Bowman Consulting Group Ltd. (BWMN) May 12, 2026 Conference Transcript

Great. So, good afternoon, everyone. I'm Nandita Nair on the Machinery, Engineering, and Construction team here at B of A. With us today is Bruce Liebowitz, CFO of Bauman Consulting. So, in our coverage, we have a focus on the infrastructure and construction side of the market. And, you know, over the past few years, we've really enjoyed watching Bauman's growth and evolution as it's kind of scaled into, you know, like a national, like, technology-enabled platform, platform, you know, with increasing exposure to areas such as like, you know, power, utilities, data-driven infrastructure. So, you know, Bruce, it's really great to have you with us today.

Thank you for having me.

I, you know, I'd love to just, you know, start off by just passing it over to you just to introduce yourself, you know, provide a little bit of background, and before we jump into some Q&A.

Terrific. Well, thanks, Indita. It's a pleasure to be here. I really appreciate the coverage that you and Sharif provide for us, and it's really valuable to us. And so Bowman is a professional services firm that focuses on serving owners and operators of the built environment right so what does that really mean that means that we're essentially an engineering firm we do designing and planning of of infrastructure for owners and operators and we also uh do life cycle asset management so from conception of a project through conclusion of a project and on to the next cycle of that project bowman's involved everything from feasibility from design and planning permitting constructability, construction oversight, asset management in a lot of different capacities and pretty multi-disciplined organization. We do a lot of things within that service business in a number of very, what we think are high value, high tailwind, and in high demand market sectors.

Got it. And, you know, just if you can just take a step back, Bruce, you know, just before we kick things off for the audience and for, you know, like those in the line that may not be as familiar with Bowman, could you just give us a little bit of a history on the firm? You know, how is it formed? You know, what what kind of, you know, made you guys go public like five years ago, I guess, to the date?

Just about. I think today or yesterday or tomorrow is the anniversary of it. I've kind of blocked out some of that, some of that experience. So Bowman is a 30-year-old firm founded by a gentleman named Gary Bowman, who very cleverly named the firm Bowman. And so Gary founded the firm. Gary is a civil engineer by trade, and he started the firm through a very tiny acquisition. His goal was to build the firm up to be a 30-, 40-person firm, a good lifestyle for himself, and ultimately kind of adopted a very high-growth mindset. that initially founded in the D.C., northern Virginia suburbs, doing mostly land planning for commercial and residential developers. After the real estate setback of the late 2000s, I think we now refer to that decade as, decided that it was really in the best interest of the firm to diversify, expand the geography and the services that the company offered. So while the company had contracted a little bit during that Great Recession, came out gangbusters and grew from that moment, started making acquisitions, expanding the geography, expanding the service lines. We grew the company to $100 million. After that, I came in in 2013 to help set the company up for whatever the next iteration of its growth was. So when I got there, we were about a $45, $50 million company, grew it to $100 million and decided that the next best infusion of growth would be from a public offering. So a public in 2021 at $100 million in revenue, with the objective of over five years to grow to a $500 million company. We've achieved that now. We're in excess of $500 million run rate company. And now we're off to the next objective.

And just to expand on that, Bruce, what type of projects does Bauman, you know, typically take on, you know, what sectors of the market do you participate in? You know, just like the size, scale, you know, who do you complete with? Just the customer sets and so forth.

Yeah. So we focus on four primary verticals, and that's just because you have to organize somehow, right? And there's things that sort of straddle different markets sometimes, but we think about our business as focused on transportation, power and energy, buildings and site civil work, and natural resources. And those are the categories that most of our clients fit into. And that's the, those are the verticals. And from a horizontal perspective, we have a number of different services that intersect with each of those verticals and kind of the heat map of where those services intersect with verticals is, you know, is where our revenue comes from. Legacy-wise, our biggest segment was the buildings and site civil. That was about 70 plus percent of our revenue. When we went public today, it's about 40 percent of our revenue. So the other, while everything has grown, the other parts of our business have grown faster because we've been more focused on growing uh in the areas of transportation and power and energy. Typical project will be anything from uh a large scale uh bridge road highway project from a state department of transportation uh it could be a tunnel realignment uh or a tunnel bypass project it could be um in in the traffic area could be in traffic mitigation, traffic planning, traffic oversight. It could be in the ports and harbors part of the transportation segment is working on the development of infrastructure for a port from the seawall to everything that's on land. It's mass transit oriented, so developing rail and aviation assets for various transportation authorities. And projects can range from being small to very large. They can be in the $100,000 to the $30-plus million kinds of assignments. In the power and energy space, we're really focused on the generation of power, the transmission of power, and the resilience of the grid, right? So taking molecules from their original source, converting them into energy, transmitting that energy, terminating that energy somewhere, and then ultimately preserving the capacity of the grid. So it could be everything from pipelining natural gas through the midstream to an endpoint at a compressor station, at a terminal operator, or on site for power generation from a large-scale turbine. It could be overhead, high-voltage overhead transmission corridors and lines. It can be anything in the renewable space from doing plans for solar implementations, battery storage facilities. And then in the resilience arena, it's typically about undergrounding or other kinds of environmental protection. So that if you think about the formula of the grid being how big it is and how much less, how much downtime there is, right, we're trying to minimize the amount of downtime that the grid is experiencing. And those can be long-term large projects that involve undergrounding of utilities up and down the coast of Florida to building compressor stations in central Texas, to building on-site power at data centers and other large-scale utility-type consumers. Buildings and Site Civil is permitting and design for large-scale development of any structure you can occupy. So whether that's in the residential, commercial, industrial, municipal space, you know, we do from land permitting to through construction, oversight, and operationalization, commissioning is one of the terms you use for bringing an asset online. Everything from the land planning to the mechanical, electrical, and plumbing engineering to all the inside systems. And so people often ask, where do data centers fit into that? They're a little bit of a hybrid between they were traditionally in our buildings group. Today we consider them in our power group because really everything is a power-first project now. Solving for power is the first challenge. And the natural resources, to sort of round that out, it's projects for mining operators, environmental remediations and conservations, water resources, whether that's water treatment, or water as a resource, as a scarce resource, and land acquisition services. So doing large-scale easement acquisition for developers of assets that have to cross over private property.

And that's really helpful in setting the stage there, Bruce. So, you know, you've also mentioned that, you know, geospatial is kind of sitting at the core of everything you do, you know, and it also allows you to kind of engage with clients much earlier in the project lifecycle. You know, like, could you just talk about, like, how that kind of translates into incremental revenue or wallet share gain over time? And maybe could you provide some examples of kind of how you kind of, you know, see that kind of play out in practice?

Yeah, so it's earlier and later in the process. So the proliferation of data throughout the engineering design and asset management lifecycle has really been changing over the last couple of years, and we've been embracing that. Geospatial was the term that took over surveying, right? So it used to be considered it surveying, then it became geospatial. Now we think of it as data capture because what we're doing is that we are collecting large sets of point clouds of data that represent assets and that are geolocated. So you're taking everything now as digital imagery, digitally captured imaging of assets that are either below the surface, that are on the surface. You capture them from mid-altitude and from high altitude. So we've got marine vessels that are capturing imaging underwater. We've got people who go around with surveying equipment and collecting terrestrial information. We've got drones and UAVs that are collecting from mid-altitude and fixed-wing aircraft that are collecting imaging from high-altitude, very high-resolution, large aperture. It's at the center of everything because it is the source of truth for engineering services, right? It is when you're going to work on an asset, you're going to plan for an asset, you need to be able to visualize it, you need to see it, you need to be able to model it. And so data collection, data capture has really become the core of the process. And then that data extends through the engineering cycle, through the asset life cycle, so that the customer can access and understand in real time what's happening to their asset as it's experiencing the environment that it exists in. So we do imaging that can span time, so you can look for changes in structural attributes of an asset over time. We will do imaging that will create the digital twin environment where you can think of an asset in three dimensions and in time and space, experiencing what it's really experiencing. So there's any number of uses. The data itself is becoming a very valuable piece of our inventory, right? So we're very focused on how to collect, store, utilize, and resell the data that we're collecting.

And also, you know, if we're looking at just data centers, you know, you mentioned even on your earnings call, I think it's about like 6% of revenues today. You kind of see that growing, you know, over the coming years. Just could you talk about just kind of like what kind of growth and opportunities are you guys seeing? Like where do you guys get, you know, you mentioned where you guys participate on the power utility side, but specifically comes to data centers. Could you just expand on that a little bit as well?

Yeah. So data centers we think of as essentially utility scale types of facilities. So it's just one of the kinds of facilities. Data centers, the legacy for us was data centers was a permitting challenge. It was a service we provided. We're based in Northern Virginia. Northern Virginia was kind of the ground zero for data center proliferation. And so we kind of cut our teeth on planning for data centers. Over the years, we've expanded the breadth of services that we provide to a data center owner from land feasibility. Where can you build it, right? What can be built? What kind of capacity can it provide? All the way through to energizing it, right? So bringing power to it, doing the mechanical engineering for the interior of the data center, and then doing the post-operationalization monitoring and management of the asset. How much power is it consuming? Where is it seeing inefficiency? Where can we engineer infrastructure to it and from it to better utilize the excess capacity that might have been built there? It's a very evolving part of the business. The permitting process has become more challenging. The how do you solve for the objections has become a bigger opportunity. How do you provide for resident power and backup power for those facilities has become an increasing challenge for us. But I think that the demand for those kinds of facilities is continuing to be as strong as we've ever seen it. And, you know, I'd argue that even if the capacity expectations are off by 20%, you know, it's still billions of dollars of engineering that has to be done for these facilities, not hundreds of thousands of dollars of engineering that has to be done. So while it's not the only focus of our business, it is a growing component of our revenue and an important part of the sort of complete solution that we provide.

And just maybe switching gears to the public side, Bruce, you know, we all know that the IIJ, you know, is set to expire on October 1st, you know, like there has been some talks about the reauthorization bill being pushed out a little, you know, there's also been some conversations about a potential CR that we could be looking at. Just, you know, curious if you could kind of just give us what you've been hearing on the ground specifically. And also, you know, would you say there's like enough demand out there in the pipeline or kind of, or are we kind of seeing like a slight easing on the edges?

So I think that we're continuing to see tremendous demand for transportation infrastructure investment, right? I think it is a relatively apolitical issue, right? It's one of those investment theses that sort of everybody can get behind, right? building better roads, bridges, and highways, to the extent that there is a move to facilitate reshoring of manufacturing and of bringing industry back, you need more transportation infrastructure to support that. So we're not particularly worried about there being an end to funding with what's going on. Most of the IAGA funds have been allocated to states. The states are working through those funds, and so I liken it to the World Series game last year where I tuned in in the eighth inning and thought it was almost over, but, you know, ended up having to sit through 19 innings of the game. So this is sort of similar to that. This game's not over. And, you know, if you follow legislative events in Washington, there's constant funding that's being provided, new fundings that are coming out for mass transit, for connectivity of communities to commuting and just recent funding that was passed on that front. So, you know, I think that there is a universal desire and demand for improving infrastructure, and I think it will continue to find funding, and it's still working through the funding that's already been provided.

That's good to know. And, you know, with your backlog just growing significantly, you know, how has the mix changed as you kind of reshape the company? And, you know, is there like a targeted mix by maybe service, markets, or project size that you guys would like to maintain?

So, at the end of the day, we're market chasers. So if something changes and the market evolves, we're not going to be stuck with any one particular vertical without being willing to be flexible. Today, we are trying to balance the allocation of revenue between the verticals. So we've brought the buildings and site civil down. We've brought transportation and power up. We want to be a multi-legged stool. We are a diversified infrastructure services provider, and so it would be nice to see them maybe in the 30s each with one of them being a little bit below to compensate for that. But right now, we're liking the balance that we're seeing. Certainly, there's a lot of demand of power and energy, and that's consuming more internal market share of revenue today, and we're going to continue to lean into that, transportation likewise. uh and so i think that those those have lots of tailwinds behind them and like to see that you know the two of them represent more than 60 percent of the business here in the near term and i'd like to just pull in that thread a little bit more bruce um you know what do you say a typical project size kind of looks like in the backlog today relative versus in the past and also you know with the you know on your earnings call you mentioned like this large government contract and you it's a multi-year contract uh you know how should we think about what this says about the evolution of Bauman's project size mix

and the opportunity set that it opens up going forward?

Yeah, so I would say the generalization of that question would be they're getting bigger, right? The projects are getting bigger, and this is an industry where you qualify in tiers. So as you get bigger, as you move up the size spectrum, you qualify for bigger projects. The client's biggest concern is that you deliver it timely and that it functions. And so bigger projects, they want to know that there are companies with bigger resources and more capabilities. So we are working our way up the size continuum there. We still do a lot of projects at the same time. So we do 12,000, 15,000 projects at a time. So on average, they're going to be a six-figure, but sort of the large ones are getting larger and larger. So we've gone from doing $10 million to $15 million projects to $30 million to $50 million projects. The most recent one that you're referencing is now a $177 million assignment that runs over three years. It was originally a $30 million assignment, modified to be increased to $177 million. It's a land services engagement to work for a government agency to help secure access rights and do surveying of properties. excuse me so i think what it says about us is that we are now in a position to be considered as a player in larger and larger contracts and they will continue to get bigger over anything over the next couple of years and you know i feel like we've gone through half of the call without surprisingly talking about the middle east which is surprising uh you know you know we've talked a lot about the strength and demand and you know but just i want to touch on just given the ongoing developments in the Middle East.

Are you kind of, you know, seeing any impact on project activity, whether if it's delays, you know, like slower decision making or changes in client behavior, anything that you're seeing?

Yes, I'll start with, I know it's not exactly the question, but we're a U.S. domestic operator. We don't have international operations in the Middle East. So directly there's been no, you know, no impact of that, of what's going on there. I would say in general, no, we're not really seeing any cessation of demand relative to that. If anything, I think this idea that we may need to be more self-reliant on energy is increasing opportunity, you know, as we see it in this sort of sense of self-reliance that may be coming from it is probably a bit of a catalyst to work. You know, direct impact of fuel prices and inflation marginal in what we do. We've got a fleet of trucks that are driving around. It's not a big input to the business that I think that we're necessarily panicked over any costs like this or it's something we keep aware of. It's more the uncertainty of the political environment and geopolitical environment on the markets and sort of the capital side of the business than it is on the actual operational side of the business.

And just staying on the topic for a minute, Bruce, given the more inflationary backdrop, like higher diesel tariffs, how are you thinking about pricing and cost pass-throughs in your contracts? And, you know, how resilient would you say the model is in a higher cost environment?

So there's there is so much more work than there is supply of us to do it, that there there is opportunity to recover. Bless you. There's opportunity to recover pricing cost, you know, cost increases in pricing. That doesn't mean that we've got a blank check to to increase prices at will. Right. Our single biggest input is labor. Right. Labor is a relatively fixed cost, but it adjusts annually, let's say. And so we do have the ability to make adjustment in pricing to to cover incremental costs of labor. But our growth has mostly been about more work, not about pricing power.

Right. And I guess another key debate now, Bruce, is, you know, the increasing dialogue around AI's impact on E&C firms. Just, you know, how do you kind of, in your view, how do you want to see AI reshaping the industry and where does it create more of like an opportunity than a risk for Bauman?

Yeah, I think that's a really important question. And we talked about this on our first quarter call that we see this as a race to the top, not as a race to the bottom, that AI is going to be an impact on how we do business. But we've been through impacts before in this industry. We've gone from hand drafting to computer aided design, right, to CAD. We've gone from manual surveying to, you know, to electronic and very highly technical geospatial. It's another inflection in the industry. I think the narrative that this is an extinction level event for the engineering professional services ignores the moat that exists around the industry. That this is an industry where there's very little if no tolerance for failure, right? There's no tolerance for unknowns of technology. What we build has to withstand environmental pressures and stresses, and if it fails, that's a really catastrophic event. So you can't allow for, okay, well, there's a coding error, right? We'll fix that later, right? I think that what we do is done through relationships with folks that rely on the professionalism and experience of the industry. We will say, you know, we stamp plans. We create accountability for what we do. But that doesn't mean AI is not going to be an important component of the way we evolve the way the business works, right? So automation, which incorporates AI, will be introduced throughout the industry. It will help make those who think about the work we do as a continuum of value, it will make the work we do more valuable. Those of us who think of our work as purely transactional, I think it's going to be challenging for folks to think it's going to be transactional. And certainly anybody who ignores the underlying compute cost associated with AI and thinks that this is a race to cost zero, therefore price zero, is mistaken about how the model of all of this is going to work. So we're integrating technology into the way we operate, the way we deliver, the way we entrench ourselves with customers. And we're very focused on the value that we provide, not just the transactional pricing of any one component.

And can you maybe just give an example of kind of just so we can just flesh that out? Say if we kind of had a project in the past where, you know, maybe, you know, I guess you had the operational side was, I guess, a little bit heavier. But now I guess you can kind of scale that back a little while keeping like, you know, just basically an opportunity to expand your TAM. So could you maybe just give an example of kind of how that you're seeing that kind of play out in maybe a project?

So automation can do interpretation. It can clue you into things that you might want to look more closely at. it can iterate faster than a human, but it doesn't mean that it can necessarily be deterministic on its own, right? We're focused really on that sort of deterministic approach to automation as opposed to sort of inference and probability-oriented orientation. So we use it to help to retrieve data, to organize projects faster. We think about how can we deliver better value to the customer. They want it sooner. They want it in a more organized way. And so how do we implement automation tools within the various tasks within the business from understanding feasibilities or doing iterative layouts for asset design, retrieving information associated with funding for clients, interpreting proposals, and helping us to connect current business to historical business that we've done. This isn't creating a SaaS business out of engineering. We're not building tools that we're going to rent to our customers. We're improving the overall value that we deliver to customers by creating an environment that arcs from internal to external, right, that takes all of the data, all the systems, all the information, and in a managed way, makes it available to everybody inside and to our customers in a way that you can interact with your infrastructure and understand how it's going to perform and where it needs attention better.

That's helpful. And, you know, I guess just looking at the broader picture, Bruce, you know, last quarter you outlined, you know, like the next long-term revenue milestone for Bauman. Could you walk us through, like, the key building blocks that kind of get you there?

So I think what you're referencing is, you know, we sort of set out that our first five years was a half a billion and our next journey was a billion, right? And while that's not a guide, that's an aspiration, right? And so we look at sort of the next increment of the business. The things that get us there are accelerated revenue capture, right? So bigger contracts that help us to grow faster. It is leveraging labor in a more efficient way. This is not about reducing headcount, but it may be about metering headcount growth a little bit more and finding ways to generate more out of each of our resources in a way that is balancing to the way the culture of the company and the demands of the marketplace for growth. So I think it's about deepening our exposure to these strong markets, adding breadth to what we do, and continuing the M&A program that we've been very successful at. So in the five years we've been public, we've done over 40 acquisitions. They're generally small acquisitions that become fully integrated into our operations. So they are themed with adjacency, and so we find operations that are adjacent to what we're doing, whether that's geographically, whether that's from a service line perspective, from a client perspective, from a technology perspective, and enable us to go after new business, to expand the wallet share that we have with clients. I think that one of the key things is growing relationships with clients beyond just their capital budgets and into their operational budgets. The lowest friction, the lowest cost of capture relationship is an existing one, right? So the more you can deepen your connection with your customers, doing more things for them, providing them more lifecycle revenue opportunities, I think the faster we can grow there.

Just a double click on that M&E opportunity, Bruce. It's clearly been a really big part of Bowen's growth story. Just to what extent is M&A kind of adding scale versus adding new capabilities, particularly in areas like you mentioned, like power, geospatial, data-driven services? And also, if I can add just one more, what are the typical multiples that you're seeing in these acquisitions?

So your first question, yes to both, right? It's about adding scale, but it's also about adding capability. It's not scale for scale's sake, right? We're not just collecting companies so that the total of the collective revenue will be higher. It's so that the product of all of the effort will be better. So we're buying companies that we can integrate into our operation who bring us a service line that we need or bring us a portfolio that we need. Oftentimes qualification is one of the key obstacles to winning work. So when you buy a small operator, sometimes they are scale builders, sometimes they're capability builders, and sometimes they're just tickets to the show, as we call it. It's like it gets you in front of new clients. And so we generally like acquisitions that have a purpose where the sellers want to join with us. They've reached some limitation, and they want to meet that limitation and grow their business, not just retire. So we're discriminating about who we buy. Generally speaking, depending on which vertical the acquisition targets, there's going to be a different multiple in today's world. I don't think multiples are getting higher necessarily, but we're shopping in a more elite part of the market where multiples are high. So on average, we could be buying in the, let's say, historically in the six to nine, because we mixed those verticals more. I think today you're buying more in the eight to tens and eight to, you know, to low double digit kind of multiples to get into some of these higher growth markets.

And can you remind us of the free cash flow conversion profile of the business, Bruce? And, you know, like as mixed changes, you know, with increasing power and utilities, which are kind of, I believe, higher price projects, do you change in maybe free cash flow profile?

Yeah, so I'll take one step back from it. I think about it from a cash from operations perspective. It's a fairly low CapEx business, right? So we're not buying big equipment. We're not buying factories. We're not buying heavy machinery. We do have episodes of higher CapEx where we're cycling assets like large digital, large high caliber cameras, right? So very high resolution cameras that we buy that are $2 million apiece, but they have long life cycles. So from a cash conversion, let's say sort of from the cash flow statement, cash from operations conversion, where we run the last quarter with 70% of adjusted EBITDA. We generally run somewhere between, let's call it 3% and 7%, mostly in the 3% to 5% of revenue for CapEx. So that might drop that down into the 50s or 60s from a cash flow conversion. But the beauty of the business is that it is not a CapEx heavy business. I think there will be some episodes over, you know, over as we go through another technology evolution where you're buying equipment to set you up for, you're spending CapEx to save OpEx in the future. But generally speaking, fairly high conversion rate.

And, you know, one area we haven't touched on yet, Bruce, is, you know, you recently announced that Gary Bowman's plan to step down as a CEO after building the company into a national platform. You know, could you talk about, you know, how you're thinking about the leadership transition process and what the board is, like, you know, prioritizing as it searches for its next CEO?

Yeah, so Gary's done a fantastic job building this company. If his goal was to build a small, you know, a small company, he failed miserably. If, you know, otherwise, you know, he'd say he's done a great job. I think Gary's at a point where, okay, he's built what he's built and he's ready for, you know, for somebody else to take their reins. He announced earlier this year that at the end of this year, he was going to step down as CEO, giving the company plenty of time and plenty of space to do a search internal and external. And the board wanted to make sure that they really met their fiduciary duty to a fulsome process. And so we're going through that now. I'd expect that it's probably got another couple months to it, but probably by the end of the summer, you know, I'd say we'll have something in place. What they're looking for is someone who will maintain the culture of the company, first and foremost, who understands what we've built at Bowman and how special it is and how important it is to attracting and retaining talent. Someone understands the evolution that has to happen to this business over the next five years as technology and data become a more central theme of the business and certainly someone with leadership and the gravitas to represent the company in the marketplace you know as we just wrap things up you know when you think about the next you know like five to ten years what do you think you know like an involvement looks at scale whether that's in terms of you know revenue capabilities the types of projects you guys are aiming to take on and i'll keep it open-ended there for you yeah i think we just continue on this trajectory we get bigger we deal with bigger projects more consequential engagements i don't think there is any ceiling to the revenue potential uh of the company done right and i think that we We are fundamentally what we look like today just with an AdWater and, you know, watch it grow.

Kind of perspective. Perfect. Great. I think that's a great note to end on. I want to thank Bruce for making the time. And everyone, thank you for joining us today. Thanks, everyone.

Appreciate it. Thank you.