Q1 2022 Bowman Consulting Group Ltd Earnings Call
along with built to rent and residential inventory creation for home builders.
So for rents and residential inventory creation for homebuilders.
Quick-serve reference represents a dependable source of repeat customer revenue while development engagements like the Amazon HQ2 project in Arlington, Virginia represent reliable long-term revenue. Demand for data centers and other industrial facilities work as high as it's ever been with price and power remaining in our favor.
Quick serve restaurants represents a dependable source of repeat customer revenue, while development engagements like the Amazon HQ2 project in Arlington, Virginia.
At present reliable long term revenue.
Demand for data centers and other industrial facility work is as high as it's ever been with pricing power remains in our favor.
Our current complement building infrastructure clients and projects have so far proven to not be tightly correlated to interest rate movements. And we have not experienced any slowdown activity or request for funding.
Our current comparability infrastructure clients and projects so far.
Moving to not be tightly correlated to interest rate movements, and we've not experienced any slowdown in activity a request for proposals.
Transportation is clearly in a transitional moment at the moment. While down slightly this quarter of the last year, we're confident between the man acquisition and the upcoming spending. You expect to begin later this year and next in the infrastructure bill. This trend will quickly reverse course and the transportation will increasingly become a more meaningful component of our revenue over the next year.
Transportation is clearly in a transitional moment, Oklahoma.
While down slightly this quarter over last year, we're confident between demand acquisition and the upcoming spending do you expect to begin later this year and next year infrastructure Bill. This trend will quickly reverse course in the transportation will increasingly become a more meaningful component of our revenue over the next year.
I work on a mile long bridge and Burley Avenue projects continue to generate meaningful recurring revenue and the Cook County Roadway Construction Management project is starting off in earnest this quarter. The I-35 Northeast expansion projects in San Antonio will be gearing up for long-term recurring revenue over the next several years. I'm happy to report that Boeing was recently selected by the only tollway for the upcoming Central Pride State I-294 project.
Our work on our model Longbridge in Broiler Avenue projects continued to generate meaningful recurring revenue and the Cook County roadway construction management project is starting off in earnest this quarter.
35 northeast expansion projects in San Antonio will be gearing up for long term.
<unk> revenue in the next several years several years I'm happy to report the bonus.
He was recently selected by the Illinois Tollway upcoming Central price State <unk> hundred 94 project.
We're negotiating the contract. I'll update you on that project in our next conference call.
We're negotiating the contract I'll update you on that project in our next conference call.
Our power and utilities work through 16% year over year due in large part to increased spending in the utility undergrounding and gas line engineering projects.
Our power and utilities work grew 16% year over year due in large part to increased spending until the underground and gas line engineering projects.
We recently awarded a renewal of our long-term contract with Southwest Gas, and we continue to build on our long-term relationship with WEC Energy.
Rewarded a renewal of our long term contract with southwest gas.
We continue to build on our long term relationship with WEC energy.
Most of our long-standing utility clients are looking to increase their spend with us substantially this year over the last.
Most of our longstanding utility clients are looking to increase their spend with us substantially this year over last.
The U.S. power grid continues to face unrelenting pressure to increase resilience and reliability, replacing aging infrastructure and integrate technologies such as electric vehicles, distributed generation battery storage.
U S power grid continues to face unrelenting pressure to increase resilience and reliability, replacing aging infrastructure and integrate technologies, such as electric vehicles distributed generation and battery storage.
Spending on these initiatives is generally independent of macroeconomic conditions, and we're focused on continuing to invest and grow in this market. Our emerging...
Spending on these initiatives is generally independent of macroeconomic conditions, and we're focused on continuing to invest and grow in this market.
Yes.
Our emerging markets.
Including mining water resources and energy services.
grew by 5% year-over-year in the first quarter. This increase was led by growth and renewable energy revenue followed by mining and water resources.
Grew by 5% year over year in the first quarter. This.
This increase was led by growth in renewable energy revenue, followed by mining and water resources.
the renewables market, providing a wide array of engineering services to solar and battery storage projects throughout the Northeast and mid-Atlantic, and a growing number of wind energy projects in the Midwest and the West.
In the renewables market and providing a wide array of engineering services solar and battery storage projects throughout the northeast and mid Atlantic.
And a growing number of wind energy projects in the Midwest and the west.
growth in renewables related revenue has so far been organic, but we expect to accelerate that effort through acquisition later in 2022 and beyond.
Growth in renewables related revenue has so far been organic but we expect to accelerate that effort through acquisition later in 2002, and 2022 and beyond.
Acquisition integration continues to be a huge focus for us. Our dedicated integration teams doing a great job with both the tactical and the social aspects of integration.
Acquisition integration continues to be a huge focus for us in our dedicated integration teams doing a great job with both the tactical and the social aspects of integration.
including a man who's added over 400 employees through acquisition in our first year as a public company. And the staff retention rate of our integrated companies thus far has been close to 97%.
Including a man we've added over 400 employees through acquisition in our first year as a public company.
And the staff retention rate of our integrated companies, thus far has been close to 97%.
Above and beyond the talent we gain from the acquisitions, our dedicated recruiting team has been able to add nearly 10 percent required firms workforce.
Above and beyond the talent, we've gained from the acquisitions our dedicated recruiting team has been able to add nearly 10% of the acquired firms workforces.
Just as important, our integration team immediately gets everybody focused on revenue synergies, and we've already got a number of successes along those lines.
Just as important our integration team immediately gets everybody focused on revenue synergies and we've already launched a number of successes along those lines.
between revenue synergies and improved utilization resulting from our recruiting successes.
<unk> seen revenue synergies and improved utilization, resulting from a recruiting successes.
We're benefiting from substantial post-closing effective compression of our transaction multiples.
We're benefiting from substantial post closing effective compression of our transaction multiples.
Our lemonade pipeline continues to be as diverse and robust as it's ever been and our outlook for continued strategic transaction activity remains polished.
Our M&A pipeline continues to be as diverse and robust as it's ever been and our outlook for continued strategic transaction activity remains bullish.
at $28 million and annualized revenue. McMahon is well above what we expect to be our average deal size in 2022. As we said, we expect the average to be significantly larger than last year. We're currently shopping many deals below double digit revenue range.
At $28 million in annualized revenue.
<unk> well above what we expected to be our average deal size in 2022.
As we've said we expect the average be significantly larger than last year. We're currently shopping many deals in the low double digit revenue range.
We continue to be focusing on deals in the six to seven times multiple range with occasional deal above and below that.
We continue to be focusing on deals in the six to seven times multiple range.
With occasional deal above and below that.
And man, as an example, was priced at a multiple of six and a half times adjusted EBITDA without any consideration given to revenue center.
But man as an example was priced at a multiple of six five times adjusted EBITDA.
Any consideration given to revenue synergies.
We're not directly affected by supply chain disruptions, and labor is our only real inflationary exposure.
We're not directly affected by supply chain disruptions and labors are real or only real inflationary exposure.
The overwhelming majority of our clients are likewise not directly affected by material supply constraints, and their demand for our services has only increased.
The overwhelming majority of our clients are likewise, not directly affected by material supply constraints and their demand for our services is only increasing.
Across our markets, demand for engineering and design services remain strong as evidenced by growth in revenue and backfalls.
Across our markets demand for engineering and design services remains strong as evidenced by growth in revenue and backlog.
pricing power remains in our favor as evidenced by year over year revenue growth meaningfully at facing our growth and labor costs.
Pricing power remains in our favor as evidenced by year over year revenue growth meaningfully outpacing our growth in labor costs.
Despite certain headwinds in the equity markets, we remain bullish on our prospects for continued growth and upside in our value proposition for shareholders.
Despite certain headwinds in the equity markets, we remain bullish on our prospects for continued growth and upside in our value proposition to our shareholders.
We're raising our outlook for 2022 today, and as new acquisitions close, we'll continue to increase our outlook accordingly. Now I'm going to turn the call over to Bruce to discuss our first quarter results in greater detail. Terrific, thanks Gary. As you mentioned, as Gary mentioned, first quarter was a record setting quarter at Bowman.
We're raising our outlook for 2022 today and as new acquisitions closed will continue to increase our outlook accordingly.
Now I will turn the call over to Bruce to discuss our first quarter results in greater detail.
Terrific. Thanks, Gary as you mentioned, Gary mentioned first quarter was a record setting quarter of element.
Last week was the one-year anniversary of the pricing of RPO, and I'm extremely proud to say that we've successfully navigated the transition from private to public and completed the year of first.
Last week was the one year anniversary of the pricing of RTL and extremely proud to say that we have successfully navigated the transition from private to public and completed the year of one <unk>.
Last year, Q1, we were still a private company. So comparisons to that quarter and periods which include that quarter are still a bit apples to our engines.
Last year Q1, we were still a private company, so comparisons to that quarter and periods, which includes at quarter or still a bit apples to oranges.
As compared to Q1 2021, gross revenue for the first quarter increased 65% or $20.7 million to $52.5 million from $31.8 million. Of the nearly $21 million increase, $7.6 million was from acquired revenue and $13 million was organic, representing a 41% organic growth rate on gross revenue.
As compared to Q1 2021 gross revenue for the first quarter increased 65% or $27 million to $52 5 million from $31 8 million.
Of the nearly $21 million increase $7 6 million was from acquired revenue and $13 million was organic representing a 41% organic growth rate on growth strategy.
net service revenue, which we refer to as net revenue, a non-gap metric, increased 62.65.2% or $18.8 million to $47.7 million in the first quarter compared to $28.9 million for the first quarter last year. With the nearly $19 million increase in net revenue, $8.6 million was from acquisition and the remaining $10 million was organic, representing a nearly 36% organic growth rate year over year.
Net service revenue, which we refer to as net revenue and non-GAAP metrics increased 60 to 65, 2% or $18 8 million to $47 7 million in the first quarter as compared to $28 9 million for the first quarter last year, but.
But the nearly $19 million increase in net revenue $8 6 million was from acquisition and the remaining $10 million was organic representing a nearly 36% organic growth rate year over year.
gross margin for the first quarter was 51 and a half percent as compared to 49.2 in Q1 2021.
Gross margin for the first quarter was 51, 5% as compared to 49, 2% in Q1 2021.
Improvement of gross margin over Q1 last year is principally a function of lower non-cash stock comp expense, but also improve utilization, mix of business, and a bit of pricing power.
Proven of gross margin over Q1 last year is principally a function of lower noncash stock comp expense, but also improve utilization mix of business and a bit of pricing power.
SG&A was 43.5% of gross revenue in the first quarter, compared to 40.1% for Q1 2021.
SG&A was 43, 5% of gross revenue in the first quarter compared to 41% for Q1 2021.
mentioned earlier this comparison is not necessarily meaningful since the last since this time last year we're still private and did not have any of the costs of being public and we had lower non-cash.com expenses
As I mentioned earlier this comparison is not necessarily meaningful since the last since this time last year, we are still private and did not have any of the costs of being public and we had lower noncash stock comp expenses.
What is notable is that SG&A as a percent of gross revenue is trending down relative to Q4 last year and last year as a whole. We continue to be focused on reducing the rate of growth of SG&A relative to revenue, expect SG&A to fall as a percent of gross revenue as we continue to build scale.
What is notable is in SG&A as a percent of gross revenue is trending down relative to Q4 last year and last year as a whole we continue to be focused on reducing the rate of growth of SG&A relative to revenue.
SG&A to fall as a percentage of gross revenue as we continue to build scale.
Net income before tax is relatively flat year over year, with net profit for the first quarter up 50% to 1.5 million.
Net income before tax was relatively flat year over year with net profit for the first quarter up 50% to $1 5 million.
adjusted EBITDA for the first quarter was up 81% to 7.4 million representing a 15.5% adjusted EBITDA margin net.
Adjusted EBITDA for the first quarter was up 81% to $7 4 million, representing a 15, 5% adjusted EBITDA margin net.
to the increase of 1.3 percentage points over Q1 2021 and 3.3 percentage points over full year 2021.
With an increase of one three percentage points over Q1 2021 of three three percentage points over full year 2021.
adjusted EBITDA is a non-gap metric which has non-recurring adjustments and non-cash expenses to EBITDA.
Adjusted EBITDA is a non-GAAP metric, which adds nonrecurring adjustments and noncash expenses to EBITDA.
As of March 31st, the company had approximately 12.6 million shares outstanding, which includes all the shares issued in the secondary offering and roughly 2.1 million shares of unvested restricted stock included in that amount.
As of March 31, the company had.
Approximately $12 6 million shares outstanding which includes all the shares issued in our secondary offering and roughly $2 1 million shares of Unvested restricted stock included in that number.
As of today, the company has approximately 13.2 million shares outstanding, which includes shares issued in connection with the McMahon acquisition, and now roughly two million shares of unvested restricted stock included.
As of today. The company has approximately $13 2 million shares outstanding which includes shares issued in connection with the Mcmahon acquisition and now roughly 2 million shares of Unvested restricted stock included.
As of March 31st, our net debt was negative to the tune of roughly $7 million. Unadjusted for cash, our ratio of adjusted EBITDA to total debt was approximately 1.4 times.
As of March 31, our net debt was negative to the tune of roughly $7 million.
Unadjusted for cash a ratio of adjusted EBITDA to total debt was approximately one four times.
We currently have approximately $23 million of cash on our balance sheet and zero outstanding on our $17 million line with B of A, which was recently approved to be increased to $25.
We currently have approximately $23 million of cash on our balance sheet and zero outstanding on our $17 million line with Bofa, which was recently approved to be increased to 25.
That leaves us with upwards of $35 million at deployable capital for growth after accounting for working capital needs.
That leaves us with upwards of $35 million of deployable capital for growth after accounting for working capital needs.
As such, we believe we have sufficient liquidity for the near term to continue our M&A program.
As such we believe we have sufficient liquidity for the near term.
To continue our M&A program.
Gross backlog on March 31st was $173 million, up from $167 million at year end. Expect roughly 85% or $150 million of that backlog to turn during the next 12 months.
Gross backlog on March 31 was $173 million up from $167 million at year end.
We expect roughly 85% of our $150 million of that backlog to turn during the next 12 months.
Backlog was approximately 65% building infrastructure, 18% transportation, 15% power and utilities, and 2% to other emerging markets.
Backlog was approximately 65% building infrastructure, 18% transportation, 15% power and utilities and 2% to other emerging markets.
Proforma for the addition of McMahon affected January 1. Transportation would have represented roughly 29% of our backlog. Building infrastructure would have been roughly 56%.
Pro forma for the addition of Mcmahon effective January one transportation would've represented roughly 29% of our backlog building infrastructure would have been roughly 56%.
As indicated in yesterday's release, we're increasing our outline for top-line guidance to net revenue of $185 million to $200 million, and increasing our adjusted eva-the-guidance to $25 million to $29 million. This adds the impact of McMahon to top and bottom line, with little or no change to the outlook we issued just a few weeks ago back in the March.
As indicated in yesterday's release, we are increasing our outline for topline guidance to net revenue of $185 million to $200 million.
We are increasing our adjusted EBIT guidance to 25% to $29 million.
The impact of Mcmahon to top and bottom line with little or no change to the outlook. We issued just a few weeks ago back in mid March.
As is our policy, this guidance only includes acquisitions closed at the time we issue the guidance.
As is our policy. This guidance only includes acquisitions closed at the time, we issued the guidance.
It does not suggest the results will be evenly distributed throughout the year and it likewise does not contemplate additional acquisitions we expect to close this year.
It does not suggest the results will be evenly distributed throughout the year and likewise not contemplate additional acquisitions, we expect to close this year.
As new acquisitions are closed, we will update our guidance accordingly on the subsequent quarterly conference call.
The new acquisitions are closed we will update our guidance accordingly on a subsequent quarterly conference calls.
Before I turn back the call to Gary, I'd like to mention that we will be at the B. Riley Securities International Investor Conference later this month in California. If you're planning to attend the conference and you've not already done so, please schedule a time to meet with us one-on-one.
Before I turn back the call over to Gary I would like to mention that we will be at the B Riley Securities International Investor Conference later this month in California.
Planning to attend the conference and we have not already done. So please schedule a time to meet with US one on one.
And that's when they call back over to Gary for concluding remarks in Q&A. Thanks, Bruce.
I'll now turn the call back over to Gary for concluding remarks, and Q&A. Thanks Bruce.
This morning we announced the addition of Raymond Vicks to our Board of Directors. I'm very happy to have Ray join us on our upcoming journey. I also want to thank Dan LaFave for his service to the Board over the past year.
This morning, we announced the addition of Raymond <unk> to our board of directors and I am very happy to have <unk>, joining us on our upcoming journey I also want to thank Dan for his service to the board over the past year.
I want to thank everybody here for delivering a fantastic quarter. We all continue to work diligently every day to deliver discipline growth and return to our shareholders, and that includes many of the fantastic professionals working here at Bowman. Ownerships always been part of our culture, and today more than ever, the alignment of interest between the employees and investors inspires us to succeed.
And we thank everybody here for delivering a fantastic quarter.
We continue to work diligently every day to deliver disciplined growth and return to our shareholders and that includes many of the fantastic professionals.
Looking here common ownership.
Ownership has always been part of our culture and today more than ever to the alignment of interest between.
For us investors inspires us to succeed.
Thanks, Solomon. I'll turn it back over to the operator to open it up for questions.
Thanks, I will now turn it back over to the operator to open it up for questions.
Thank you. At this time I would like to remind everyone in order to ask a question press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.
Thank you at this time I would like to remind everyone.
To ask a question press Star then the number one on your telephone keypad.
So just a moment to compile the Q&A lifestyle.
Our first question comes from the line of Brett Feldman of the 8 Davison. Your line is now open.
Our first question comes from the line of Brett Feldman of D. A Davidson your line is now open.
Great. Thanks. Good morning, Gary. Bruce. Um, my first question, I mean, really strong start to the year here, anything to be aware of that might have had an unusually strong impact this quarter, you know, specific programs or contracts. I'm just, you know, the seasonally slower quarter for you. If I analyze that, that gets me to the midpoint of your guidance, frankly, a little bit about that. Just want to be sure I understand all the moving pieces in the quarter and what we should be thinking about for the rest of the year.
Great. Thanks, Good morning, Gary Bruce.
My first question I mean really strong start to the year here anything to be aware of to date might've had an unusually strong impact this quarter specific programs or contracts just seasonally slower quarter for you. If I annualize that that gets me to the midpoint of your guidance frankly.
A little bit about that just wanted to be sure I understand all the moving pieces in the quarter and what we should be thinking about for the rest of the year.
Yeah, but there really isn't one particular contract or one particular client or any one particular event that made the quarter strong. It was just a strong quarter for us. It's the culmination of a lot of hard work in business development and acquisition strategy. And there's really a very balanced
Brexit.
There really isn't one particular contract or one particular clients or any one particular event that made the quarter strong. It was just a strong quarter for US is the culmination of a lot of hard work in business development and acquisition strategy.
And.
There is really a very balanced portfolio of revenue.
portfolio of revenue that makes up the quarter. So we think that's a positive that there isn't one anomalous thing that impacted it.
That that makes up the quarter so.
We think thats a positive.
There isn't one anomalous thing.
That impacted.
Positively.
I'll just reinforce that, but it is spread all over. There's not any big rock, a couple big rocks.
This reinforces our belief is spread all over there is not.
And a.
Couple of Big rocks.
that are not sustainable, that piece that, yeah, we were not terribly seasonally weather-affective, generally, you know, if it was a mild or mild winter, you know, out of our markets. And we have become, as we become more geographically diversified, somewhat less impacted by winter weather on outdoor work.
That are that are not sustainable.
Yes, we were not terribly seasonally weather.
Effective generally it was a mild or mild winter a lot of our markets.
And we have.
As we become more geographically diversified somewhat less impacted.
Bye bye winter weather on outdoor work.
Okay, okay, fair enough. And then the next question was just on, you know, the gross margins seem to be fine. I guess, you know, new contracts.
Okay, Okay fair enough.
And then the next question is just on them.
Yeah.
The gross margins seem to be fine I guess new contracts.
Um, you know, how do you feel they're sort of appropriately capturing the cost increases we all see out there, fuel, labor, all that sort of stuff, um, seen in the business and then, you know, how are you kind of monitoring that as new work flows into the backlog?
And how you feel theres sort of appropriately capturing kind of cost increases we all see out there pure labor all of that sort of stuff.
And the business and then how are you kind of monitoring that as new workflows into the backlog.
Sure.
And we're, uh, you know, we have, uh, I anticipated that thinking about it this morning. We have, uh
And Brent.
We have.
I anticipated that and thinking about it this morning, we have.
really probably hundreds of pricing agents out there, seller-dealers.
Really probably hundreds of pricing agent side, they're a seller doers and we cannot hold them we coach them.
And we counseled them, we coached them.
and we listen through them and our customers are experiencing price increases all across the board and their materials, their fuel, their labor.
And every family.
And we listened through them and our customers are experiencing price increases all across the board in your materials there are fuel their labor.
And we're coaching our folks because, you know, we're having a lot of pressure to increase our labor, price of our labor is going up.
And we're approaching our folks because we're having a lot of pressure as we increase our labor price of our labor is going up.
So, our folks are, and they are,
So our folks are in there.
<unk>.
they are not needing resistance to increase pricing. Our customers are expecting it. So, our folks are receptive to the coaching and they're at their ad. And we're able to get our pricing up, coincidentally, with what's happening in the marketplace. It's inflationary environment, it's new to everybody. I think, Brent, just to point out a few more, particularly since you mentioned that he is not a significantly large component of our cost.
They are not meeting resistance to increased pricing by our customers are expecting it.
So our folks are receptive to the coaching and they're out there.
And we were able to get our pricing up.
Coincident with what's happening in the marketplace it relates inflationary environments new to everybody.
Brent just to point out few or particular since you mentioned that he is not a significantly large component of our costs on.
on a regular basis. We have a fleet of vehicles that are out that you survey work, but the vast majority of the work that we produce and the revenue that comes out of here is done from inside an office and isn't necessarily, from our cost point of view, particularly fuel driven. That sets the label.
On a regular basis, we have a fleet of vehicles that are out there.
As you survey work, but the vast majority of the work that we produce in our revenue that comes out of here is done from inside an office.
And isn't necessarily from a cost point of view.
Particularly fuel trickle down effects of labor.
Yeah. Okay. Fair enough. And then, Gary, why McMahon Associates? Why was that the right kind of large transaction to expand the transportation footprint for you? I mean, what did you especially like about...
Yes, Okay fair enough.
And then Gary why Mcmahon associates.
Why was that the right kind of a large transaction to expand the transportation footprint for you I mean when did you.
Especially like about this business.
So, great question.
So.
Great question.
It's a little bit of as geographically correct.
you know, a little bit of it's geographically correct. That makes that, you know, made it, uh,
No Nathan.
Yes.
Okay.
more than bite size, but it was a comfortable size for us and the appropriate stretch.
More than bite size, but it was it was a comfortable size for us was the appropriate stretch.
We really like the culture similar to our culture. They have it's a strong ownership culture, lots of, lots of stockholders that have been in a long time and very, very receptive leadership to.
We really like the culture similar to our culture. They have it's a strong ownership culture.
Lots of lots of stockholders that have been there a long time.
And.
Barry.
Very receptive.
Leadership too.
to taking the next step along with us and growing with us and certainly congruent with our strategy of growing our transportation practice.
To taking the next step along with us and growing with us.
And certainly certainly can grow with our strategy of growing growing.
Growing our transportation practice.
Really, they have some great clients, PennDOT, Pennsylvania Transportation, Massachusetts Frontpack Authority, and they do work for Florida DOT, which we do with the open design size, some really complementary clients.
Really great.
Great clients.
Ken.
Principally in transportation.
That's a impact authority.
Massachusetts Turnpike authority.
They do work for Florida.
<unk>, which we do but they are on the design side, some really complementary clients. So there's lots of factors make him a great fit for us our first really big increasingly diverse market ortho say from when we started to do diligence.
So just lots of factors made them a great fit for us. Our first really big increase in the diverse market. What to say from when we started to due diligence, the way they've grown the organization.
They've grown the organization.
you know, as they've grown the size of the business, it's very professional, the products of information that they were able to provide to us was not quick, accurate, you know, organized. And so, you know, they had built, in a lot of ways, the way we had built as we grew through their size.
As they've grown the size of the business is very professional.
The product information that they were able to provide to US foods was not quick accurate organized.
So they had built in a lot of ways. The way we have built as we grew through their size.
And so it was very easy to understand them and, you know, compliment to the folks who do all of their back office work there. It was an easy, we saw that it would be easy to plug in.
So it was very easy to understand them and compliments.
So we do all of their back office work there.
It was an easy.
We saw that it would be easy to plug in.
as it was. Okay, great. I'm kind of honored from heaven, but it was really, really confirmed literally within the first few days. This, this one, uh,
Okay great.
On time all of them have them, but it was really really confirmed literally within the first few days with this one.
Deal from.
one of our longstanding clients, immediately, hey, we closed this seven-figure traffic study deal because we had an advance. Like, wow, that's what it's all about.
One of our longstanding clients immediately.
We closed.
Seven figure traffic study deal because we had mcmahon it's like Wow, that's what it's all about.
That's great. Maybe just the last one and I'll turn it over. You know, considering this is a larger deal, I assume there's a little more integration to it. But you obviously have some bigger targets for what you like to do, I think, this year in terms of acquired revenue. If you take a step back here in the short term and focus on integration, maybe just how we might think about the deal flow here through the rest of the year.
That's great.
Just last one and I'll turn it over.
Considering this is a larger deal I assume there is a little more integration to.
But you obviously had some bigger targets for which I'd like to do I think this year in terms of acquired revenue. It take a step back here in the short term and focus on integration, maybe just how we might think about that deal flow here through the rest of the year.
we're, they're going to continue to come. We have built a very robust integration team, dedicated integration team. And so we've got strong integration bandwidth.
We're going to continue to come and we have built a very robust integration team.
Dedicated integration team.
So we start strong integration bandwidth.
And, in fact, I will, yes, we've got a lot of listening to do to Integratement Man. It's going to be a long haul to Integratement Man.
And in fact I won't.
We've got a lot of lifting to do to integrate Mcmahon.
It's going to be a long haul to integrate Mcmahon.
but the deals will keep on coming and we've got the bandwidth, we've got the machine built to continue to queue up.
But the deals will keep on coming and we've got the bandwidth. We got the team we've got the machine built to continue to queue up.
Integrate in.
Also, in some way, you know, put them in, bring them into the, bring them into the scene here.
I will say a similar bump.
Put them and bring them into the bring them into leukemia.
They're not going to slow us down.
Okay.
That is not going to slow us down.
Understood. Okay. Thanks, Gary Thanks, Bruce.
Thanks, Brett.
Thank you. Your next question comes from the line of Alex Regal.
Thank you. Your next question comes from the line of Alex Regal.
The Riley financial, your line is now open.
B Riley financial your line is now open.
Thank you. Good morning, gentlemen, and a nice quarter and a nice acquisition. I know it's a couple quick.
Thank you good morning, gentlemen, nice quarter and nice acquisition.
Thanks, Alex a couple of quick questions.
You've talked in the past about some other end markets, such as power infrastructure, mining, water, and renewables. Can you talk about the activity in the quarter there and the pipeline of work that you see on the rise?
<unk>.
You've talked in the past about some other some other end markets such as power infrastructure mining water in renewables can you talk about the activity in the quarter, there and the pipeline of work that you see on the horizon.
Yeah, so those are still, you know, the smaller parts of our business. We definitely saw good growth in renewables over the course of the quarter. A little bit of a decline in water resources and strong activity in mining. But again, sort of as a collective, they represent, you know, less than 5% of revenue today. I think that they are knowing our pipeline. They are a focus of M&A activity.
Yes, so those are still.
Smaller parts of our business, we definitely saw good growth in renewables over the course of the quarter a little bit of a decline in water resources.
And strong activity in mining, but again sort of as a collective they represent less than 5% of revenue today I think that they are.
Okay, knowing our pipeline they are our focus.
Of of M&A activity, I don't think anything necessarily in the short term or the size.
I don't think anything necessarily in the short term of the size, you know, say that would, you know, that would move them into, you know, a more, you know, to kind of a, you know, a Thank you. Thank you. Thank you.
Say that debt.
That would move them into a more.
To kind of.
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percentage as the three other primary, but I'll stand a little bit on what this is saying. Our renewables is a focus, although we've not had any hits on acquisitions, but it is a focus. And we've really had some super successes.
Percentages as the three other primary.
But I'll turn out.
<unk>, a little bit on what you're saying.
Our renewables is is a focus although we've not had any hit on acquisitions, but it is a focus and we've.
We've really had some super successes.
kind of, candidly, under my radar, that just my radar just started lighting up organic growth of successes in renewables. So organically, we're really growing our renewables practice. We're going to continue to focus on growing that by acquisition. So we can really continue our commitment to growing that. And on the mining front, we're looking at
Candidly other my radar that's just my radar this started lighting up organic growth.
Our successes in renewables, so organically, we're really growing our renewables practice, we're going to continue to focus on growing up by acquisitions.
Continuing our commitment to growing that.
And on the mining front.
We're looking at.
several relatively smaller but meaningful acquisitions. And our paradigm is expanding on that. We've been in the mining business some 10 years. In Arizona it's copper mining. And our paradigm is expanding to include I'll say mining slash quarrying with aggregate.
Several relatively smaller but meaningful acquisitions.
Our paradigm is expanding on that.
Even in the mining business some 10 years.
Arizona is compromising and our paradigm is expanding to include I'll say mining slashed correlating with aggregates.
to be kind of expanded to an infrastructure play to serve the highway and infrastructure market. That market is on fire with the infrastructure bill.
B kind of expanded to an infrastructure play to serve.
The highway and infrastructure markets.
That's that that market is on fire with the infrastructure Bill.
And then, you know, more broadly speaking, you talk about inflation risk, and in particular, obviously, labor inflation, and how quickly you can react to that and pass that along to be able to
And then more broadly speaking can you talk about inflation risk and in particular, obviously, the labor inflation and how quickly you can react to that and pass that along to be able to.
Keep your margin profile fairly consistent.
Keep your margin profile fairly.
Consistent.
Yeah, it's a great question, Alex, and like I was anticipating, like I told Brent this morning, just saying that this morning. And so far, so good. And the way I looked at that is, you know, I think I was
Yes, it's a great question, Alex and.
I was anticipating record.
Told the Brent this more interesting that this morning.
And so far so good and the way I look at that as well.
I was.
I saw my professional career when Paul Volcker was chairman of the Fed, so none of us who are in the professional world today really have experienced inflation as professionals, so we all kind of feel our way through it.
I started my professional career.
Paul Volcker was chairman of the fed so I would say none of us none.
For US who are in the professional world today really have experienced inflation as professionals. So we all kind of CLR way through it.
<unk>.
And I said this a little bit before, so far we are finding that our clients are expecting price increases from us. They're getting hit from all sides, so they are not that resistant to it.
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And I've said this before it's so far we are finding that.
Our clients are expecting.
Price increases from us, they're getting hit from that.
From all sides.
They are not that resistance to it.
And.
And our.
it's new for our folks to push that. Like I said, we're coaching them to do it. They're going out and they're being appropriately aggressive about pushing the pricing. They're learning that the market is receptive to it. So it's kind of new to everybody. So we are finding that we are able to increase our pricing.
It's new for our folks to push that like I say, we're coaching them to do it they are going out and they are being offered.
Appropriately aggressive about pushing the pricing.
Learning that there that the market is receptive to it so it's kind of new to everybody. So we're.
We are we are we are we are.
Are finding that we are able to increase our pricing.
to be able to keep up with the demands, our demands to increase the cost of labor. So, so far, so good. Like I said, we continue to feel our way through it. We are optimistic and confident we're gonna be able to continue to navigate through it.
To be able to keep up with the demands of our demands to increase the cost of labor. So so far so good I would say, we continue to feel our way through it.
Optimistic and confident we're going to be able to continue to navigate through it.
And as we don't have any meaningful contracts that are old enough that we're out of the money on labor, we're not locked in and we don't have these kinds of contracts that five years ago we set rates and had no elevators in it. Part of the benefit of the term of our business right now is that we are in a somewhat real time pricing environment for a lot of the work that we do.
And honestly, we don't have any meaningful contracts that are so that are old enough that were out of the money on on labor. We're I mean, we're not we're not locked in and you don't have these kinds of contracts that.
Five years ago, we set rates and had no escalators that are part of the benefit of.
The term of our business right now.
We are in a somewhat real time pricing environment for a lot of the work that we do.
And then, Bruce, can you talk about rising interest rates and sort of how you think about that as it relates to your capital structure moving forward?
And then.
Bruce can you talk about.
Rising interest rates and sort of how you think about that as it relates to your capital structure moving forward.
So, you know, as we stand today.
Right so.
The stands today.
you know, fairly low leverage, you know, interest rates aren't necessarily, you know, consuming a lot of change of rates, you know, interest carries on consuming a lot of capital here. We think that the next, you know, in our near future, you know, as we grow, you know, that will be a component of what we do.
We were fairly low leverage.
<unk> rates aren't necessarily consuming a lot of change of rates interest carriers are consuming a lot of capital.
<unk> here.
We think that.
Okay.
The next.
In our near future as we grow.
That will be a component of what we do.
But we're not necessarily looking to lock in a large amount of capital today that we have to carry for a period when we don't really necessarily need it imminently. So I think rate movements of... Rate movements long term is going to be a cost...
But we're not necessarily looking to lock in a large amount of capital today that we have to carry for a period, where we don't really necessarily need it imminently.
So I think yes.
Rate movements of rate.
<unk> long term it is going to be a cost of.
of playing for us, you know, we'll deal with rates when we get to when we need more capital.
Playing for us.
These are deal with rates when we get to when we need more capital.
But I don't think it's going to be, we're not going to be so highly leveraged ever that it is a huge negative drag on the capital structure. Does that address what you're looking for? It sure does. Great answer. Thank you very much.
But I don't think its going to be we're not going to be so highly leveraged over that fuel that is huge.
Negative drag.
On the on the capital structure here does that <unk>.
The rest what youre looking for.
It sure does.
Thank you very much.
Alright. Thanks.
Thank you. We now have a follow-up from Brett Stalman of DA Davison. Your line is now open.
Thank you we now have a follow up from Brett Feldman of D. A Davidson your line is now open.
Hey, thanks, guys. Um, just one more on the cash flow was particularly solid this quarter. Maybe just your thoughts on how that flows, Bruce, for the rest of the year.
Hey, Thanks, guys just one more on the cash flow was particularly solid this quarter and maybe just your thoughts on how that flows through the rest of the year.
Yeah, I think we're, we're reaching a stride there, you know, again, our, our.
Yes, I think we're reaching a strive there.
Yes again.
operating cash flow, we believe is going to be strong. We still consume cash for investment activity and probably won't be generating necessarily. We've done the financing activity earlier this year, but certainly one of the things that we see
Our.
Operating cash flow.
<unk> is going to be strong, we still consume cash for investment activity in Q4.
We probably won't be generating necessarily when we've done the financing activity earlier this year, but.
Certainly one of the things that we see.
over time here and the impact of the growth is that it generates cash and so sort of back to Alex's question of kind of how do we see interest rates affecting the business and we're looking for the growth to start generating more free cash flow that can be used for investment in you know in additional growth but you know the way it's solid
Over over time here and the impact of the growth is that it generates cash and so sort of back to Alex's question on kind of how do we see interest rates affecting the business.
We're looking for for the growth to start generating more free cash flow that can be used for investment in an additional growth but.
We I think we had solid solid trajectory. This this quarter for cash flow.
fellow trajectory this quarter for cash flow and expected.
And you expect that.
we can turn our adjusted EBITDA into cash at pretty healthy rates going forward.
We can turn our adjusted EBITDA into cash at pretty healthy rates going forward.
Okay, great. Thank you.
Thank you.
Thank you. There are no further questions at this time. Mr Bowman, I turn the conference call back over to you.
Thank you.
So a nice final questions at this time, Mr Feynman or Tyler.
Conference call Buckeye for Ta.
Thank you Candice.
We'll wrap it up this morning. Thank you everybody for listening in and and thanks Brent and Alex for thoughtful questions and and appreciate everybody being on the call and thanks for every all the public employees for all the hard work and all the investors for the faith you put in us and I'm just not this place you know we're hard to build value here. Good morning everyone.
<unk>.
We will wrap it up this morning. Thank you everybody for listening in thanks, Brent and Alex for thoughtful questions and I appreciate everybody being.
And being on the call and thanks for.
Every all the Beaumont employees for all the hard work and all the investors for the safety put in us.
I'm just not in this place.
Hard to build value here good morning, everyone.
Thanks, operator, that's it.
That now concludes today's conference call, you may now disconnect your line to have a great day.
That now concludes today's conference call you May now disconnect your lines have a great day.
Yes.
Never. you
Yeah.
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Yes.
Okay.