Good morning. My name is Lydia and I will be your conference operator today. At this time, I'd like to welcome everyone to the Bowman Consulting Group Second Quarter 2022 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] 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, the Company's earnings press release and 8-K filed with the SEC and on the Company's investor website at investors.bowman.com. Management will deliver prepared remarks, after which they will be taking live questions from public 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. Replays of the call will be available on the Company's investor website. Mr. Bowman, you may begin your prepared remarks.

Thank you, Lydia. Welcome, everyone to the Bowman Consulting Group second quarter 2022 earnings call. I'm Gary Bowman, the Chairman and CEO of Bowman, joined this morning by Bruce Labovitz, our Chief Financial Officer. Before we get started, I would like to welcome – extended welcome to everyone from PDC and Fabre Engineering, our two most recent acquisitions. The talented professionals joining us from Southern California and Florida Panhandle to expand our reach, add to our client network and add to our depth of talent. We are excited to have these transactions complete, and we've already realized some significant cross-selling successes with both of these firms. In addition, I'd like to thank all the members of the Bowman team who worked tirelessly delivering the exceptional growth that we've been experiencing. Our people focus their efforts on delivering value to our clients and supporting each other by sharing work and cross-selling and by creating an inclusive culture that we are all proud of. As outlined in our press release last night, the second quarter of 2022 picked up where the first quarter left off with continued strong growth and record results. Our net revenue in the quarter puts on a pace of over $200 million a year for the first time. We continue to deliver on our strategy of driving both organic and acquisitive growth with an organic net revenue growth rate of roughly 30% year-over-year. Looking to the second half of the year, we are confident in the likelihood of continued growth, even in light of potentially challenging economic conditions. The mix of our business, we believe insulates us from any meaningful impacts from rising interest rates and volatile energy prices. [Indiscernible] and in connection with our ongoing acquisition program, we are raising our guidance for the full-year. Now I'm going to turn the call over to Bruce, who will discuss our financial results in detail, and then I'll return to talk a little bit about our markets and our M&A program. Bruce, go ahead?

Great. Thank you, Gary. Welcome, everybody. We are pleased to be here today talking about another record quarter. It's hard to believe that we are finally at a point where we are now comparing two quarters, both of which were where we operated as a public company. Gross revenue for the second quarter increased $25.9 million to $62.4 million or 71%. Year-over-year organic gross revenue was 27%. Net revenue for the quarter increased $23.9 million to $56.4 million or 74%. Year-over-year organic growth for net revenue was 32%. It's important to note that this is true organic growth in the volume of work build, not simply the impact of increased pricing. We saw growth in orders and net revenue across all our markets, resulting from the implementation of our growth plan, which focuses on cross-selling to existing customers throughout our national offices, creating revenue synergies from acquisitions and focusing our efforts on increasing our work with existing clients and winning new assignments. Adjusted EBITDA for the second quarter increased $3.4 million or 81% to $7.6 million as compared to the year ago period. This represents an adjusted EBITDA margin net of 13.4%, which is up 50 basis points as compared to last year. You can find the reconciliation for non-GAAP metrics in our press release. Gross revenue for the six months ended June 30 increased $46.6 million to $114.9 million or 68%. Year-over-year organic growth of gross revenue was 31%. Net revenue for the six months ended June 30 increased $42.8 million to $104.1 million or 70%. Year-over-year organic growth for net revenue was 34%. In our business, it is a positive when the growth of net revenue outpaces the growth of gross revenue. Adjusted EBITDA for the six months ended June 30 increased $6.7 million or 81% to $15…

Thanks, Bruce. I'm going to turn my attention now to our business and state of our markets and the status of our strategic growth plan and the vision for the future of our business. I will start by addressing the macro environment that we are working in. The demand for infrastructure investment is the strong as it's ever been during my 40 years in this business. Both public and private sector clients are competing for the services of firms like ours. What we are experiencing is a convergence of a growing market in which there is more business to be had, and growth within our business that's clearly taking market share from competition. While some of the markets we serve are reactive to interest rates on are driven solely by changes in rates. It's important to remember that in historical context, rates they are still substantially lower than they've been during other periods of inflation and aggressive federal reserve tightening. The mix of markets and some markets that we serve provides a buffer against economic cyclicality. While we all hear the same rhetoric about economic conditions and forecasts, these indications seem to run contrary to the resolute confidence that our clients are showing their business and their willingness to spend on infrastructure investment, which has made clear to us by the continued robust demand for our services across all sectors. Our bookings and new orders, which we refer to as our sales continue to grow month in and month out with a book-to-burn ratio well in excess of one. We are acutely attuned to any single of macroeconomic headwinds that may adversely affect our business. And to date, we've yet to experience any systemic slowdown in demand for our services. We are beginning to see the early stages of dollars…

[Operator Instructions] Your first question comes from the line of Brent Thielman of D.A. Davison. Please go ahead.

Hey, great. Thanks. Gary, Bruce, good morning.

Good morning, Brent.

Good morning, Brent.

I was curious – yes, first off, I'm just curious if there's a way to think about the contribution to organic growth from sort of more billable hours versus higher billing per hour I think you made a comment in the prepared remarks, and I was curious about that?

I'm not sure there's specifically a way to answer that the way you've asked it, except that the – I think the comment in the prepared remarks was that the organic growth is not simply a function of the same workforce at the same utilization rate at higher billing rates. It is a function of an increased headcount working at slightly higher utilization rates for more clients.

Okay. Okay. Thanks, Bruce. And then it looks like the nonhousing piece, the building's infrastructure sort of vertical is continues to grow really well. Maybe you could just talk about some areas that have been really strong for you in that side of the business.

Yes, commercial and municipals.

Yes, both of those markets are very robust. So it's all the government markets we're in are, I guess, fully recovered from COVID. So they're spending at very healthy paces, pursuing new projects in healthy basis. And the commercial and retail developers, I say developers our end clients are more often than not the actual retail chains, and they're very aggressive in their expansion. So that's very helpful. Some specific submarkets that data centers within building infrastructure has been extremely strong. Schools and other educational type facilities have been very strong. We've seen industrial commercial has been strong. We work with Amazon, for instance, on their HQ2 project in the D.C. area that JBG really – it's a strong market that type of work. So all of those areas have been positively impacted.

Okay. And then March, you laid out sort of these plans to be able to acquire $75 million or more in annualized I guess, net service billings, you're up to looks like over $40 million now. How robust are the discussions today? Kind of how is this evolving economic climate impacting those discussions? Is it working against achieving that target? Is it helping the pipeline? Just be curious about that.

The pipeline is robust. And I don't certainly don't sense any change, I'd say, in the sentiment of the seller. And their expectations haven't changed. Their expectations are the same, but the market is still as robust as it's been. I'd say we are probably quite – we really like these smaller acquisitions because there's a lot of integration involved, but we're finding – we're getting a lot of synergy bang for our buck. So I know we were talking about a higher – I think maybe we said an average size of $10 million. They're not going to average $10 million this year. But if we don't hit $75 million, we'll be close to it this year. So the marketplace is as robust and the pipeline is robust as it's ever been, Brent.

But I think it's important to also to remember, $75 million was aspirational. It is not incorporated into guidance in any way necessarily. So we don't include an acquisition unless it's closed. So we still would like to continue to be acquisitive if it's $68 million or $75 million or $50 million not – will continue...

…or $85 million.

Yes. We'll continue to update guidance as we are successful in that strategy, but a downside on that number wouldn't affect guidance.

I think the bottom line is the market and the environment is just where we expected and hoped it would be at this time of the year – at this time of the year.

Okay. And then others in the engineering space have started to talk about the transportation end market increasing either as a direct or sort of indirect result of the increased infrastructure funding. Are you seeing that in your bid activities now?

We're seeing some of it up in Illinois. And man, I know some of their clients are seeing some activity. So yes, we are starting to say, projects hitting the street that are as a result from the transportation bill.

Okay. Thanks, guys. I will get back in queue.

Thanks, Brent.

Your next question comes from the line of Alex Rygiel of B. Riley Securities. Your line is open.

Thank you. Good morning, gentlemen. A very nice quarter. A couple of quick questions here.

Thank you, Alex.

Bruce, coming back to that first question as it related to organic revenue growth. Obviously, again, a lot of different components kind of building into that 34% growth year-over-year. I guess, the question here is there a way to kind of simply think about how much of it is due to improved pricing versus organic volume versus synergistic volume?

Not without kind of being a bit of a lag because you can't – it's very hard to look at price, we're not like a hotel room that's sort of year-over-year, what's the price or day over day. If I had to try to disaggregate that number into the kind of form you've asked, Alex, I'd say 80% of that is really just organic growth in work that we're being asked to do from clients that we have or clients that we are acquiring not through acquisition, right. There's – I think another component that was sort of 10% of that would be sort of synergistic maybe kind of somewhere between that 10% and 20% of okay, cross-selling and synergy. But I kind of think of those first two as one big suit together. We're generating more work from nonacquisitive sources. I mean, our headcount is growing not just because of acquisition, but because of increased volume of work to be done. Yes, there is some value accretion that's occurring, right, because of the shortage of supply of people like us in the market to do work. But we're not just the same headcount doing the same utilization, generating more revenue. I would...

That's helpful. And then as it relates to your backlog, what end markets do you think are expanding the fastest organically right now?

Probably transportation and power utilities out of our backlog. And then growing – so I would call those the nominally fastest growing. Percentage fastest-growing might be the energy transition business, but it is not necessarily having the same bang or buck kind of impact that the other two are having. But it sounds sort of out of favor to say, but building infrastructure is continuing to grow organically. We monitor homebuilding. We monitor the commercial developers. We monitor everybody. You listen to the Hortons and the Lennars, and they're talking about not slowing down their investment in inventory. They may be slowing their starts a bit, but they're not abating their demand or lot inventory. They might be shifting it off their balance sheet to a private developers balance sheet looking for more finished lot acquisition as opposed to direct acquisition, but that's still in the aggregate demand for our service unchanged or increasing. So we feel pretty good about the three primaries. Water is growing fast just by virtue of it being a resource that is becoming more scarce in certain parts of the geographies that we serve.

And then lastly, as it relates to your guidance, the low end of your revenue guidance of 205 would suggest that the back half of the year sort of declines from 2Q, is that your typical seasonality that you expect or are you being conservative? Or do you see something in the marketplace that would suggest kind of a slowdown from the pace in 2Q?

We generally do see just a slightly lighter Q4. The holidays – I mean we're a people business, people take vacations. You can only bill hours that people are working. So we generally – sort of that Thanksgiving to New Year's period can be a little bit slower for us, not always. Alex, it's probably just more – we all turn the news on every morning. We all hear what's going on. We want to be in a position where we're not being dismissive to the potential for slowdown so that's our low end. But I think that where we gave a range because we feel that the low end is just that and are more optimistic that there could be a higher end as well.

Very helpful. Thank you very much.

Thanks, Alex.

[Operator Instructions] We have a follow-up question from Alex Rygiel of B. Riley Securities. Your line is open.

Welcome back.

Thanks. One last question. Yes. Thanks. You've made a number of acquisitions so far. You have a number of acquisitions planned going forward. Can you just touch upon sort of how systems integration is going, how back-office integration is going, some of the successes or some of the complications that you've had and how your platforms kind of established for layering on you're having another kind of a couple of years of active M&A?

Yes. So integration is one of the most challenging parts. And there's really two components to it. And I can refer – I can address the systems side of it, the cultural side of it, it's just equally as challenging, but we have a great team of people that work every day to get the cultural and orientation kind of integration going. Systems side, Alex, we have a really strong back end process here. We've got strong ERP in place. Going public, that was something we knew was going to be part of our life. And it was something that was well vetted ahead of time that we had the capability to implement this plan. It is absolutely challenging. It has cost us headcount, meaning we've had to add people. It's a challenge. We bring on systems that range from shoeboxes and notes to QuickBooks to the same kind of ERP systems that we have. But they're all good companies with good organizations and good knowledge of their businesses. And so we go through a process and first couple of months, first things we do is integrate what we consider to be critical processes such as cash management and revenue recognition. And then we work towards fully integrating our billing processes and creating visibility uniformly in one platform to all of our data. It's probably the most challenging part of the first couple of months of any integration is kind of getting your arms around all of the data so that I can present it in a way to our leadership team that's meaningful to that.

And I'll speak to what Bruce was talking about the cultural part. And that's for us, it's a lot more than just doing everybody at Bowman hat, wallet card with our cultural values, we concentrate tremendous amount on inculcating from the word go culture cross-selling, and that has been tremendously successful. It really exceeded our expectations. We've actually begun here in the past several weeks to start to quantify that. And it's something that's a little bit of gray area to quantify it. But as we start counting it up, it's kind of mind blowing. I don't know if we can come up with a KPI on that or not, but I don't know a wallet card is also a business cost.

We do all that stuff.

But what we've done, and that's not what we focus on.

It was one thing I'll just close that with it. I do not anticipate there being any substantial requirement for big CapEx spending to support the back end of all of this integration. It's people Well, we've got all the systems and capacities in place from a – sort of from ERP point of view to keep going.

Very helpful. Thank you.

And finally, we have a follow-up from Brent Thielman of D.A. Davidson. Your line is open.

Hey, Thanks. Bruce, what are your cash flow expectations for the second half?

Yes. I think similar to what we're seeing in the first half. We are continuing to invest cash generation in growth. So we can – when we make acquisitions, the acquisitions provide working capital as part of the consideration kind of the conditions of acquisitions. And our organic growth continues to consume cash flow. But I think we're now kind of on a trajectory for the second half of the year that will probably mimic the first half of the year, if not improve it just slightly.

Okay. Thank you.

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

Thanks, Olivia. Just to wrap up, we're very happy to be on the call this morning and report such a great quarter. I want to thank everybody for spending time with us this morning. I certainly thank all of our investors for the faith that they put in us, and we are committed to continuing to create value here. Good morning to everyone. Thank you.

This concludes today's conference call. You may now disconnect.