastructure solutions. Our well-balanced building infrastructure business grew by just over 8% year-over-year in gross revenue, reflecting solid execution in public and mixed-use work that continues to balance softer conditions in the residential space. While some private development remains slightly constrained by interest rates, we see clear rebound potential emerging in mid to late 2026 as financing conditions improve. Our current building infrastructure projects continue to generate long-term revenue visibility through 2027, and we remain well-positioned to capture renewed private sector growth as market conditions improve. Our natural resources and imaging segment remains a steady performer and margin stabilizer, representing roughly 11% of our net service revenue. We have robust visibility into 2026 in this market, supported by recurring federal programs and strong municipal demand in water, environmental, and geospatial services. Automation and recurring federal mapping programs will continue to underpin growth in this segment, and our geospatial and remote sensing services continue to enhance efficiency across our broader business. Operating margins in this market remain among the highest company wide, and we expect growth to be driven by technology-enabled delivery and long-term public sector funding. Now, I'd like to address the current operating environment, which includes the government shutdown. While the shutdown is causing some delays in project progression, invoicing collections within select federally supported programs and federally adjacent projects, our direct exposure to federal contracts remains limited, and we are not experiencing any unusual cancellation activity. Most of our public sector work is performed for state and local governments, which provide a natural buffer to extended interruptions, such as the current government shutdown. We continue to monitor this particular situation closely, noting that the longer the shutdown continues, the more likely it is to extend near-term revenue somewhat further into the future. Looking ahead, our focus remains clear. We'll continue to convert backlog into revenue while improving utilization and project delivery efficiency. We will aggressively leverage technology and innovation to enhance margins and scalability. And we'll deploy capital strategically through discipline M&A and organic growth derived from continued investment in people and systems. We're reaffirming our full year 2025 guidance. We're also initiating 2026 guidance of net revenue between $465 and $480 million and an adjusted EBITDA margin between 17% and 17.5%. With that, I'll now turn the call back to Jasmine for questions. Jasmine | Investor Relations / Conference Call Moderator: Thank you. We will now begin the Q&A portion of the call. If you would like to ask a question, please press star followed by one on your telephone keypad. To remove your question, press star followed by two. Again, to ask a question, press star one. As a reminder, if you're using a speakerphone, please remember to pick up your headset before asking a question. We will pause here briefly as questions are registered. Our first question comes from Laura Mayer with the B. Riley Securities. You may now proceed. Laura Mayer | Analyst, B. Riley Securities: Good morning, Gary and Bruce. Thanks for taking the question. Gary Bowman | Chief Executive Officer: Good morning. Laura Mayer | Analyst, B. Riley Securities: So, some of the larger specialty contractors have mentioned total solutions packages. Do you see this creating competitive pressure in your data center business? Bruce Labovitz | Chief Financial Officer: No, I don't think that that's going to impede on any of the work that we do. I think it's similar to any trends in design-build or others that don't necessarily compete with other industries. I think it's a big market. And even when firms offer complete solutions, they end up subcontracting a good portion of that to specialized contractors like us anyway. So I don't think that's a real threat. I agree with that. Laura Mayer | Analyst, B. Riley Securities: Great. Thanks. And then one more. On M&A, are there specific service lines or regions where you still see gaps relative to your growth objectives? Gary Bowman | Chief Executive Officer: Yes, we're really focused on some of these markets that we've been focused on expanding into for years now, especially transportation, certainly power and energy and data centers, and also water-related opportunities as they come along. No specific regions we're focused on. You know, we find the usual suspects appealing, Texas, California, Southeast, but we're not particularly focused on a particular region of the U.S. Bruce Labovitz | Chief Financial Officer: It's more service line and skill set focused than it is geographically focused. Laura Mayer | Analyst, B. Riley Securities: Great. Thanks. I'll pass it on. Gary Bowman | Chief Executive Officer: Thank you, Lauren. Thanks. Jasmine | Investor Relations / Conference Call Moderator: Thank you. Our next question comes from Andy Whitman with Baird. You may now proceed. Andy Whitman | Analyst, Robert W. Baird & Co.: Morning, Andy. Yeah, great. Hey, good morning. I guess I'll start with some top line questions here. It looks like the fourth quarter guidance here for 25 is implying a bit of a revenue acceleration to something in the double digits. So I think that's right. Bruce, I was just wondering if you could comment on which end markets you think will pick up the growth rate here as you move into fourth quarter and what gives you confidence in that? Bruce Labovitz | Chief Financial Officer: Yeah, the pickup's a couple days' worth of work. It's not, you know, I don't know that I would necessarily say it's anything extraordinary. We think that, you know, across the board, we've got a healthy backlog of work. that it's making its way through. Sales are strong and a lot of the sales have been strong in what we consider to be shorter-term contracts, areas we can earn revenue relatively quickly. So we have a good sense that with what would be a couple days' worth of improvement in the fourth quarter, it will grow revenue. Andy Whitman | Analyst, Robert W. Baird & Co.: Sorry, Bruce, the idea of a couple days. Are you saying there's more work days in the fourth quarter of 2020? Bruce Labovitz | Chief Financial Officer: No, I'm just saying that the amount of revenue that is to be accelerated is the equivalent of just a couple days' worth of work, so a couple of improved utilization weeks here and there. Got it. Okay, okay, okay. We don't do the days of the quarter game. Quarters do have extra days and more holidays, but we really just think of them as quarters. Andy Whitman | Analyst, Robert W. Baird & Co.: Yeah, that's what I thought. That's why when you were talking about days worth of work, I was trying to picture the world. Get a little bit more utilization out of the people. What's really great about that is that it cruises the margins even better. Got it. So that makes sense. And then I guess just kind of related to that, in the performance in the third quarter, I thought I'd ask a little bit about margins there too. And your business mix is changing a lot as you've been diversifying. So I just was wondering, and maybe I missed a little bit of the comments at the early part of the conference call, but did you comment on the margins? I guess they were down slightly over a year. Was that like investments and growth? Was that Andy Pelster, Utilization rates was that mix well, you know every quarter is kind of its own thing, but I wanted to try to understand that a little bit better as a how as a compared to the prior year. Bruce Labovitz | Chief Financial Officer: Andy Pelster, yeah yeah I think Andy every year, as you said, every quarter is a little bit different we talked about you know how we time Labor sometimes can can impact margins, you have to prepare for. what's coming next. And so sometimes we'll get a little bit heavy on labor in a quarter in anticipation of stronger growth in the next quarter. We are not downsizing labor. At the moment, contrary to employment reports that come out, we're in the hiring game. And so when labor becomes available, we take it. The margin change is a couple hundred thousand dollars worth of revenue on this fixed set of labor. So, you know, we talk about, you know, our band today is a 16 to 18% margin. We'll fall in there between periods. And so I don't think there's anything to read into, you know, a 40 basis point change between last year and this year in margin. Andy Whitman | Analyst, Robert W. Baird & Co.: Okay. And then I guess there's a similar question that just happened since you gave us initial guidance for 26. You know, your margins are either up a little or up a little bit more. to the 17% to 17.5% range. Obviously, this is a good year to be able to get the margins up there. And I was just wondering kind of what the knobs are to get you there next year. You talked about the overhead leverage. I have to imagine that's a big part of it. But what other things? Is mix in your favor? Maybe, Bruce, why don't you just kind of fill us into what do you think is going to drive the year-over-year margin expansion in 2026? Bruce Labovitz | Chief Financial Officer: Yeah, in large part, you know, I think it is improved overhead leverage, right? We continue to be very focused on growing revenue faster than we grow overhead. And so there's additional margin expansion to be had from that. There's also, you know, improved utilization of our labor. As we look at next year and we look at the mix of work, we think we can do it at a slightly higher revenue factor, which is our internal measurement of the efficiency of our labor. And so we gain a little bit of margin expansion. which is somewhat embedded in that total overhead, when you think about it, because we kind of combine that together. But it's really a combination of the way we are utilizing geospatial technologies and technologies that exist today to advance the efficiency of the workforce and grow revenue quicker than we're growing overhead. Andy Whitman | Analyst, Robert W. Baird & Co.: Okay, great. I think I'll leave it there. Thanks for your time. Thanks, Danny. Thanks, Randy. We'll see you soon at your conference. Jasmine | Investor Relations / Conference Call Moderator: Thank you. Our next question comes from Alex Regal with Bid This Capital. You may now proceed. Alex Regal | Analyst, Bid This Capital: Good morning, Alex. Thank you. Good morning, Bruce and Gary. Very nice quarter there. As it relates to data centers, can you talk a bit about bidding opportunities? and how you see that progressing sort of in 2026 versus maybe 2025 and 2024. Are you seeing the sort of bidding opportunities or, you know, new project opportunities to be greater than the prior year, or is the average project or contract size kind of greater than they have been in the past year? So just a little bit of color on that. Gary Bowman | Chief Executive Officer: Yeah, Alex, it's certainly tailwinds in that market. So there are continuing greater number of opportunities. The facilities are getting larger. Really, as the data centers, we've spoken to this, is, you know, with AI as opposed to before, the lack of being critical to be located proximate to fiber just provides a lot more opportunities for data centers spread out across the country. lots of drivers to locate data centers near natural gas to power them. And our acquisition of E3I, as an example, just has expanded our network. So that in itself expands our opportunities. Bruce Labovitz | Chief Financial Officer: Alex, I would say that data centers have become the hot ticket item for landowners. And so, to some extent, there's a little bit of a phantom amount of data center work that occurs within our building infrastructure portfolio. Because when landowners come to us and say, what are the options? We want our project to be a data center, right? Because everybody wants their project now to be a data center. There's feasibility we do within that building infrastructure segment related to data centers. But until it becomes a data center, it doesn't really become part of the kind of what we call the data center portfolio of revenue. So there's a little bit of because there's an increased availability of opportunity for land to be data center, there's more activity in it. Alex Regal | Analyst, Bid This Capital: And to take that another step, you know, clearly landowners in the past had seen solar as being a big opportunity. How do you see your solar business right now and sort of as we think about the next one to two years? Gary Bowman | Chief Executive Officer: Well, for the next year, we're seeing it very strong. It's really being driven by, I guess, a moment in the tax credits next year that's driving a lot of demand to accelerate planning of projects to get a critical mass of the project done before the middle of next year. So we see it very strong in 2026, certainly likely to taper off in 2027, but we're well positioned in that market, and the development of solar projects is not going to go away. So we see a very strong 2026, cautious outlook after that. Alex Regal | Analyst, Bid This Capital: Excellent. And lastly, your M&A activity this year has been, I don't know, a little bit slower than the last few years. Any comment on that and how we can think about the M&A activity in 2026? Gary Bowman | Chief Executive Officer: We're still committed to M&A. We have a strong pipeline of opportunities. I think we've shifted maybe more focus of our M&A to really focus on strategic opportunities. And certainly with the new revolver in place and that dry powder really positions us for some strong M&A activity toward the end of this year and certainly into 2027. So we're still fully committed to inorganic growth to supplement our organic growth. Great. Thank you very much. Jasmine | Investor Relations / Conference Call Moderator: Thank you. Our next question comes from Aaron Spicello with Craig Hallam. You may now proceed. Aaron Spicello | Analyst, Craig-Hallum Capital Group: Good morning, Aaron. Yeah, good morning, Gary and Bruce. Thanks for taking the questions. Morning. Maybe first on building infrastructure, can you kind of talk about how you're thinking about growth in that segment in 2026? Sounds like there's some cross currents between some of the sub areas and just maybe talk about your ability to kind of you know, move labor or, you know, kind of as projects kind of ebb and flow in that segment? Gary Bowman | Chief Executive Officer: Well, it's a nice thing about our business is the skill set, excuse me, that we apply to building infrastructure is transferable to many of our other markets. So we do move that labor around readily. We're seeing with the interest rate decline, We're seeing projects come off the shelf earlier in the year, a little more localized geographically. As we come into the end of the year here, we're seeing it more broadly across the geographies that we're located in. So we're probably looking at, in 2026, maybe as we allocate labor, TAB, Mark McIntyre, I would, I would bet that the directionality would be some labor allocated toward the building infrastructure, as opposed to away from it. Aaron Spicello | Analyst, Craig-Hallum Capital Group: TAB, Mark McIntyre, All right, thanks for that and then maybe you know on opex just there's an earlier question, but you know kind of a pick up an sg and a you know this this quarter, you know is there. you know, some kind of allocation of, you know, projects and timing there? Is that kind of in advance of growth, you know, moving forward, or just opportunistic? Maybe just a little bit of color on that. Bruce Labovitz | Chief Financial Officer: Yeah, one of the reasons we talk, we try to talk about total overhead as opposed to the SG&A relative to COGS is that our labor and operations, depending on utilization, will be allocated a little bit more towards COGS or a little bit more towards SG&A in any given period. depending on the proportion of direct and indirect labor. I wouldn't say there's anything consequential that's really driven SG&A higher. It's going to grow as we grow. The question is just can we meter it at a lower pace than revenues growing? So I really look at it as the overall all-in is down as a percentage of revenue. That's really what we're focused on. Aaron Spicello | Analyst, Craig-Hallum Capital Group: All right. Thanks. And then just maybe one last one. I mean, on labor, you know, how are you feeling about, you know, availability there as you grow the business moving forward? Gary Bowman | Chief Executive Officer: We have a very, very aggressive talent acquisition group. Excuse me. So it's a, It's a labor-challenged market, I mean, in a good way. It's a challenge to find staff, but they're out there, and we have a good machine to recruit on board them. So we're well-positioned to bring home the labor that we need. Bruce Labovitz | Chief Financial Officer: I guess it's why we are so focused on developing labor-leveraging you know, innovation within the organization, not to shrink the labor pool, but to not have to grow it as dramatically as, you know, as otherwise. Aaron Spicello | Analyst, Craig-Hallum Capital Group: Great. Understood. Great. Thanks for taking the questions. I'll turn it over. Thank you, Aaron. Jasmine | Investor Relations / Conference Call Moderator: Thank you. Our next question comes from Jeff Martin with Ross Capital Partners. You may now proceed. Jeff Martin | Analyst, Ross Capital Partners: Good morning, Jeff. Thank you. Good morning, Gary and Bruce. Dave Kuntz, When you wanted to dive into a specific segment of the backlog you look at power and utilities it's it looks like it's on a trajectory to. Dave Kuntz, The double from where it was in the middle of 2024 Where are you seeing the strongest backlog growth there, and is this is this the segment that you're most focused on for me. Gary Bowman | Chief Executive Officer: We're seeing it certainly in the linear projects, the transmission corridors. We've included data centers in there now, so our data center activity certainly is growing that. I wouldn't say it is the primary focus of M&A, but it is one of a couple of primary, power and utilities, energy, certainly transportation. TAB, Mark McIntyre, If I if I picked areas that we're we're really focused on and the opportunities that. TAB, Mark McIntyre, That they're really we find exciting. Jeff Martin | Analyst, Ross Capital Partners: TAB, Mark McIntyre, Great and then just how would you characterize the environment in terms of you know, the timeliness of projects and by timeliness I mean starting on time, you know, no delays in the weather delays, no other factors driving. Yeah, because I know transportation is a bit of a wild card. You know, you have large projects that can come on, they can get pushed out a month or two, they can get pushed out a little longer. If you could just give an update of kind of how that's progressed this year, I know going back several quarters, transportation kind of caused some disruption for you. So any insight there would be really helpful. Gary Bowman | Chief Executive Officer: We did have some some projects that got delayed in the starts. They didn't go away. So this business is lumpy. That's why we guide to a year, not a quarter. So we have seen some delays in starts here recently, but that's only attributed to project-specific issues, nothing in the macroeconomy. ignoring the funding of transportation driving that. Jeff Martin | Analyst, Ross Capital Partners: Great. And how would you characterize the M&A environment from a valuation standpoint? I know, you know, when you're looking at strategic acquisitions, I assume those are getting larger than you've done historically. So I'm just curious how you're seeing the competitiveness of those more strategic level acquisitions out in the market today. Gary Bowman | Chief Executive Officer: It's competitive. It's I'll say no more competitive than it has been over the last year or so. But these strategic opportunities, they drive a lot of attention. So it's we have to sharpen our pencil. We have to sell ourselves. But it's we're We're winning out on our share of nice strategic opportunities. Jeff Martin | Analyst, Ross Capital Partners: Great. Thanks for taking the questions. Andy Whitman | Analyst, Robert W. Baird & Co.: Thank you, Jeff. Jasmine | Investor Relations / Conference Call Moderator: Thank you. Our next question comes from Jean Delise with DA Davidson. You may now proceed. Jean Delise | Analyst, DA Davidson: Good morning. Hi, Jean. Good morning. Thank you so much for your time. I'm just a quick question. Some of the comments you made about hiring. So you guys are so you're in hiring mode. And then I just wanted to sort of understand what, you know, some project delays and this growth that you're experiencing. How would you characterize sort of the growth cadence in 2026 versus previous year, should we expect maybe a higher pickup in the first half of next year versus this year, I guess? And how should we think about EBITDA margins, given that there could be some increase in SCNA? Or I guess, should I think about differently as you progress through the year? Should those efficiencies start to kick in? And when will they kick in? Bruce Labovitz | Chief Financial Officer: I think one thing we're hoping for for next year, the first half of this year was a relatively chaotic time with a lot of disruption associated with uncertainty around tariffs and other economic issues. And so I think that that stifled the first half a little bit. So hopefully X that factor, we'll see a little bit more balanced growth first quarter, second quarter. of next year into third and kind of through the end of the year. So I think our cycles are relatively the same. Hopefully, they'll be maybe a little bit more calm with rates lower and some of the transition issues behind us. We're still there? Jasmine | Investor Relations / Conference Call Moderator: Dean, are you still there? Jean Delise | Analyst, DA Davidson: Yeah, yeah, sorry, I apologize about that. In terms of the EBITDA margins, yeah, thank you so much for all the comments and color, but I just sort of wanted to understand a little more. With the pickups in projects or expected work, I guess going into the fourth quarter, Should we see it kind of come down to second quarter levels in terms of SG&A, or should it be more in line with what you experienced this quarter? Bruce Labovitz | Chief Financial Officer: I think it will be in between. Jean Delise | Analyst, DA Davidson: Makes sense. And just, I guess, into 2026, going back to my first question, should we expect more efficiencies that you talked about having a great impact initially sort of from the start of 2026, or will that develop more as you head into the second half of 2026? Any other comments around that help? Bruce Labovitz | Chief Financial Officer: Yeah, I would expect it to be more beneficial on a relative basis in the second half of the year, but still be beneficial in the first half of the year. Jean Delise | Analyst, DA Davidson: Got it. I appreciate it. Thank you so much for your time. Thank you. Jasmine | Investor Relations / Conference Call Moderator: Thank you. There are clearly no questions registered, so as a reminder, it is still one to ask a question. There are no questions waiting at this time. So I'll pass the conference back over to the team for any closing remarks. Gary Bowman | Chief Executive Officer: Thank you, Jasmine. And thank you, everyone, for joining us on this call this morning. We're really looking forward to finishing out the year on a high note and certainly looking forward to Banner 2026. So thanks for all the employees who are listening, for all you're doing, and for all the investors, for the faith you put into us. to the analysts for staying in touch with us. With that, I'm going to wrap it up. Good morning, everyone. Jasmine | Investor Relations / Conference Call Moderator: Ladies and gentlemen, that will conclude today's conference call. Thank you for joining. jsPDF 3.0.3 D:20260606090033-00'00'

NASDAQ:BWMN Q2 2025 Earnings Call Transcript Generated on 6/6/2026 Victoria | Conference Operator: Good morning. My name is Victoria, and I will be the conference operator today. At this time, I would like to welcome everyone to the Bowman Consulting Group second quarter 2025 earnings conference call. All lines will be placed on mute for the presentation portion of the call with an 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 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 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. Replays of the call will be available on the company's investor relations website. Mr. Bowman, you may begin your prepared remarks. Gary Bowman | Chief Executive Officer: Great. Thank you, Victoria. And good morning, everyone. And thanks for joining our second quarter earnings call. Bruce Labovitz, our CFO, is with me this morning. I'll start today's call with some introductory remarks, and then Bruce will cover our financial performance. I'll end the call with closing statements before opening to Q&A. So, turning to slide three. The second quarter marked another period of growth due to strong demand across our core verticals. New orders were especially strong in transportation, renewables, and energy transmission, where our expertise and differentiated capabilities continued to drive increase client engagement and long-term opportunities. The momentum we experienced across the business reflects our ability to execute with discipline and deliver high impact outcomes for our clients. For the quarter, we recorded a 17% increase in gross contact revenue, a 15% increase in net service billing, over 8% organic net service billing growth, and almost 51% growth in adjusted EBITDA. Importantly, record bookings during the quarter were well balanced across our markets. Once again, we reported a book-to-bill ratio of well over one. As we sit here today, I'm pleased to report that bookings so far in the third quarter are outpacing second quarter bookings. I'll now turn the call over to Bruce to go into greater detail. Bruce? Bruce Labovitz | Chief Financial Officer: Okay. Thanks, Gary, and good morning, everyone. Let's turn to slide four. As we detailed in our earnings release last night, the second quarter was record setting on several fronts, including both gross revenue and net revenue at 122 million and 108 million respectively. Adjusted EBITDA of 20.2 million and a margin of 18.7 were also records. Adjusted EBITDA margin was up 440 basis points over the second quarter last year and 420 points over the first quarter of this year. Gross margin in the second quarter increased by 120 basis points over last year and by 230 basis points compared to the first quarter this year. That's helpful, but it's just a component of the margin expansion story. Keep in mind, gross margin sometimes fluctuates because it only reflects the burdened utilization driven cost of our operations workforce, but does not include indirect non-billable operations labor. So to be more complete, Let's look at total overhead. The combination of the direct payroll and SG&A lines on the P&L is total operating overhead. When we compare the second quarter to the first quarter this year and look at the sequential quarter-to-quarter changes in revenue versus changes in total overhead, you see that the $8 million sequential period increase in net revenue was achieved with essentially a flat total overhead. Unpacking that a little further, total unburdened operations labor increased roughly 1%, while net revenue increased roughly 8%. What we find most encouraging about the second quarter's results is the validation of our belief in the scale effect on our adjusted EBITDA margin, the point in our growth cycle where revenue is growing faster than overhead. While there were ups and downs across overhead expenses, we believe that in the aggregate, we are delivering on the scale effect. In large part, the margin expansion we delivered this quarter was the product of deliberate and disciplined labor cost management supported by the commitment of every member of our workforce to optimize our collective utilization. Year to date, our adjusted EBITDA margin is 16.7%, a 250 basis point increase over last year. At the midpoint of our guidance, we're projecting a 17% adjusted EBITDA margin for the year. This implies operating in what we believe is an extremely achievable second half average margin of a little over 17%. Non-cash stock compensation expense in the second quarter was 3.1 million compared to 6.1 million last year and 6.7 million in the first quarter. This sequential quarterly drop is attributable to two primary considerations. First, in the first quarter we benefited from a cost arbitrage based on lower than expected grant date fair value for the shares we issued in April in settlement of our 2024 non-cash stock bonus accrual. Secondly, we implemented structural changes to our 2025 bonus plan during the second quarter that impacted the anticipated annual accrual for non-cash stock compensation. We currently project total non-cash stock comp expense of around $20 million in 2025. We firmly believe our culture of widespread employee ownership creates shareholder alignment, which contributes meaningfully to improving efficiencies and to our ability to deliver a high teen's margin profile. Let's turn to slide five. The composition of our revenue continues to evolve and deconcentrate. To better illustrate the composition of our revenue, we've added a few new subcategories to the revenue pinwheel. In addition, We reclassified data center work to the power utilities and energy sector, given the rapidly evolving nature of our work in data centers, which Gary will discuss later. Additionally, we added a breakdown of our transportation business to highlight what we believe will be consequential areas of concentration and growth for us over the next few years. This includes ports and harbors and mass transit, including aviation, both small parts of our business today. Within transportation, Our work remains approximately two-thirds public and one-third private in nature. Natural resources and imaging revenue is roughly 50% public-funded digital orthoimaging and photogrammetry for federal customers such as the Department of Agriculture, with the remainder split between water resources, mining, and environmental services. Let's turn to slide six. In the second quarter, we generated 8% organic growth in net revenue over last year. For the year, we have generated nearly 10% organic growth of net revenue. Organic growth of net revenue was positive across all verticals, being strongest in transportation at 21%, followed by natural resources and imaging at 19%, power utilities and energy at 5%, and finally building infrastructure at 4%. These organic growth rates demonstrate the strength of our diversified service offerings and reflect the revenue synergies that have been generated through an uncompromising commitment to adjacency and complete integration in our M&A program. Let's turn to slide seven. Backlog at the end of Q2 was nearly $87 million, or 25% higher as compared to last year, and over 19 million, or 5% higher than the end of Q1. This healthy growth in our backlog is the product of organic sales, as no new one-time inorganic backlog was added during the quarter. This growth of transportation backlog relative to revenue is a result of our deliberate efforts to grow our transportation business, and at this time we consider it to be indicative of continued future deconcentration of building infrastructure revenue. Let's turn to slide eight. Our balance sheet remains healthy with low leverage of just 1.6 times trailing four quarters adjusted EBITDA. The strength of our balance sheet and improving cash conversion provides sufficient liquidity and access to debt capital to fund our drive to greater scale. At the end of Q2, we had $108 million in net debt with nearly $16 million in cash on hand and $80 million available under the current revolver with sufficient access to lease financing for capital expenditures. We see no imminent need to access the equity capital markets. Cash flow from operations was down a bit in the quarter due to the payment of accrued bonuses and an increase in working capital resulting from backloaded growth in revenue and increased receivables during the quarter. Year to date, we've generated $16.3 million of cash flow from operations, a nearly 50% adjusted EBITDA conversion rate, and a threefold increase over last year. We remain confident that we will continue to increase that ratio and end the year with conversion in the mid to high 60s. At the beginning of the quarter, we spent $6.7 million, sorry, at the beginning of the quarter, we spent $6.7 million capitalizing on the opportunity to repurchase stock amidst a tumultuous market. We're purchasing over 300,000 shares at an average price of $22.19 per share. With markets more settled and our stock having rebounded, we're now focused on alternative capital deployment priorities, having not made any additional repurchases so far in the third quarter. Let's turn to slide nine. A couple weeks ago, we announced that we had committed $25 million for innovation investment through the formation of the Bowman Innovation Growth Fund, or the BIG Fund for short. This initiative is one way we are demonstrating our commitment to engaging our workforce in our quest to expand our digital and data service offerings, expand our revenue capture into OPEX and maintenance budgets, enhance the utility of our deliverables and increasing residual interaction with customers, and enable continued margin expansion through the introduction of innovation-driven efficiencies. We consider this to be an imperative for engineering services providers that want to remain relevant and competitive. Our efforts toward innovation are focused on three primary areas of technology. One, geolocation GIS and intelligent spatial awareness. Two, high resolution digital imaging, and interactive 3D modeling. And three, artificial intelligence tools that leverage large language modeling, hyper iteration, and agentic applications. We're already funding several employee initiated pilot projects and are vetting several others. We expect to yield meaningful returns on these investments over time. For now, we are only investing in internally generated ideas with internally executed implementations. I'll close by addressing the impacts of the recent One Big Beautiful Bill on our business. Keep in mind, the legislation was passed in July, so there are no visible effects in Q2. Of particular benefit to Bowman are the reversion to 100% bonus depreciation and the elimination of the requirement to capitalize and amortize research and experimental expenditures. This change finally affords us the ability to permanently unwind our uncertain tax position over time and reverse corresponding accruals for potential interest, with such future reversals having positive impacts on earnings per share. With that, I'm going to turn the call back over to Gary for closing comments. Gary Bowman | Chief Executive Officer: Great. Thank you, Bruce. One of the significant drivers of future growth for Bowman is the renewed increase in demand for power generation, transmission, and consumption. This phenomenon has been accelerated by the rapidly expanding applications for data centers. Data centers today are amongst the most energy-intensive forms of infrastructure development, and their scale, complexity, and urgency are reshaping how we think about them as an asset class. Data centers are no longer just land development initiatives driven by the availability of fiber and proximity to substations. Today, data centers start and end with the availability of power, both in permanent and temporary bridging applications. Power has displaced latency as the primary problem to solve. To better position Bowman for success in capturing a larger share of the entirety of the data center market, we've moved data centers out of building infrastructure and into our power market sector, where it belongs and where it will thrive. We also made an acquisition to further expand our range of service offerings to data center developers and operators. Given the growing influence of the data center market on our business, I want to spend a few minutes walking through our strategy in this space, how the E3I acquisition positions us to unlock near-term growth and expand our service scope in the quarters ahead. I'll just turn to slide 11. Historically, data centers were built where zoning allowed it. Fiber was abundant, and power was sufficient. Today, the definition of sufficiency has exploded to levels unfathomable 5 to 10 years ago, and power is the catalyst to successful data center planning. This is where we are uniquely positioned to capitalize on the growth of data centers. Our teams are not only supporting clients through site development permitting, but also in the design of onsite substations, switching yards, advanced chiller systems, and power distribution infrastructure. We're also able to implement advanced thermal strategies into our designs. These capabilities increase both project complexity and value, which we expect will help us win high margin, longer duration engagements. Evolution in the rapidly evolving power dynamics of the data center market is exactly why we acquired E3I, to better position us to compete for broader scopes of work and grow our long-term presence in this sector. With E3I, we now offer a true end-to-end solution from land acquisition and entitlement to onsite infrastructure and substation integration, all the way to delivery of cooling and electrical systems inside the walls of the facilities. A full delivery solution enables us to expand project scopes, compete more aggressively with the growing power needs of our clients, and deliver greater value per engagement. The rise of data centers is also fueling increased demand for our renewables and energy services divisions. As clients bring data centers online in advance of the availability of traditionally transmitted electricity, They also pursue grid independence and cogeneration strategies, such as battery energy storage, fuel cells, microgrids, and the alternative energy generation. We have the expertise to plan, permit, and engineer both facilities and the energy infrastructure they depend on, making us not only a key partner in facility design, but in long-term energy strategy. So while we are concentrating on capturing more market share and wallet share in data centers, we continue to focus on revenue diversification across all verticals, and we continue to sail where the tailwinds are strong in other areas, such as road and bridge infrastructure, mass transit, water resources, ports and harbors, and other general civil infrastructure. As we look for the rest of the year, We're optimistic about the remainder of 2025 and our early view of 2026. We expect to see a similar growth pattern to what we experienced last year, wherein momentum builds through the second and third quarters with growth accelerating mid-year before leveling out in the fourth quarter. On slide 12, you'll see we're raising 2025 full-year guidance of net revenues in the range of $430 to $442 million. with adjusted EBITDA between $71 and $77 million. I'll now turn this call back to Victoria for questions. Victoria | Conference Operator: Of course. We will now begin the question and answer session. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If for any reason you would like to remove that question, please press star followed by 2. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question. We will pause here momentarily to allow questions to register. Our first question comes from the line of Aaron Spachala with Craig Hallam. Your line is now open. Aaron Spachala | Analyst, Craig-Hallum Capital Group: Yeah, good morning, Gary and Bruce. Thanks for taking the questions. You know, maybe first for me, can you talk a little bit about the transportation segment and just, you know, some of the growth that you're seeing there, you know, particular areas of strength and just maybe talk a little bit about the pipeline and how you see that segment, you know, performing over the near term. Gary Bowman | Chief Executive Officer: Sure, Erin. Good morning. What we're seeing is really the establishment of great synergies between some of our recent acquisitions and just increased presence in the market. The public spending both from the infrastructure bill and other funding sources is certainly continued in a robust manner. So lots of wins in our construction management and engineering services. but all throughout also with bridge renewal and highway design. So really across the board, great backlog. Aaron Spachala | Analyst, Craig-Hallum Capital Group: All right. Thanks for that. And then maybe on power and utilities, energy transmission is an area we haven't heard about for a little bit. Can you maybe just give a little bit more color there, the size of that business for you today and kind of how you see the outlook there moving forward? Gary Bowman | Chief Executive Officer: Yes, Aaron. It's a significant part of our energy and power segment. Our geospatial group has had some great recent wins with power transmission. And with the acquisition of Surdex last year, we're starting to see some applications with our fixed aerial for some of the big transmission jobs. So we see that as a continuing increasing part of our power and energy business. Aaron Spachala | Analyst, Craig-Hallum Capital Group: All right. And then just maybe last on the operating leverage, you know, really good to see that start to show through. Can you just kind of talk about how you, you know, feel from a, you know, operational capacity standpoint, you know, areas of investment that you might need there? Bruce Labovitz | Chief Financial Officer: Bruce, good morning. I guess The answer to that is we're happy with the way we're leveraging the size of the operation. The key input is always labor, right? And so managing the increases labor being prepared to meet the demand that's coming in through, as Gary mentioned, increasing sales. So investing in having the appropriate labor force available at the right size in the right places at the right times is a meaningful amount of effort here. Beyond that, you know, we've talked about investing in innovation that allows us to further leverage the workforce into higher multiples of return, being able to provide more efficient technology-enabled services to capitalize on the inventory of digital assets that we have in place today to be able to scale in such a way that it's not one to one incremental labor to incremental revenue, that it is a multiple of incremental labor to revenue going forward. So we're investing internally in systems and processes and digital services that are of high value. and in making sure we keep the labor force correctly aligned for the future. Aaron Spachala | Analyst, Craig-Hallum Capital Group: All right. Thanks for taking the questions. I'll turn it over. Victoria | Conference Operator: Thank you for your question. Our next question comes from the line of Brent Thaleman with DA Davidson. Your line is now open. Brent Thaleman | Analyst, D.A. Davidson & Co.: Good morning, Brent. Hey, thanks. Good morning. Hey, great quarter, guys. I guess just. Yeah, first question was just maybe Bruce just on the outlook. The updated view for the year at the at the midpoint sort of implies somewhat lower margins in the in the second half, and it seems like a lot of the factors that are driving the really good operating leverage here this quarter should carry forward. So just wanted to get a sense that there's some other things. Now we had to consider on the margins in the second half. I know it's a dynamic. macro environment right now, and there's a need to want to be conservative as well. So just wanted to dive into that a bit. Bruce Labovitz | Chief Financial Officer: Yeah, Fred, me and Paul, we've talked about in the past that quarterly margins will vary, you know, depending on the timing of revenue and the increases in labor. I think about the second half relative to the first half, and it does imply improving margins over the first half as a collective. I think that this quarter is a very positive indication of the capability of the organization to generate the kind of long-term high margins that we aspire to deliver. We will see some inflationary pressure on labor, you know, throughout the year, and we do think that'll have some dilutive effect to this particular quarter's margin, but not meaningfully. Um, and so as we look ahead, we're confident that we can achieve a higher collective margin in the second half of this year than we achieved in the first half of this year, whether it be exactly evenly distributed or exactly at this. Uh, quarters level, this achieving this quarter's level of, of margin would, would allow us to exceed, uh, our guidance for the year. So that's our aspiration. Brent Thaleman | Analyst, D.A. Davidson & Co.: Okay, appreciate that. That's helpful. And then just on the press release, Bruce, you talked a bit about it, the big fund. Any timelines associated with that? Is that fairly open-ended in terms of the deployment of that back into the business? Just wanted to get a better sense around that. Bruce Labovitz | Chief Financial Officer: Yeah, at the moment, Brent, I would characterize it as opportunistically open-ended. You know, we would like to be deploying capital into the business in productive ways as quickly as possible, but as prudently as possible. So we are sort of thinking of it as, you know, there's an investment committee that is assessing ideas, that is funding pilot programs. We're currently working with a couple of pilot programs at our ports and harbors group and our water resources group and our civil production group in terms of how we traffic work around the organization. And so there's a number of good things. I would say this is, you see it between the rest of this year and next year, we'd like to see that capital being deployed and returns starting to be generated. And so it's an exciting initiative within the company. It's got a lot of traction, and it's amazing how many ideas our workforce, you know, has been able to generate. We're sorting through them. Brent Thaleman | Analyst, D.A. Davidson & Co.: Okay, awesome. And then, you know, last one, I mean, Gary, I'd be curious if you could just talk around how some of the demands of the data centers have changed the way you work around and with these customers. I mean, on one hand, it's a small portion of your business, but I'm sure it's having kind of knock-on effects in other areas of your business as well. So if you could just talk around that and how you see that unfolding here going forward. Gary Bowman | Chief Executive Officer: Well, it's a great question because it is evolving from one where several years ago, it was the land acquisition, entitlement, site development work to now being tied together with, as we said in the comments, the entirety of energy infrastructure, the energy demand, power generation, and now with the addition of E3I to be able to get inside the walls of the buildings. So it's rapidly evolving and in a way that is synergistic with other areas of the business that we've been building. So we're very excited about the, needless to say, about the future potential. Andy Whitman | Analyst, Robert W. Baird & Co.: Okay. Very good. Thanks, guys. I'll pass it on. Thank you, Brent. Victoria | Conference Operator: Thank you for your questions. Our next question comes from the line of Andy Whitman with Baird. Your line is now open. Andy Whitman | Analyst, Robert W. Baird & Co.: Great. Good morning, everyone. Yeah, I mean, as I look at the quarter, I think, again, the margins just really stand out to us. Not to beat a dead horse here, but, like, Bruce, could you just talk about, you know, over the last year or so, you've also done some things to manage that overhead. You've done some cost actions there. talk about if that was a contributor here as kind of it's kind of a few quarters now i don't know if it's still contributing but can you just discuss that as it relates to the margins and any benefits maybe from the mix of work that you're doing i have to imagine that this data center grows faster than the rest of the business some of the lower margin parts maybe aren't growing as fast maybe that's a factor as well so maybe a thought could have you address those couple of things too bruce Bruce Labovitz | Chief Financial Officer: Yeah, sure, Andy. You know, the margin, you know, the principle contributed to margin here is the efficiency of labor. You know, hands down, that's sort of the single biggest lever is having the right labor in the right place at the right time to meet the demand that the business is generating and the revenue that is to be generated. Having the pyramid of labor Tom Frantz, You know, in the right shape, so that you've got you know cost you've got a large a large collection of folks that can do a lot of different functions and a fewer of the highly specialized folks so that you can share work more freely. Tom Frantz, it's a function of the adjacency of our m&a activity that we're buying things that fit within that pyramid of Labor and then we are fully integrating them. without regard for how they looked before. And it's part of the vetting process of M&A to be able to find the right kinds of organizations that understand what the post-closing environment is going to look like and why they're going to fit in and thrive in this environment. So labor is really the biggest lever we have. And last year, as you talked about, we retrenched and got very serious about made some leadership changes in terms of how labor and operations were managed. And it's been a very effective realignment of interest there and of effort. Everyone within the company has stepped up, mobilized, and found ways to optimize utilization. The rest of overhead is one of those things that we control to the best of our ability and try to limit the growth of. And, you know, we're not in a, you know, a, what do we call it, rapid cost-cutting mode, you know, but we're looking at where can we, you know, be more effective with what we have as opposed to acquiring more things. So, you know, all those things together are contributing to a, you know, what we said is essentially a flat total overhead period over period. I don't really think of it as year over year. I really like to think of things in sequential periods because that's where you really see the relevant change. In terms of margin of work, I would say that it's not as big a factor. We're not out here chasing specific categories of work because we've identified them as being higher margin. But I will say that the introduction of technology is an accelerant in the margin profile of all of the things that we do. To be able to iterate faster, to be able to access large troves of publicly available information and synthesize them in real language I mean, our people be able to essentially ask Bowman their own questions about how to win work has been a very valuable and contributing investment. Andy Whitman | Analyst, Robert W. Baird & Co.: Thanks for that, Collier-Bruce. And just kind of, Gary, the M&A pace, you have previously discussed that your M&A pace in terms of number acquisitions might be lower. size of them might be higher. We had a quarter here where I don't think anything closed. So really two aspects to this question. The first aspect is, has that slower acquisition pace afforded a better look at the organic business that's helped you focus in on some of these cost actions? And two, is this still the plan forward with maybe lower frequency, larger deals, and how should investors be thinking about that as we sit here today? Gary Bowman | Chief Executive Officer: So it's a great question, Andy. I'd say the pace of our acquisitions, it's really a matter of some normal ebbs and flows, and it has an ebbing. So it wasn't deliberate, but it's certainly timely. And we've taken advantage of it and by taking some bandwidth to be able to focus on the organic growth and the efficiencies. But we certainly will continue to be an acquisitive firm, acquisitive company. And the pace will be focused more on larger deals and not quite as frequent. Andy Whitman | Analyst, Robert W. Baird & Co.: Got it. Then just if you'll afford me one last one, maybe for you, Bruce. Notice the change in the stock-based comp, just looking at the run rate as what's coming on. You talked about how you kind of restructured the program and made some changes to it. This is, I think, for a lot of investors, been an important area, actually, because it's been a fairly large number relative to the size of your company. So I guess maybe the question is from an operational point of view, like, Is there a substitute here where maybe there's a little bit less stock comp that goes to the income statement, but there's more cash? I'm just wondering if there's some other aspect to how this kind of changed in the compensation system, which has been so important. I mean, Gary set up this company with equity for people to keep them aligned. I mean, this was foundational to kind of the thesis about what your company was going to do. So when you change it, I kind of want to understand and what's changed, how that affects people, and how it affects the income statement. A little bit more detail there. Bruce Labovitz | Chief Financial Officer: Yeah, I think, Andy, the answer is that in the aggregate, you know, we still are in a competitive labor environment and compensation matters, right? And so don't take that as if we are cutting compensation. We're just restructuring the way that compensation is, you know, and the incentives, the incentives and the way the compensation is settled. And in response to And in an effort to bring the non-cash stock portion and the dilutive effect of that a little more in line as we get bigger. We are not reversing course in any way on our mindset that it is an important component of this business's success to have invested aligned employees who care about the long-term value creation who are incentivized to work that extra hour or two because they know that when we generate margins like we do today, we all benefit collectively. But yes, there's certainly, you know, in the mix of compensation, if you take from one, you give somewhere else. And so we're not risking the loss of employees over it, but we're realigning to where we're at about 4% this year. and expecting that to come down as we grow, as revenue grows and we scale into this mindset. We don't disclose specific bonus components because from a competitive perspective, that's something that we try to be generally descriptive of, but not specifically descriptive of. But the answer is yes, there's some give and take in there, but it is in recognition of Gary Bowman | Chief Executive Officer: that need to realign and it is gary i just i want to reiterate what bruce said is is as this evolves our ownership culture is as strong as it's ever been so we're committed to not compromising on that so and sort of walking the line between the two and so far appears we're doing it successfully okay great thanks for the detail on that have a have a good day thanks thanks andy Victoria | Conference Operator: Thank you for your questions. Our next question comes from the line of Jeff Martin with Roth Capital Partners. Your line is now open. Jeff Martin | Analyst, Roth Capital Partners: Thank you. Good morning. I'm wondering if you could touch on an update on the building infrastructure group. You know, the organic growth returned positive for it in the quarter and, you know, Wanted specifically to dive into the potential for Bowman to benefit from potential industrial reshoring. Gary Bowman | Chief Executive Officer: For Jeff, it's the the the market has has rebounded over the past six months in our general building infrastructure group. We've had some really great wins in with big national retailers and the residential segment is stronger we're seeing uh lots of recovery in in multi-family and in build for rent we've had a we have a great presence in the bill for rent market and there's some some really strong green shoots there uh so with with reshoring in the long run certainly we our position in building infrastructure overall will will benefit from that so we're looking forward to that Don't think it'll show up next quarter. Don't think it'll show up the fourth quarter. But in the long run, that will be a tailwind for us. Bruce Labovitz | Chief Financial Officer: And we think about reshoring, really. Reshoring is an entire ecosystem of our services. Anything that gets reshored requires transportation and power and environmental remediation and, you know, and then all the collateral building infrastructure associated with the housing required and the commercial and retail. So it's a holistic impact to us, what is the idea of reshoring. Jeff Martin | Analyst, Roth Capital Partners: Great. And then wanted to touch on, given the, you know, the nice increase in backlog, just curious from a high level, you know, how much you're bidding on larger contracts, how much you're competing, you know, more directly on those potentially larger contracts. And is this something that you anticipate being more prominent to the business going forward? Gary Bowman | Chief Executive Officer: Sure, Jeff, as, as the company evolves, as we, uh, move into other markets, almost by definition, transportation markets, highways, bridges, ports and harbors, with the bigger energy projects. We are bidding on and winning bigger projects. So as we continue to grow, we continue to expand into these markets that are newer to us, but that we're well established in. We will see that a continued pattern that I'll say the average size is going to get larger. We're going to have more larger wins as we continue to grow the company. Jeff Martin | Analyst, Roth Capital Partners: Great. And then wanted to dive in on the big fund a little bit more. Sounds like this is largely a technology-focused initiative. Is there opportunity to create more of a recurring type revenue stream longer term as a result of this initiative? Bruce Labovitz | Chief Financial Officer: Yeah, I'll answer that, Jeff, absolutely. And it's one of the prime objectives of the big fund is to identify places and opportunities to deploy capital and assets that can create recurring revenue streams. And fundamentally, where we are evolving is from being strictly in the CapEx mindset of our customers to being in the operating and maintenance mindset of our customers. And that is, by definition, recurring revenue opportunity. So not just designing the asset, but innovating in our product suite so that we then deliver our products to our customers in a way that they interact with us on an ongoing basis throughout the lifecycle of the asset. Just in Gary's quote, we talked about evolution in the lifecycle engineering, and that's a deliberate terminology that we're using because that's what we think generates a recurring revenue opportunity for us. We're investing in ways that we can engage with customers between engagements. and create recurring contracted maintenance services, not physically going and, you know, and turning wrenches and screwdrivers to maintain things, but being able to predictably assess the state of infrastructure to know when and where repairs, upgrades, and or, you know, risks exist. So, it's very much a part of the business, and it's also designed to, help to break down friction in what we would think of as high-volume opportunities, where you can leverage the universe of language and libraries of information to rapidly deploy proposals on behalf of customers to expedite their ability to obtain funding. Very helpful. Thank you. Jeff Martin | Analyst, Roth Capital Partners: Thanks, Jeff. Victoria | Conference Operator: Thank you for your questions. Our next question comes from the line of Laura Mayer with C. Reilly Securities. Your line is now open. Bruce Labovitz | Chief Financial Officer: Good morning, Laura. Laura Mayer | Analyst, C. Reilly Securities: Hi, Gary and Bruce. Thanks for taking the question. My first question is, what are your customers telling you about how the one big beautiful bill might affect their project pipelines and timing? And then how does that transpire to your operations on the front end? Gary Bowman | Chief Executive Officer: Laura, it's Gary. It's fairly early. Certainly the accelerated depreciation makes a difference in investment decisions. So I guess the most immediate feedback that we hear from the market is that that will have an effect on investment. Bruce Labovitz | Chief Financial Officer: There's also a calming of uncertainty that results from, okay, this is now behind us, right? It's not an open question. And so now our customers can regroup, settle in, and know where long-term there's opportunity for funding, for capital deployment. It is certainly in many cases accelerating the race to permitting on renewable energy because there are some deadlines now that exist Patrick T. O' that I think are going to draw forward in the next 18 months, a large collection of activity in order to lock in what was, you know, previously not expiring, but now is. So we're gearing up in expectation of there being, you know, an increase in that activity. Laura Mayer | Analyst, C. Reilly Securities: Great, thank you. And then just another one, what's driving the growth in natural resources and how much runway do you think remains in that segment? Bruce Labovitz | Chief Financial Officer: Yeah, we've talked about this, that a big influence there was the acquisition of CertX and the introduction of this adjacent but new service that didn't really, in many cases, fit into other categories. We this year have started to allocate it more throughout the business And so a big driver of that is in the work we're doing for high altitude ortho imagery, photogrammetry, and geospatial services around things like the Department of Agriculture's programs. that remain in what we would call natural resources. There's been good growth in water, good growth in mining, and probably a flat environmental environment for us, but that's the primary driver. Laura Mayer | Analyst, C. Reilly Securities: Thanks. Victoria | Conference Operator: Pass it on. Gary Bowman | Chief Executive Officer: Thank you, Laura. Thank you, Laura. Victoria | Conference Operator: Thank you for your questions. There are no further questions registered at this time, so as a reminder, it is star one to ask a question. Ladies and gentlemen, as there are no further questions, we will conclude today. Oh, apologies. We would like to pass the call back to Mr. Bowman for any final remarks. Gary Bowman | Chief Executive Officer: Great. Thanks, Victoria. I want to take a moment to thank all the staff employees of Bowman for all the great hard work over the course of this year, the course of this quarter. These results, they don't happen by accident. It's not just Bruce and I who drive it. So great work to everybody. And thanks to our investors for the faith you put in us. And we're looking forward to a continued great year and continued good years ahead. Thanks, everybody. Good morning. Victoria | Conference Operator: That concludes today's conference call. 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