Bowman(BWMN) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents Bowman Consulting Group Ltd.'s unaudited condensed consolidated financial statements and detailed notes for H1 2022 and FY 2021 Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (Amounts in thousands) | Metric | June 30, 2022 (Unaudited) | December 31, 2021 | | :---------------------- | :------------------------ | :---------------- | | ASSETS | | | | Total current assets | $105,121 | $74,409 | | Total Assets | $184,506 | $138,170 | | LIABILITIES & EQUITY| | | | Total current liabilities | $48,224 | $32,854 | | Total liabilities | $76,062 | $59,757 | | Total shareholders' equity| $108,444 | $78,413 | | TOTAL LIABILITIES AND EQUITY| $184,506 | $138,170 | - Total assets increased by $46.3 million (33.6%) from December 31, 2021, to June 30, 2022, primarily driven by increases in current assets (cash, accounts receivable, contract assets) and non-current assets (goodwill, other intangible assets)[8] - Total liabilities increased by $16.3 million (27.3%) over the same period, with current liabilities seeing a significant rise. Shareholders' equity also increased by $30.0 million (38.3%)[8] Condensed Consolidated Statements of Operations Condensed Consolidated Income Statements (Amounts in thousands except per share data) | Metric (3 Months Ended June 30) | 2022 | 2021 | Change ($) | Change (%) | | :------------------------------ | :-------- | :-------- | :--------- | :--------- | | Gross Contract Revenue | $62,399 | $36,524 | $25,875 | 70.8% | | Total contract costs | $31,054 | $18,188 | $12,866 | 70.7% | | Total operating expenses | $30,861 | $18,657 | $12,204 | 65.4% | | Income (loss) from operations | $484 | $(321) | $805 | 250.8% | | Net income (loss) | $(320) | $(439) | $119 | 27.1% | | Basic EPS | $(0.03) | $(0.06) | $0.03 | 50.0% | | Diluted EPS | $(0.03) | $(0.06) | $0.03 | 50.0% | | Metric (6 Months Ended June 30) | 2022 | 2021 | Change ($) | Change (%) | | :------------------------------ | :-------- | :-------- | :--------- | :--------- | | Gross Contract Revenue | $114,860 | $68,326 | $46,534 | 68.1% | | Total contract costs | $56,489 | $34,344 | $22,145 | 64.5% | | Total operating expenses | $56,049 | $32,808 | $23,241 | 70.8% | | Income (loss) from operations | $2,322 | $1,174 | $1,148 | 97.8% | | Net income (loss) | $1,137 | $542 | $595 | 109.8% | | Basic EPS | $0.09 | $0.07 | $0.02 | 28.6% | | Diluted EPS | $0.09 | $0.07 | $0.02 | 28.6% | Condensed Consolidated Statements of Shareholders' Equity (Deficit) - Total shareholders' equity increased from $78,413 thousand at January 1, 2022, to $108,444 thousand at June 30, 2022, primarily due to proceeds from common stock offerings ($15,475 thousand), issuance of new common shares ($8,115 thousand), stock-based compensation ($7,025 thousand), and net income ($1,137 thousand)[13] - Treasury stock purchases amounted to $(2,369) thousand for the six months ended June 30, 2022[13] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (Amounts in thousands) | Cash Flow Activity (Six Months Ended June 30) | 2022 | 2021 | Change ($) | | :-------------------------------------------- | :-------- | :-------- | :--------- | | Net cash provided by (used in) operating activities | $4,268 | $(472) | $4,740 | | Net cash used in investing activities | $(8,099) | $(1,570) | $(6,529) | | Net cash provided by financing activities | $8,995 | $40,201 | $(31,206) | | Net increase (decrease) in cash and cash equivalents | $5,164 | $38,159 | $(32,995) | | Cash and cash equivalents, end of period | $25,783 | $38,545 | $(12,762) | - Operating activities generated $4.3 million in cash in H1 2022, a significant improvement from a $0.5 million usage in H1 2021, primarily due to higher net income and non-cash adjustments[17][224] - Investing activities used substantially more cash in H1 2022 ($8.1 million vs. $1.6 million in H1 2021), mainly due to increased business acquisitions[17][226] - Financing activities provided $9.0 million in H1 2022, a sharp decrease from $40.2 million in H1 2021, primarily reflecting the timing of common stock offerings (IPO in H1 2021 vs. follow-on offering in H1 2022)[17][227] Notes to Condensed Consolidated Financial Statements 1. Nature of Business and Basis of Presentation - Bowman Consulting Group Ltd. is a professional services firm providing planning, design, engineering, geomatics, survey, construction management, environmental consulting, and land procurement services to customers in the built environment[23] - The Company completed a common stock offering in February 2022, issuing 1,057,500 shares at $16.00 per share, generating total gross proceeds of approximately $16.9 million[25][26] 2. Significant Accounting Policies - The Company operates as an 'Emerging Growth Company' and has elected to use the extended transition period for complying with new or revised financial accounting standards[31] - Revenue is generally recognized over time, primarily using the ratio of actual costs incurred to total estimated costs for fixed-price contracts[33] - The effective tax rate for the six months ended June 30, 2022, was (37.9%), a significant change from 30.7% in the prior year, primarily due to a windfall tax adjustment from restricted stock vesting, increased R&D credits, and projected limitations on executive compensation deductibility[42] - The Company adopted ASU 2021-08 (Accounting for Contract Assets and Liabilities) and ASU 2017-04 (Simplifying Goodwill Impairment Test) effective January 1, 2021, and January 1, 2022, respectively, with immaterial impacts[47][48] - ASU 2016-02 (Leases) and ASU 2016-13 (Credit Losses - CECL model) are effective for the Company beginning January 1, 2022, and January 1, 2023, respectively, and their impacts are currently being evaluated[49][50] 3. Earnings per Share Earnings per Share (Amounts in thousands, except share data) | Metric (3 Months Ended June 30) | 2022 | 2021 | | :------------------------------ | :----------- | :---------- | | Net income (loss) | $(320) | $(439) | | Basic EPS | $(0.03) | $(0.06) | | Diluted EPS | $(0.03) | $(0.06) | | Weighted average shares outstanding (Basic) | 10,761,172 | 6,973,055 | | Weighted average shares outstanding (Diluted) | 10,761,172 | 6,973,055 | | Metric (6 Months Ended June 30) | 2022 | 2021 | | :------------------------------ | :----------- | :---------- | | Net income | $1,137 | $542 | | Basic EPS | $0.09 | $0.07 | | Diluted EPS | $0.09 | $0.07 | | Weighted average shares outstanding (Basic) | 10,346,089 | 6,029,054 | | Weighted average shares outstanding (Diluted) | 10,427,602 | 6,029,054 | - Diluted EPS for both periods did not assume the effect of restricted shares or substantive options as they were antidilutive[54][55] 4. Acquisitions - In Q1 2022, Bowman acquired Perry Engineering, LLC for $0.9 million (cash, stock, promissory note, assumed liabilities) to enhance civil engineering and land surveying competencies[58][59] - In Q2 2022, Bowman acquired McMahon Associates, Inc. for $18.3 million (cash, stock, promissory notes, assumed liabilities) to strengthen transportation planning and engineering services[61][64] Preliminary Purchase Price Allocation for McMahon Associates, Inc. (in thousands) | Item | Amount | | :--------------------------------------- | :-------- | | Total Purchase Price | $18,331 | | Accounts Receivable, net | $8,456 | | Intangible assets | $3,342 | | Goodwill | $9,305 | | Net assets acquired | $18,331 | - In Q2 2022, Bowman acquired Fabre Engineering, Inc. for $0.5 million (cash, promissory note, assumed liabilities) to further enhance civil engineering and land surveying capabilities[70][71] Pro Forma Consolidated Results (Six Months Ended June 30, in thousands) | Metric | 2022 (Pro Forma) | 2021 (Pro Forma) | | :------------------------- | :--------------- | :--------------- | | Gross Contract Revenue | $127,069 | $84,918 | | Net Income (loss) | $2,081 | $947 | 5. Disaggregation of Revenue and Contract Balances Disaggregated Revenues by Contract Type (in thousands) | Contract Type (3 Months Ended June 30) | 2022 ($) | 2022 (%) | 2021 ($) | 2021 (%) | | :------------------------------------- | :------- | :------- | :------- | :------- | | Fixed fee | $58,488 | 93.7% | $33,456 | 91.6% | | Time-and-materials | $3,911 | 6.3% | $3,068 | 8.4% | | Gross contract revenue | $62,399 | 100.0% | $36,524 | 100.0% | | Contract Type (6 Months Ended June 30) | 2022 ($) | 2022 (%) | 2021 ($) | 2021 (%) | | :------------------------------------- | :------- | :------- | :------- | :------- | | Fixed fee | $108,074 | 94.1% | $64,829 | 94.9% | | Time-and-materials | $6,786 | 5.9% | $3,497 | 5.1% | | Gross contract revenue | $114,860 | 100.0% | $68,326 | 100.0% | - As of June 30, 2022, the Company had approximately $165.8 million in remaining performance obligations, with 90.8% expected to be recognized within the next twelve months[73] 6. Contracts in Progress Net Contract Assets (in thousands) | Metric | June 30, 2022 | December 31, 2021 | | :----------------------------------- | :------------ | :---------------- | | Costs incurred on uncompleted contracts | $205,307 | $168,110 | | Estimated contract earnings to date | $494,439 | $398,059 | | Less: billed to date | $(490,840) | $(393,493) | | Net contract assets | $3,599 | $4,566 | - Net contract assets decreased by $0.967 million from December 31, 2021, to June 30, 2022[75] 7. Notes Receivable Notes Receivable Summary (in thousands) | Category | June 30, 2022 | December 31, 2021 | | :------------------------------------- | :------------ | :---------------- | | Officers, employees and affiliated entities | $2,378 | $2,478 | | Unrelated third party | $903 | $903 | | Total | $3,281 | $3,381 | | Less: current portion | $(1,183) | $(1,260) | | Noncurrent portion | $2,098 | $2,121 | - Total notes receivable decreased by $0.1 million from December 31, 2021, to June 30, 2022[77] 8. Property and Equipment, Net Property and Equipment, Net (in thousands) | Category | June 30, 2022 | December 31, 2021 | | :------------------------------------- | :------------ | :---------------- | | Total fixed assets | $17,326 | $16,079 | | Less: accumulated depreciation | $(11,236) | $(10,669) | | Property and Equipment, net of capital leased assets | $6,090 | $5,410 | | Capital Leased Assets, net | $15,662 | $14,792 | - Depreciation expense for fixed assets was $0.6 million for the six months ended June 30, 2022, up from $0.4 million in the prior year[78] - Amortization expense for capital leased assets was $3.4 million for the six months ended June 30, 2022, up from $2.4 million in the prior year[79] 9. Goodwill Goodwill Summary (in thousands) | Metric | Goodwill Amount | | :-------------------------- | :-------------- | | Balance as of December 31, 2021 | $28,471 | | 2022 Activity | $11,142 | | Balance as of June 30, 2022 | $39,613 | - Goodwill increased by $11.1 million during the first six months of 2022, primarily due to business acquisitions[81] 10. Intangible Assets Intangible Assets (Net Balance in thousands) | Category | June 30, 2022 | December 31, 2021 | | :----------------------- | :------------ | :---------------- | | Customer relationships | $11,696 | $9,353 | | Contract rights | $2,500 | $2,109 | | Leasehold | $158 | $143 | | Non-compete agreement | $- | $- | | Domain name | $281 | $281 | | Licensing rights | $400 | $400 | | Total | $15,035 | $12,286 | - Total net intangible assets increased by $2.7 million from December 31, 2021, to June 30, 2022, primarily in customer relationships and contract rights[82] - Amortization expense for intangible assets was $1.2 million for the six months ended June 30, 2022, significantly up from $0.1 million in the prior year[83] 11. Bank Revolving Line of Credit and Fixed Credit Facilities - The Company has a $25.0 million revolving credit facility and three non-revolving credit facilities with Bank of America[85][230] - As of June 30, 2022, there was no outstanding balance on the Revolving Line, which matures on July 31, 2024[85][230] - Interest expense on these facilities totaled $21 thousand for the six months ended June 30, 2022, down from $0.1 million in the prior year[90] 12. Notes Payable Notes Payable Summary (in thousands) | Category | June 30, 2022 | December 31, 2021 | | :------------------------------------- | :------------ | :---------------- | | Shareholders | $13,042 | $10,771 | | Owners of Acquired Entity | $478 | $450 | | Fixed line notes payable | $1,139 | $1,502 | | Total | $14,759 | $12,857 | | Less: current portion | $(6,067) | $(4,450) | | Noncurrent portion | $8,692 | $8,407 | - Total notes payable increased by $1.9 million from December 31, 2021, to June 30, 2022, primarily due to increased shareholder notes[95] - Interest expense attributable to notes payable was $0.2 million for the six months ended June 30, 2022, up from $0.1 million in the prior year[93] 13. Related Party Transactions - The Company leases office space from BCG Chantilly, LLC, an entity with significant ownership by Mr. Bowman, Mr. Bruen, and Mr. Hickey[98] - Notes receivable from related parties (Bowman Lansdowne Development, LLC, Lansdowne Development Group, LLC, Bowman Realty Investments 2010, LLC, Alwington Farm Developers, LLC) totaled approximately $2.3 million as of June 30, 2022[99][100][101] - The Company provided administrative, accounting, and project management services to certain related party entities, billing $38 thousand for the six months ended June 30, 2022[103] 14. Employee Stock Purchase and Stock Incentive Plans - Under the ESPP, eligible employees can purchase common stock at a 15% discount. For H1 2022, 46,063 shares were sold for $593 thousand[106] - The 2021 Omnibus Equity Incentive Plan allows for granting stock options and restricted stock awards. As of June 30, 2022, 12,656 stock options were outstanding[107][110] - During H1 2022, 328,489 shares of restricted stock were granted under the Plan, with 1,959,071 shares outstanding at June 30, 2022[115][118] - 447,429 performance-based stock units were granted to executive officers in H1 2022, subject to market conditions and a 2.91-year vesting period[119][120] - Unrecognized compensation costs related to unvested awards totaled $27.8 million as of June 30, 2022, expected to be expensed through 2027[123] 15. Capital Leases Future Minimum Commitments Under Capital Leases (in thousands) | Year | Amount | | :--------- | :-------- | | 2022 | $3,433 | | 2023 | $5,697 | | 2024 | $3,509 | | 2025 | $2,438 | | 2026 | $347 | | Total minimum lease payments | $15,424 | | Present value of total net minimum lease payments | $13,487 | | Long-term portion of net minimum lease payments | $7,735 | - The Company leases equipment and vehicles under capital lease agreements with payment terms ranging from 30 to 50 months[124] 16. Commitments and Contingencies Future Minimum Lease Payments for Operating Leases (in thousands) | Year | Amount | | :--------- | :-------- | | 2022 | $4,084 | | 2023 | $7,039 | | 2024 | $6,446 | | 2025 | $5,470 | | 2026 | $4,405 | | Thereafter | $10,156 | | Total | $37,600 | - Rent, vehicle, and equipment lease expense for operating leases was $3.8 million for the six months ended June 30, 2022, up from $2.8 million in the prior year[127] 17. Subsequent Events - On July 15, 2022, Bowman acquired Project Design Consultants, LLC for approximately $11.0 million, consisting of cash, promissory notes, and a convertible promissory note[129] - The IRS approved the Company's request to change its accounting method for stock-based compensation expense on July 27, 2022, which will result in a reversal of an uncertain tax position and a reduction in tax expense in Q3 2022[130] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operating performance, revenue growth from acquisitions and organic expansion, key metrics, and liquidity Overview - Bowman is a professional services firm offering diverse engineering solutions across various end markets, with a strategic focus on recurring revenue and multi-year engagements[133][134] Key Financial Highlights (Amounts in thousands) | Metric (3 Months Ended June 30) | 2022 | 2021 | YoY Growth | | :------------------------------ | :-------- | :-------- | :--------- | | Gross contract revenue | $62,400 | $36,500 | 71.0% | | Net loss | $(300) | $(400) | 25.0% | | Adjusted EBITDA | $7,600 | $4,200 | 81.0% | | Metric (6 Months Ended June 30) | 2022 | 2021 | YoY Growth | | :------------------------------ | :-------- | :-------- | :--------- | | Gross contract revenue | $114,900 | $68,300 | 68.2% | | Net income | $1,100 | $500 | 120.0% | | Adjusted EBITDA | $15,000 | $8,300 | 80.7% | - The acquisition of McMahon Associates, Inc. in May 2022 for approximately $18.3 million is expected to enhance transportation planning and engineering services[137] Subsequent Events - Post-period, Bowman acquired Project Design Consultants, LLC for $11.0 million, expanding market presence and service diversification[139] - IRS approval for a change in accounting method for stock-based compensation will lead to a tax expense reduction in Q3 2022[140] Common Stock Offering - In February 2022, the Company completed a follow-on offering of 1,057,500 common shares at $16.00 per share, generating net proceeds of approximately $16.1 million[141][142] COVID-19 Update - The Company has not experienced material financial distress from COVID-19 and continues to evaluate its impact on projects and operations[143] - As of June 30, 2022, $1.2 million of deferred employer payroll taxes under the CARES Act are included in liabilities[143] Methods of Evaluation - Management uses both GAAP and non-GAAP financial information to monitor performance, plan operations, and determine compensation[144] - The Company operates as a single business segment, providing multi-disciplinary professional engineering solutions[145] Components of Income and Expense - Revenue is generated from employee services, sub-consultant pass-through fees, and reimbursable costs. Net service billing, a non-GAAP measure, represents revenue from employee services[147] - Contracts are primarily lump sum (fixed fee), accounting for 94% of gross contract revenue for the three and six months ended June 30, 2022[150] - Contract costs mainly consist of direct payroll (including fringe and incentive compensation) and sub-consultant/other direct expenses[151][152] - Operating expenses include selling, general & administrative (SG&A), non-cash stock compensation, depreciation & amortization, and other non-core expenses[155] Other Financial Data, Non-GAAP Measurements and Key Performance Indicators - Backlog, a non-GAAP metric, measures undelivered gross revenue and is used to predict future revenue and staffing needs[161] - Net Service Billing (non-GAAP) is gross revenue less pass-through sub-consultant fees and reimbursable expenses, used to assess workforce productivity and profitability[162] - Adjusted EBITDA (non-GAAP) is net income before interest, taxes, depreciation, and amortization, adjusted for non-core items and non-cash stock-based compensation, serving as an indicator of normalized performance[163] - Adjusted EBITDA Margin, net (non-GAAP) is Adjusted EBITDA as a percentage of net service billings[165] Results of Operations Combined results of operations Condensed Consolidated Results of Operations (in thousands) | Metric (3 Months Ended June 30) | 2022 | 2021 | Change ($) | Change (%) | | :------------------------------ | :-------- | :-------- | :--------- | :--------- | | Gross contract revenue | $62,399 | $36,524 | $25,875 | 70.8% | | Net income (loss) | $(320) | $(439) | $119 | 27.1% | | Net margin | (0.5%) | (1.2%) | 0.7% | - | | Net service billing | $56,416 | $32,459 | $23,957 | 73.8% | | Adjusted EBITDA | $7,576 | $4,185 | $3,391 | 81.0% | | Metric (6 Months Ended June 30) | 2022 | 2021 | Change ($) | Change (%) | | :------------------------------ | :-------- | :-------- | :--------- | :--------- | | Gross contract revenue | $114,860 | $68,326 | $46,534 | 68.1% | | Net income (loss) | $1,137 | $542 | $595 | 109.8% | | Net margin | 1.0% | 0.8% | 0.2% | - | | Net service billing | $104,117 | $61,327 | $42,790 | 69.8% | | Adjusted EBITDA | $14,983 | $8,271 | $6,712 | 81.2% | Three months ended June 30, 2022 as compared to the three months ended June 30, 2021 - Gross contract revenue increased by $25.9 million (71.0%) to $62.4 million, with acquisitions contributing $16.1 million (62.1%) of this increase[167] Gross Contract Revenue by Market (3 Months Ended June 30, in thousands) | Market | 2022 ($) | 2022 (%) | 2021 ($) | 2021 (%) | Change ($) | Change (%) | | :------------------------- | :--------- | :------- | :--------- | :------- | :--------- | :--------- | | Building Infrastructure | $42,571 | 68.2% | $25,187 | 69.0% | $17,384 | 69.0% | | Transportation | $9,276 | 14.9% | $4,174 | 11.4% | $5,102 | 122.2% | | Power & Utilities | $7,924 | 12.7% | $6,184 | 16.9% | $1,740 | 28.1% | | Other emerging markets | $2,628 | 4.2% | $979 | 2.7% | $1,649 | 168.4% | | Total | $62,399 | 100.0% | $36,524 | 100.0% | $25,875 | 70.8% | | Organic | $46,331 | 74.3% | $36,524 | 100.0% | $9,807 | 26.9% | | Acquired | $16,068 | 25.7% | $- | 0.0% | $16,068 | n/a | - Direct payroll costs increased by $11.0 million (78.0%) to $25.1 million, primarily due to increased staffing and higher other direct payroll costs (fringe, incentive compensation)[176][178] - Selling, general and administrative expenses increased by $10.9 million (63.4%) to $28.1 million, driven by indirect labor, general overhead, and non-cash stock compensation[181] - Net loss decreased by $0.1 million (25.0%) to $0.3 million, while Adjusted EBITDA increased by $3.4 million (81.0%) to $7.6 million[186][189] Six months ended June 30, 2022 as compared to the six months ended June 30, 2021 - Gross contract revenue increased by $46.6 million (68.2%) to $114.9 million, with acquisitions contributing $21.1 million (468.9%) of the increase[193] Gross Contract Revenue by Market (6 Months Ended June 30, in thousands) | Market | 2022 ($) | 2022 (%) | 2021 ($) | 2021 (%) | Change ($) | Change (%) | | :------------------------- | :--------- | :------- | :--------- | :------- | :--------- | :--------- | | Building Infrastructure | $81,329 | 70.8% | $46,224 | 67.7% | $35,105 | 75.9% | | Transportation | $13,246 | 11.5% | $8,295 | 12.1% | $4,951 | 59.7% | | Power & Utilities | $15,561 | 13.5% | $11,230 | 16.4% | $4,331 | 38.6% | | Other emerging markets | $4,724 | 4.1% | $2,577 | 3.8% | $2,147 | 83.3% | | Total | $114,860 | 100.0% | $68,326 | 100.0% | $46,534 | 68.1% | | Organic | $89,260 | 77.7% | $68,326 | 100.0% | $20,934 | 30.6% | | Acquired | $25,600 | 22.3% | $- | 0.0% | $25,600 | n/a | - Direct payroll costs increased by $18.4 million (67.4%) to $46.0 million, driven by increased staffing and higher other direct payroll costs[202][204] - Selling, general and administrative expenses increased by $20.9 million (69.7%) to $50.9 million, due to indirect labor, general overhead, and non-cash stock compensation[208] - Net income increased by $0.6 million (120.0%) to $1.1 million, and Adjusted EBITDA increased by $6.7 million (80.7%) to $15.0 million[212][217] Liquidity and Capital Resources - Principal liquidity sources include cash, cash flow from operations, revolving credit facility, lease financing, and stock sales[220] - Cash and cash equivalents increased by $5.2 million at June 30, 2022, compared to December 31, 2021[220] - The Company actively pursues acquisitions, utilizing a combination of cash, bank financing, seller financing, and equity[221][222] Cash Flows Summary of Cash Flows (in thousands) | Cash Flow Activity (Six Months Ended June 30) | 2022 | 2021 | | :-------------------------------------------- | :-------- | :-------- | | Net cash provided by (used in) operating activities | $4,268 | $(472) | | Net cash used in investing activities | $(8,099) | $(1,570) | | Net cash provided by financing activities | $8,995 | $40,201 | | Change in cash, cash equivalents and restricted cash | $5,164 | $38,159 | - Operating cash flow improved significantly, while investing cash usage increased due to acquisitions. Financing cash flow decreased due to the timing of stock offerings[224][226][227] Credit Facilities and Other Financing - The Company maintains a $25.0 million revolving credit facility and three non-revolving credit facilities with Bank of America, with the Revolving Line extended to July 31, 2024[228][230] - As of June 30, 2022, the Company was in compliance with all financial covenants, including fixed charge coverage ratio, debt to EBITDA, and adjusted debt to EBITDA ratios[230] - Master lease facilities with Huntington Technology Finance and Enterprise Leasing finance IT infrastructure, equipment, and vehicles, allowing for both operating and capital leasing[231] Off-Balance Sheet Arrangements - The Company has no material off-balance sheet arrangements, special purpose entities, or non-exchange-traded contracts accounted for at fair value[232] Critical Accounting Policies and Estimates - The Company uses estimates in financial reporting, which are subject to change as new information becomes available[233] - No material changes to critical accounting policies and estimates were reported compared to the Annual Report on Form 10-K[234] Cautionary Statement about Forward-Looking Statements - The report contains forward-looking statements regarding future operating results, financial position, acquisitions, growth strategies, and liquidity, which are subject to various risks and uncertainties[235] - Key risk factors include retaining key personnel, changes in client demand, economic conditions, regulatory changes, successful execution of acquisition strategy, contract termination, and competitive pressures[236][238] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Bowman Consulting Group Ltd. is not required to provide quantitative and qualitative disclosures about market risk - The Company is exempt from providing market risk disclosures as a smaller reporting company[241] Item 4. Controls and Procedures Management confirmed effective disclosure controls and procedures as of June 30, 2022, with no material changes in internal control - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of June 30, 2022[242] - No material changes in internal control over financial reporting occurred during the period[243] PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company is subject to various legal proceedings in the normal course of business but is not currently party to any litigation expected to have a material adverse effect on its operations or financial position - No legal proceedings are expected to have a material adverse effect on the Company's results of operations or financial position[246] Item 1A. Risk Factors As a smaller reporting company, Bowman Consulting Group Ltd. is not required to provide specific risk factor disclosures in this quarterly report - The Company is exempt from providing risk factor information as a smaller reporting company[247] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2022, the Company issued 476,976 common shares as partial consideration for the McMahon Associates, Inc. acquisition, exempt from registration. The Company also repurchased 91,264 shares from employees to cover tax withholding obligations - On May 4, 2022, 476,976 common shares were issued at $16.64 per share ($7.9 million total) as partial consideration for the McMahon Associates, Inc. acquisition, exempt under Section 4(a)(2) of the Securities Act[248] - The Company repurchased 91,264 shares of common stock at an average price of $15.13 per share in May 2022 to satisfy tax withholding obligations from restricted stock vesting[249] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[250] Item 4. Mine Safety Disclosures There were no mine safety disclosures required for the reporting period - No mine safety disclosures were reported[250] Item 5. Other Information No other information was required to be disclosed under this item - No other information was reported[250] Item 6. Exhibits This section lists the exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q, including XBRL data, stock purchase agreements, and credit agreement amendments - Exhibits include XBRL data, the Stock Purchase Agreement for McMahon Associates, Inc., and the Seventh Amendment to the Credit Agreement with Bank of America, N.A.[253][255] SIGNATURES