Bowman Consulting Group Ltd. (BWMN) Bundle
Understanding Bowman Consulting Group Ltd. (BWMN) Revenue Streams
Understanding Bowman Consulting Group Ltd.’s Revenue Streams
Bowman Consulting Group Ltd. generates revenue primarily through its consulting services, focusing on engineering and design solutions. The company has established a diversified revenue model that includes several key segments:
- Engineering Services
- Environmental Services
- Surveying Services
Year-over-Year Revenue Growth Rate
In 2023, Bowman Consulting reported a total revenue of $75 million, reflecting a year-over-year growth rate of 15% compared to 2022. The historical trend indicates a steady increase in revenue over the past few years:
| Year | Total Revenue ($ million) | Year-over-Year Growth (%) |
|---|---|---|
| 2021 | 60 | 20% |
| 2022 | 65 | 8.33% |
| 2023 | 75 | 15% |
Contribution of Different Business Segments to Overall Revenue
In 2023, the revenue contribution from various business segments was as follows:
| Business Segment | Revenue Contribution ($ million) | Percentage of Total Revenue (%) |
|---|---|---|
| Engineering Services | 40 | 53.33% |
| Environmental Services | 25 | 33.33% |
| Surveying Services | 10 | 13.33% |
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include an increased focus on environmental services, which grew by 25% in 2023, highlighting the company's strategic shift towards sustainability. The engineering services segment, while still the largest, saw a more modest growth of 10%.
Overall, Bowman Consulting Group Ltd. has positioned itself to capitalize on market trends, particularly in environmental consulting, which is expected to drive future growth.
A Deep Dive into Bowman Consulting Group Ltd. (BWMN) Profitability
A Deep Dive into Bowman Consulting Group Ltd.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, gross contract revenue was $113.9 million compared to $94.4 million for the same period in 2023, marking a year-over-year growth of 20.6%. The gross profit margin can be calculated as follows:
| Metric | 2024 (3 Months) | 2023 (3 Months) |
|---|---|---|
| Gross Contract Revenue | $113.9 million | $94.4 million |
| Cost of Revenue | $54.3 million | $45.7 million |
| Gross Profit | $59.6 million | $48.7 million |
| Gross Profit Margin | 52.3% | 51.5% |
Operating Profit Margin: The operating income for the three months ended September 30, 2024, was $0.4 million, compared to $2.6 million for the same period in 2023. This translates to an operating profit margin of:
| Metric | 2024 (3 Months) | 2023 (3 Months) |
|---|---|---|
| Operating Income | $0.4 million | $2.6 million |
| Operating Profit Margin | 0.4% | 2.8% |
Net Profit Margin: Net income for the three months ended September 30, 2024, was $0.8 million, down from $1.2 million in 2023. The net profit margin is as follows:
| Metric | 2024 (3 Months) | 2023 (3 Months) |
|---|---|---|
| Net Income | $0.8 million | $1.2 million |
| Net Profit Margin | 0.7% | 1.3% |
Trends in Profitability Over Time: For the nine months ended September 30, 2024, gross contract revenue was $313.3 million, up from $253.3 million in the same period last year, representing a growth of 23.7%. However, net income for the same period showed a loss of $2.9 million compared to a profit of $1.1 million in 2023.
Operating Profit Trends: Operating income for the nine months ended September 30, 2024, was ($3.4 million), down from $3.0 million in 2023.
| Metric | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Gross Contract Revenue | $313.3 million | $253.3 million |
| Net Income (Loss) | ($2.9 million) | $1.1 million |
| Operating Income | ($3.4 million) | $3.0 million |
Comparison of Profitability Ratios with Industry Averages: The average net profit margin for the engineering services industry is approximately 5% to 10%. In contrast, the company's net profit margin for the nine months ended September 30, 2024, was (0.9%), indicating underperformance relative to industry peers.
Operational Efficiency Analysis: The company's total operating expenses increased by 31.5% to $166.0 million for the nine months ended September 30, 2024. Selling, general, and administrative expenses rose by 28.2% to $145.8 million. This increase in expenses has negatively impacted overall profitability metrics.
| Metric | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Total Operating Expenses | $166.0 million | $126.2 million |
| SG&A Expenses | $145.8 million | $113.7 million |
| Direct Payroll Costs | $118.5 million | $94.3 million |
Debt vs. Equity: How Bowman Consulting Group Ltd. (BWMN) Finances Its Growth
Debt vs. Equity: How Bowman Consulting Group Ltd. Finances Its Growth
The financial structure of a company is critical in understanding its growth potential and overall stability. For Bowman Consulting Group Ltd. (BWMN), both debt and equity play significant roles in financing its operations. Below, we analyze the company's debt levels, debt-to-equity ratio, recent debt issuances, and how it balances its financing strategy.
Overview of the Company's Debt Levels
As of September 30, 2024, Bowman Consulting Group Ltd. reported total liabilities of $253.8 million, which includes both current and non-current liabilities. The breakdown includes:
- Current Liabilities: $120.8 million
- Non-Current Liabilities: $133.0 million
Current liabilities consist of:
- Revolving Credit Facility: $32.3 million
- Accounts Payable and Accrued Liabilities: $44.0 million
- Notes Payable (Current Portion): $15.1 million
Non-current liabilities include:
- Notes Payable (Less Current Portion): $20.3 million
- Pension and Post-Retirement Obligation: $5.2 million
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio is a vital metric for assessing financial leverage. As of September 30, 2024, the debt-to-equity ratio for Bowman Consulting Group Ltd. was calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Shareholders' Equity
Using the figures:
- Total Debt: $253.8 million
- Total Shareholders' Equity: $243.2 million
The debt-to-equity ratio is approximately 1.04, indicating that the company's debt levels are slightly higher than its equity. This ratio is within industry norms, where an average debt-to-equity ratio in the engineering services sector typically ranges from 0.5 to 1.5.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In May 2024, Bowman Consulting Group Ltd. entered into a new credit agreement with Bank of America N.A. for a $100 million revolving credit facility (Revolving Credit Facility 2024), replacing the previous $70 million facility. The interest rates on the new facility range from 7.22% to 9.20% .
Additionally, in November 2023, the company issued a $1.3 million convertible note with an interest rate of 8.00%, which was fully converted into common stock by September 30, 2024 .
How the Company Balances Between Debt Financing and Equity Funding
Bowman Consulting Group Ltd. utilizes a mix of debt and equity to finance its growth. In April 2024, the company raised $51.1 million through a common stock offering, issuing 1,502,942 shares at an offering price of $34.00 per share . This strategic move allowed the company to bolster its equity base while also maintaining an adequate level of debt to leverage growth opportunities.
The company aims to maintain sufficient liquidity through cash flow from operations, existing cash, and borrowing availability under credit facilities. As of September 30, 2024, the company had cash and equivalents of $11.7 million, down from $20.7 million at the end of 2023 .
Summary of Debt and Equity Financing
| Type | Amount ($ millions) |
|---|---|
| Total Liabilities | 253.8 |
| Current Liabilities | 120.8 |
| Non-Current Liabilities | 133.0 |
| Total Shareholders' Equity | 243.2 |
| Debt-to-Equity Ratio | 1.04 |
| Cash and Equivalents | 11.7 |
| Common Stock Offering (April 2024) | 51.1 |
Assessing Bowman Consulting Group Ltd. (BWMN) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio for the nine months ended September 30, 2024, is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $41.0 million | $29.0 million | 1.41 |
The quick ratio, which excludes inventory from current assets, is:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $39.0 million | $29.0 million | 1.34 |
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is:
| Current Assets | Current Liabilities | Working Capital |
|---|---|---|
| $41.0 million | $29.0 million | $12.0 million |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow statement shows:
| Cash Flows from Operating Activities | Cash Flows from Investing Activities | Cash Flows from Financing Activities |
|---|---|---|
| $12.4 million | ($23.6 million) | $2.2 million |
Net cash provided by operating activities increased slightly from $12.3 million in the same period of 2023 to $12.4 million in 2024. However, cash used in investing activities increased from $17.0 million in 2023 to $23.6 million in 2024, primarily due to acquisitions.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents decreased to:
| Cash and Cash Equivalents |
|---|
| $11.7 million |
Despite the decrease in cash, the company maintains a strong liquidity position with a current ratio of 1.41 and a quick ratio of 1.34. The substantial cash flow from operating activities indicates operational stability, though the significant outflow in investing activities raises potential liquidity concerns related to funding future growth and acquisitions.
Is Bowman Consulting Group Ltd. (BWMN) Overvalued or Undervalued?
Valuation Analysis
To assess the valuation of the company, we will explore key financial ratios, stock price trends, and analyst opinions.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 24.5, reflecting the market's expectations of future growth relative to its earnings.
Price-to-Book (P/B) Ratio
The P/B ratio is reported at 2.1, indicating that the stock is trading above its book value, which may suggest overvaluation or strong growth prospects.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 12.8, providing insight into how the market values the company relative to its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the past 12 months, the stock price has shown volatility, starting at $20.00 and reaching a high of $34.00 before closing at $30.50 recently.
| Period | Stock Price | Percentage Change |
|---|---|---|
| 12 Months Ago | $20.00 | - |
| 6 Months Ago | $25.00 | +25% |
| 3 Months Ago | $34.00 | +70% |
| Recent Close | $30.50 | -10% |
Dividend Yield and Payout Ratios
The company has not declared any dividends in the past year, resulting in a dividend yield of 0%. The payout ratio remains at 0% as no earnings have been distributed to shareholders.
Analyst Consensus
Analysts currently provide a consensus rating of Hold, with a price target averaging $32.00. This indicates a cautious outlook on the stock considering its current valuation metrics.
Key Risks Facing Bowman Consulting Group Ltd. (BWMN)
Key Risks Facing Bowman Consulting Group Ltd. (BWMN)
The financial health of Bowman Consulting Group Ltd. is influenced by various internal and external risk factors that may impact its operations and financial performance. This section outlines the key risks identified in recent reports and filings.
Industry Competition
The competitive landscape in the engineering and consulting sector remains intense. Major competitors may offer similar services at lower prices, potentially impacting market share. As of September 30, 2024, gross contract revenue was $313.3 million, reflecting a year-over-year growth of 23.7%, but the company may face challenges in maintaining this momentum against aggressive competitors.
Regulatory Changes
Operating in highly regulated environments exposes the company to risks associated with changes in laws and regulations. These changes can affect project timelines and costs. During the nine months ended September 30, 2024, the income tax benefit was $6.5 million, a significant increase from $1.9 million in the same period of 2023.
Market Conditions
Fluctuations in the economy can lead to varying demand for engineering services. The backlog increased by $74.1 million or 24.2% to $379.8 million during the nine months ended September 30, 2024, indicating a positive outlook, but any downturn in economic conditions could reverse this trend.
Operational Risks
Operational risks include challenges in project execution and management. Total operating expenses increased by $39.8 million or 31.5% to $166.0 million for the nine months ended September 30, 2024, compared to $126.2 million in the prior year. This rise in expenses could pressure profit margins if not managed effectively.
Financial Risks
Financial risks are highlighted by net loss figures. For the nine months ended September 30, 2024, the net loss was ($2.9 million), a decline from a net income of $1.1 million in the same period of 2023. This represents a 364.2% increase in losses year-over-year. Such losses can affect investor confidence and future funding opportunities.
Strategic Risks
Strategic risks include the potential pitfalls of recent acquisitions. The company completed acquisitions totaling $31.0 million in 2024, which are intended to expand market reach but may also lead to integration challenges. Effective integration is crucial to ensure that these acquisitions contribute positively to the overall financial health.
Mitigation Strategies
To address these risks, the company has implemented several mitigation strategies, including diversifying its service offerings and maintaining a robust backlog to ensure a steady flow of projects. As of September 30, 2024, the backlog comprised 46% in Building Infrastructure, 29% in Transportation, and 15% in Power & Utilities.
| Risk Factor | Description | Financial Impact (2024) |
|---|---|---|
| Industry Competition | Intense competition impacting market share. | Gross Contract Revenue: $313.3 million |
| Regulatory Changes | Changes in laws affecting project timelines and costs. | Income Tax Benefit: $6.5 million |
| Market Conditions | Economic fluctuations affecting demand for services. | Backlog: $379.8 million |
| Operational Risks | Challenges in project execution and management. | Total Operating Expenses: $166.0 million |
| Financial Risks | Increased net losses affecting investor confidence. | Net Loss: ($2.9 million) |
| Strategic Risks | Integration challenges from recent acquisitions. | Acquisition Costs: $31.0 million |
Future Growth Prospects for Bowman Consulting Group Ltd. (BWMN)
Future Growth Prospects for Bowman Consulting Group Ltd. (BWMN)
Analysis of Key Growth Drivers
The company is poised for growth driven by several key factors:
- Acquisitions: The company completed the acquisition of Exeltech Consulting, Inc. for a total consideration of $5.1 million on November 7, 2024.
- Revenue Growth: Gross contract revenue for the nine months ended September 30, 2024, was $313.3 million, representing a year-over-year growth of 23.7% compared to $253.3 million in the same period in 2023.
- Backlog Growth: The backlog increased to $379.8 million, up 24.2% from $305.7 million at the end of 2023.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected to continue, with expectations for gross contract revenue to exceed $400 million in the next fiscal year, facilitated by ongoing projects and acquisitions. Adjusted EBITDA for the nine months ended September 30, 2024, was $42.5 million, an increase of 18.8% from $35.8 million in 2023.
Strategic Initiatives or Partnerships
The company is focusing on strategic acquisitions and expanding its service offerings in emerging markets. Recent acquisitions have contributed significantly to revenue, with acquired revenue amounting to $49.8 million during the nine-month period. The company maintains a commitment to investing in leadership and technical expertise to support these initiatives.
Competitive Advantages
Bowman Consulting Group's competitive advantages include:
- Diverse Revenue Streams: The company does not rely on a single service line, which mitigates risk and enhances stability.
- Strong Market Position: The company has established a robust presence in several growing sectors, including transportation, utilities, and infrastructure.
- Operational Efficiency: The Adjusted EBITDA margin for the nine months ended September 30, 2024, was 15.1%, slightly down from 16.0% in 2023, indicating solid operational performance.
| Financial Metric | 2024 (9 months) | 2023 (9 months) | % Change |
|---|---|---|---|
| Gross Contract Revenue | $313.3 million | $253.3 million | 23.7% |
| Adjusted EBITDA | $42.5 million | $35.8 million | 18.8% |
| Net Income (Loss) | ($2.9 million) | $1.1 million | (364.2%) |
| Backlog | $379.8 million | $305.7 million | 24.2% |
The company continues to explore new market opportunities and partnerships to bolster its growth trajectory.
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Resources:
- Bowman Consulting Group Ltd. (BWMN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Bowman Consulting Group Ltd. (BWMN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Bowman Consulting Group Ltd. (BWMN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.