Good morning. My name is Harry, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Bowman Consulting Group Fourth Quarter and Full Year 2021 Conference Call. [Operator Instructions] Thank you. Please note that many of the comments made today are considered forward-looking statements under federal securities laws. As described in the Company’s filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and the company is not obligated to publicly update or revise these forward-looking statements. In addition, on today's call, the company will discuss certain non-GAAP financial information such as adjusted EBITDA and net service billing. You can find this information, together with the reconciliations to the most directly comparable GAAP information in the Company’s earnings press release and 8-K filed with the SEC on company investors website at investors.bowman.com. Management will deliver prepared remarks after which they will be taking live questions from published research analysts. Throughout the call attendees on the webcast may post questions for management to answer on the call or in subsequent communications. But there will be no live Q&A from the webcast attendees. Replay of the call will be available on the company's investor website. Mr. Bowman, you may now begin your prepared remarks.

Thank you. Welcome to the Bowman Q4 and full year 2021 earnings call. I'm Gary Bowman, Chairman and CEO of Bowman. I'm joined this morning by Bruce Labovitz, our Chief Financial Officer. Before we start, I'd like to acknowledge all the hardworking staff members of Bowman, both those who have been with the firm for a while and those who joined us through our recent acquisitions. Results that we report this morning stoke from the unrelenting efforts of all our employees and the service of our clients, our communities, and our shareholders. And 2021 is a transformational year for Bowman. We started the year as a closely held private company with just over 700 employees in 25 offices. By the end of the year, we were 1100-person public company working at some 40 offices. We required eight firms throughout 2021 and added a ninth acquisition early 2022. Through our acquisitions we broadened our service offerings with the addition of mechanical, electrical engineering, building commissioning and building envelope and energy efficiency consulting. Our acquisitions extended the reach of our footprint by adding locations in Houston and Denver, Fort Worth, Raleigh, Atlanta, Baltimore, Louisville and Waco, Texas, while organic expansion added offices in Carolinas, in Arizona and California. Most importantly we added talented professionals and extraordinary leadership to our team. I could not be more pleased with the results of the execution of our strategy in the first year of our public company. As Bruce will describe, we delivered record growth in net revenue in 2021. Overall, year-over-year rated growth in net service billings was 30% with year-over-year rate of organic growth coming in at 19%. We expect continued strong momentum in top line growth and management will be focused on increasing margin as we build scale, since we had public company…

Great. Thank you, Gary. Good morning, everybody. As Gary mentioned, 2021 was a transformational year for Bowman. We’ve accomplished so much. It’s hard to believe. We’re still talking about our first 10-K for a year in which we were public for only seven months. I want to add my thanks to the entire Bowman accounting team for your tireless effort to help transform us to a public company that delivers quality financial filings in a timely manner. It’s been no small feat, and we’re all grateful for your efforts. Gross revenue for the fourth quarter increased $12 million to $41.9 million, up 40% from $29.9 million in Q4 2020. Gross revenue for fiscal 2021 increased $28 million to a $150 million, up 23% from $122 million for fiscal 2020. Of the $28 million increase for the year $12 million was from acquired revenue and $16 million was organic representing a 13% organic growth rate. Net revenue a non-GAAP metric is gross revenue as outside sub consultants of other direct expenses. Net revenue is the revenue generated by our workforce and is a better revenue proxy for growth and profitability. Net revenue increased $11.5 million or 43.7% to $37.8 million in the fourth quarter. Net revenue for the year increased $31.2 million or 30.1% to $134.9 million. This represents an increase of net revenue as a percentage of growth revenue from 85% to just under 90%. We believe this was primarily the result of lower transportation revenue in 2021. Of the $31.2 million increase in net revenue, $11.5 million was from acquisition and the remaining $19.7 million was from organic representing a 19% organic growth rate for the year. Gross margin for the fourth quarter was 51% as compared to 50% in 2020 and 50% for the full year as compared…

Thanks, Bruce. This continue to be exciting times here at Bowman. And I cannot be more pleased with the execution of our strategic growth plan. We go through generating extraordinary, the quality of the local presence exemplary. Integration of acquired companies and the synergies we are creating really at pace my expectations. Our future bright and confident will continue to increase shareholder value for everyone who’s invested in Bowman. Thanks again to everyone who works every day and makes us successful. I’ll now turn to call back to the operator for questions. Thanks.

Thank you. [Operator Instructions] Our first question is from Brent Thielman from DA Davidson. Brent, your line is now open. Please proceed.

Great. Thank you. Good morning, Gary, Bruce.

Good morning, Brent.

I guess, first question was a clarification, Gary, I think what you’ve mentioned in the prepared remarks, I think you said you acquire up to or ambitions to acquire up to $75 million in annualized revenue this year. It’s one to clarify, does that include some of the late December transactions you’ve done? And then if you could, I think you said the average deal size might be closer to $10 million in annual revenue. Just curious, what might the top end kind of look like in terms of sizes transactions you’re looking at right now.

The forecast or estimate of $75 million does not include to Q4 2021 acquisitions. And let’s just say a range, maybe I’ll just say a roughly from $5 million to $25 million, $30 million in size of what sort of in our sites right now. So, I’d say, answer your question, [indiscernible] I’d say – saying the $30 million-ish size.

Okay. Okay. That’s great. And then the increase in guidance for 2022, obviously very bullish. Is that strictly related to the deals you’ve completed? I guess, since you’ve last provided guidance, is there a more optimistic organic growth outlook also embedded in that just wanted to get some color there.

Some of both, it’s the addition – it is primarily the addition of the deals we closed since we last issued guidance, a little bit of additional optimism on the organic growth, somebody else only against. Brent, I just commenting on that, I don’t think we’re generating.

Okay. Thanks, Gary. And then maybe for Bruce, I mean, the SG&A did increase at a faster clip than I’d expected. Thanks for the breakout of the stock comp obviously that’s a factor there. I mean, anything else you can dissect for us. I mean, any items in there that might be transitory this quarter? Just looking for some more color there.

Yes. I think one of the things that it wasn’t necessarily in 2021’s particularly obviously where fuel prices go, we’ll have some impact we’ve got a large fleet of vehicles out on the road. There’s some impact to that. But generally, Brent really, it’s been the cost of gearing up to manage our existence as a public company to integrate acquisitions as they’ve come on board nothing that I would call particularly anomalous or unexpected other than, as we’ve talked about in the past, insurance, certainly D&O insurance is more expensive than would’ve been expected two years ago when we initially contemplated being public. But generally speaking, costs are kind of in line, but the majority of the increase is nominally coming just from being a larger company percentage wise from having to gear up to accommodate the requirements of being public.

Okay. And maybe last one and I’ll pass it on. I mean, again, really strong organic growth this quarter. I know in your filings you typically provide a good breakout of the building’s infrastructure piece in terms of where you’re deriving that growth. Not seeing that yet, maybe you could just help us with where you’re seeing the most growth in that market segment kind of between single family, multifamily and then the commercial customer applications.

Yes. So, within the growth of the building infrastructure, the major – well, the majority of it was from commercial, non-residential. And within commercial, we’re seeing increases from big box retail and from office and industrial. So, it was about an $18 million increase in commercial, municipal, and non-residential. Of that about $8.5 million was office and an industrial and about $9 million was big box and chain retail. And then there was about a $10 million increase in residential, about $7 million of that was from multifamily, about $2 million-ish from single family and the balance from other. That’ll be in the K when it gets filed, but that’s the breakup.

A big driver of that this year and into the future, we’ve added this – we bought KTA and then PCD and Kibart, we’re adding chemical, electrical, plumbing engineering, we’re adding a whole new service, which really serves that building infrastructure market with large that’s generally mostly non-residential, that’s generally commercial. So that really drives that broad market and drives the commercial market – and clearly part of that growth.

Do you need to repeat that Brent, because I seem too fast, or did you get them?

Yes, I think I got them. This is great. I’ll get back in queue. Thank you.

Okay. Thanks.

Thank you. Our next question is from Alex Rygiel from B. Riley. Alex your line is now open. Please Proceed.

Thanks. Good morning, Gary, and Bruce. Great quarter, great year.

Thanks, Alex.

Thank you, Alex. Good morning.

Good morning. Couple of quick questions here. First coming back to the M&A pipeline, can you clarify whether or not that’s $75 million is gross or net? As well, can you dig a little bit deeper and identify maybe some of the end markets that could be the majority of – sort of that $75 million target today, but also maybe sort of bracket what a larger sort of pipeline of discussions looks like over and above the $75 million?

The $75 million that would be net not gross. Large focus on transportation. There’s some public sector like say ports, waterfront type operations, some geographic expansion out in the west. Sort of the broader beyond the $75 million in the – what we’re looking in the broader picture, lot of focus – more focus – continued focus on transportation, focus on energy transition, focus on utilities, focus on water resources. So that’s sort of beyond the $75 million is maybe what we have in the center of our sites and the broader those other areas that we’re looking at.

I think the pipeline of opportunities not necessarily, as Gary said in the center of focus is easily double or more than that.

That’s very helpful. And then Bruce, you mentioned a focus on increasing your margin and I believe that 300 to 600 basis points of improvement can be derived. Can you go into that a little bit greater detail? Is it all just leverage over fixed overhead as you layer in more acquisitions? Or are you seeing cost synergies develop as your acquisition program gets going?

Yes, it’s a little bit of both. So, we’re currently seeing the slope of growth. We have seen the slope of growth of overhead at a faster pace than the growth of revenue. So that’s sort of contracted margin, but that’s because over the last year, we’ve really increased the fixed overhead associated with running the company and integrating acquisitions. There’s a point where that plateaus and I believe that we’re reaching that point and then you see a flip of that growth rate where net revenue is growing at a faster pace than overhead is growing over itself. And so, I think we’ve talked a lot about that 2021 and probably into early 2022 was our ramping up, our – building the infrastructure. But then that reach its sort of fixed point where it’s not that it won’t nominally grow, but it’ll grow at a rate that is at a slope that dampens relative to net. And then you’re just starting to grow the top line and while operations costs continue to grow, as you grow revenue that the corporate cost starts to become more fixed. And so, I really do think that we’ll – as we say, gross margin has stayed relatively stable and there aren’t that many transformational opportunities for gross margin. The technologies can add a fringe of that. But really, it’s a story of increasing revenue over a relatively fixed slope of growth of corporate fixed cost.

That’s excellent. Nice year. Good luck.

All right. Thanks, Alex.

Thanks, Alex.

Look forward to seeing you in May.

Absolutely.

Thank you, Alex. [Operator Instructions] And we have another question from Brent Thielman. [DA Davidson] Brent, your line is now open if you’d like to proceed.

Yes. Thanks. Gary, Bruce, in the February perspective, you talked about a pending acquisition target, I think in addition to Perry. I just wanted to get an update on the status of that deal. And does that kind of fall within the current acquisition pipeline that you talked about?

So that deal has currently been delayed. There’s some issues we’re assessing on that. And it may be later in the year, but it is not included in the $75 million of so that one since we already sort of talked about that one, if that can happen later in the year, that’ll happen incremental to that. But for the moment that one’s, it was in due diligence hold.

Okay. And then, I think you guys would be at the front end of any sort of spending cycle, obviously related to the infrastructure bill. It sounds like maybe you are starting to see some things developed there. I mean, any broader evidence in the planning processes you’re seen with public agencies that does that money is starting to flow?

Really just – still just kind of describe it as anecdotal maybe the anecdotes are coming a little more frequently and maybe a little more tangible, right. I would say the consumer confidence in index in that space has grown significantly. So, we’re now hearing lots of opportunities that are germinating and beginning to be discussed and you’re right, Brent. We will be on the front end of that as it occurs, will be mostly on the front end and the back end, a little bit in the middle. We do a lot of work in the planning. And so, we’re definitely engaged in activities with DOTs and other private developers who are seeing funds coming from public agencies. And so, as I said, we really expect the revenue to start showing up in 2023. One of our acquisition targets is active in that space. So, I think that’s kind of increased the footprint of our radar screen. So, we’re hearing more of it by virtue of that.

Okay. And then the power and utilities market, I think gives you pretty good exposure to these longer duration kind of programmatic contracts with good level of visibility kind of beyond the current year. Maybe an update in what you’re seeing in terms of new related customer opportunities, maybe new relationships building there. And then the status that some of the existing longer duration contracts you’re in right now with some of those blue-chip customers.

The work in Florida, we mentioned it in the remarks, the work in Florida has all indications that has been going on several years. And I guess it categorizes a pilot project. But it's all indications are that it's going to graduate from pilot to permanent, whatever is as much as anything is permanent in this world that forever project of undergrounding. So that’s – that is a positive outlook for the long-term durability of that project in particular. The new relationship again, we mentioned the WEC Energy with Peoples Gas up in Chicago. That’s again – that’s a long-term pipeline replacement job. That’s – we’ve really expanded our relationship there. Our relationship with Southwest Gas has expanded, that’s been a long term. So, these recurring revenue projects, our relationships, we become just more embedded and there’s no really, the outlook for them remaining as long for projects is made steady.

Okay. And then last one is just to clarification again, Bruce, I think you’d said 65% conversion of EBITDA and cash flow in 2022, but I may have not written that down. Maybe you can just clarify your expectations around cash flow this year?

What I said was 2021. Yes. What I said was 2021, not necessarily of indicator of what we think we can achieve over time of 65 plus. Obviously hopeful that that could be, we can get closer to that in 2022. But so, it’s sort of a long-term vision for cash conversion, 65 to 75 plus over time.

Got it.

Not necessarily setting out as a 2022 absolute yet.

Understood. Understood. Okay. Thank you, guys. Best of luck.

All right. Thanks, Brent.

There are no further questions registered at this time, Mr. Bowman, I’ll turn the call back over to you.

I like to just wrap it up by reiterating, very happy with the year. Very happy being a public company. Thank all the investors that are on the line for investing in us, the faith you show us. Thanks to all the employees who are on the line and those who aren’t on the line for all the hard work and making us successful and for everyone’s time to listen to our story today. Good morning. Look forward to talking to you again with the first quarter in mid-May.

This concludes today’s conference. You may now disconnect your lines.