Good morning. My name is Mariama, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bowman Consulting Group First Quarter 2021 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Followed by the number 1 on your telephone keypad. Thank you. Please note that many of The comments today are considered forward looking statements under federal securities laws. As described in the company's filings with the SEC, These statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and the company is not ligated to publicly update or revise these forward looking statements. In addition, on today's call, the company will discuss certain non GAAP financial information such as adjusted EBITDA and net service billing.
You can find this information together with conciliations to the most directly comparable GAAP information, the company's earnings press release and the 8 ks filed with the SEC and on the company's investor Web site at investors. Bohmann.com. Management will deliver prepared remarks for about 50 minutes, after through which they will be taking live questions from published research analysts. Throughout the call, attendees on the webcast who may post questions for management to answer on the call or in subsequent communications, but there will be no live Q and A from the webcast attendees. Replays of the call will be available on the company's investor website.
Mr. Bowman, you may begin your prepared remarks.
Thank you. Good morning. Welcome to Bowman's Q1 2021 earnings webcast. I'm Gary Bowman, to the Chairman and Chief Executive Officer of Baumann. Also with me today is Bruce Leibovitz, our Chief Financial Officer.
We're excited to have you join us for our 1st earnings call as a public company, and we want to welcome all of our new shareholders. Your interest and support has made our journey to become a public company a reality. As we discussed during the road show, I along with the entire leadership team remain heavily in the success of Onan, and we are fully committed to delivering the long term growth and profitability you expect from us. Our IPO has been an affirmation to all our employees that the work we do every day continues to build something special. Employee ownership has always been the foundation of our corporate culture.
It creates a strong and ongoing alignment that benefits all our stakeholders. I also want to take a moment to acknowledge everyone involved in our IPO. First, I want to thank the bankers at D. A. Davidson and B.
Riley. Thanks also to our auditors at Ernst and Young, our attorneys at Nelson Mullins and the underwriters counsel at Acrement. Initiating reports were issued last week, and we appreciate the time and effort our new analysts invested in getting to know our story. Finally, I'm grateful to all my colleagues who work tirelessly not just to make this IPO happen, but to make us a company for which this IPO could happen. Now I want to walk you through our accomplishments over the Q1, then I'll hand the call over to Bruce to discuss the financial results.
Following that, I'll talk a bit about the current state of the business as we near the end of the Q2. The Q1 was certainly a busy one. In early January, we closed the acquisition of KTA Group, a well established mechanical, electrical and plumbing engineering firm based in Herndon, Virginia. That acquisition was extremely complementary to what we do. It also adds expertise and energy efficiency to better serve our renewable energy customers, enabling us to accelerate our expansion in the energy transition market.
That acquisition was quickly followed by hiring Michael Ginsberg as our Vice President of to Energy Transition. We feel very fortunate to have Michael join our leadership team at this stage in the market evolution of alternative energy technologies. Michael has a proven track record of providing innovative cost effective and environmentally sound technologies to a vast array of end users and markets. We're excited to have him lead the firm's growing practice in the areas focused on low carbon technologies such as green hydrogen, photovoltaics and solar powered desalination. We're already seeing positive results from these news.
KTH contributed $1,900,000 of gross revenue in the Q1 and the group is continuing to grow into the Bowman family. With the KTA acquisition, we reengaged our M and A activity, which is a key component of our long term growth strategy. And now with the proceeds from an IPO, we intend to be quite active in this area going forward. I'll discuss our M and A activity in greater detail a bit later. The COVID pandemic had a profound effect on our employees, on our clients, the way we work, to the U.
S. Economy and of course the global economy. While there was talk of COVID during the Q1 of 2020, the period we are now preparing to, The economy and our business were generally in phase during those 3 months. However, the Q2 of 2020 was a whole different story. The pandemic hit, Since the country into a shelter in place mode.
That said, we were fortunate that our services were deemed essential in every to the state where we conducted business and work continued uninterrupted. With most of our employees working remotely, The Q3 of 2020 introduced a strong undercurrent of cautious optimism. And by the Q4, we were experiencing the rebirth of confidence in economic recovery. From a historical perspective, the Q1 of 2021 was strong on its own, but given the prior 4th quarters, it was extraordinary. The tailwinds we now feel are forceful we see a bright future for our business over both near and long term horizons.
The last 4 quarters were each unique with respect to the COVID effect and these differences have made it difficult to draw conclusions based on the usual qualitative and quantitative year over year comparisons. For those new to our story, a majority of our revenue flows from engineering and related to the development of commercial buildings and residential communities. This is a broad category covering a number of end markets, including commercial, industrial, municipal and other institutional customers as well as mixed use in residential developments. We refer to these as the communities, homes and buildings market. In the residential submarket, we saw a significant increase in work relating to build for rent single family construction.
We initially served this market in Arizona. As we gain more experience with the nuances in this space, we have expanded our reach and work on these types of projects in Texas, Florida and other Southeast markets. Changing demographics and renewed consumer interest in living in a single family home have expanded this market. We I see tremendous opportunity here. That's not to say that the traditional for sale homebuilding market has failed off at all.
During the Q1, We are extremely busy supporting continued plans of our homebuilder customer to replenish their inventory of buildable lots. On the commercial front, data center and quick service restaurant customers continue to contribute to growth in our communities, homes and building market. Longstanding customers such as Chick Fil A and Circle K were extremely active with net service billing that nearly doubled from a year ago. Being based in Northern Virginia, having been here for 25 years, we are well known in Loudoun County, Virginia, which is often referred to as the data center capital of the U. S.
While our data center work continued to grow nationally during the Q1, our growth in Loudoun County and the surrounding areas have faced other markets. Both the transportation and the power utilities market saw small decreases in revenue compared to the pre pandemic Q1 of last year. It's not unusual to see quarterly fluctuations in revenue relating to projects in this sector. We believe this will be primarily the project timing and weather as the health of these markets and our ability to grow within them remain strong. Some notable accomplishments in transportation include our first ever engagement with the New Jersey Pension Authority, the addition to our leadership team of Paul Kovacs, who was previously the Chief Engineering Officer at the Illinois Tollway Authority, And our selection for a significant multiyear construction management and engineering project in Cook County, Illinois.
We'll keep you updated as that large project develops. In the power and utilities market, our gas pipeline work in Chicago picked up substantially during the quarter and is continuing to grow. It's offset somewhat by a slowdown in our pipeline work in Arizona. We're not concerned about the slowdown in Arizona as we believe that work will pick back up as the year progresses. Our revenue from pipeline identification work in Ohio was negatively impacted by weather during the Q1, We expect that project to continue as anticipated over the remainder of the year.
The Florida Undergrounding Project, a The project which is being refined on an ongoing basis by its sponsor was down in the Q1 as compared to last year. This project involves face to face interaction that were obviously impacted by COVID. We are committed to this engagement having been working closely with to optimize our staffing for this project. We remain confident that it will be meaningful part of our power and utility revenue this year. Emerging markets, which include mining, water resources, energy efficiency and energy transition is continuing to gain traction.
Our water resources business has been robust, presents a meaningful opportunity for growth. We secured a substantial project working with the South Florida Water Management District on a 6,700 acre stormwater reservoir. We also began work for a pilot utility system asset management program for the town of Round Hill, to some unique technology tools. In the energy space, we're excited about the initiation of a small relationship with Tesla. I look forward to seeing how that develops.
Our work with Samsung Renewables is expanding from Ohio to Kentucky, and we're securing significant opportunities in utility scale battery storage. The addition of Michael Ginsberg, who I mentioned earlier, has been a catalyst for growth in this market as well. Now, I I'll turn things over to Bruce to walk you through the results of the Q1.
Great. Thanks, Gary.
I'm happy to be with you today to discuss a very positive quarter. Results of operations for the quarter along with the supporting tables and non GAAP reconciliations are included in the earnings release we issued yesterday. On May 6, we priced our initial public offering of 3,690,000 shares at $14 per share. On June 4, the underwriters exercised their overallotment option for an additional 115,925 shares. The proceeds of the offering totaled $53,000,000 with the company receiving around $49,000,000 after discounts and commission.
None of that IPO activity is reflected as of March 31, but the money is now in the bank and we have roughly $38,000,000 of cash reserves with full access to our $17,000,000 revolving credit line. We believe we have sufficient capital to fund our near and mid term growth plans. Based on the timing of our IPO, our S-one filings presented audited full fiscal year results only, And we have not previously reported the quarterly results against which we will be comparing 2021 quarters. This makes the 1st 3 quarters of this year unique and that Public is seeing 2 sets of quarterly results for the first time each quarter. The Q1 got 2021 off to a great start.
Gross revenue increased 11.2 percent to $31,800,000 a single quarter company record. Organic revenue for the quarter was $29,900,000 and acquired revenue was $1,900,000 Our practice will be to report acquired revenue Separate from organic revenue for a period of 12 months post closing. With 17% growth to $28,900,000 Increases in net service billing outpaced increases in gross revenue and as a percentage of gross billing increased 7 percentage points to 91%. The increase in net billing as a percentage of gross revenue is primarily due to a higher concentration of revenue from communities, homes and buildings this quarter at to 66% of our gross revenue. With respect to revenue, I want to take a moment to remind everyone that none of our revenue is derived from general to tracking activities.
As a result, we have no bonding obligation. We have no exposure to construction materials cost fluctuations. We work with customers on a fixed fee and hourly basis. When we talk about fixed fee assignments, our exposure is generally limited to the hours it takes our employees to complete a discrete task. During the quarter, approximately 70% of our gross revenue was associated with and 30% with hourly assignments.
Fixed fee assignments at market prices Provide us an ability to improve profitability through experience and efficiency. Vying for research and development tax credit. For revenue recognition purposes under ASC 606, however, all mixed Fee contracts are classified as fixed fee, which sometimes skews the ratio of fixed fee and hourly contracts in our financial footnotes. Adjusted EBITDA increased 157 percent to $4,100,000 for the Q1 as compared to $1,600,000 for the Q1 of 2020 and adjusted EBITDA margin net more than doubled to 14.2%. For the 3 months ended March 31, 2021, Adjusted EBITDA includes an add back of $1,100,000 in non cash stock compensation expense.
There were no other add backs. Adjusted EBITDA for the Q1 of 2020 included the elimination of a non cash stock comp benefit to the benefit of lowering adjusted EBITDA. The benefit is the result of a reduction in our liability to common stock subject to repurchase during Q1 2020. Without getting too much into the accounting weeds, our periodic liability to Common stock subject to repurchase was based on the net present value of financing obligations we would have been subject to in the event certain redemption obligations have been triggered. The reduction in the liability during Q1 2020 and the associated benefit Resulted primarily from a reduction in interest rates that reduced the net present value of an otherwise unchanged liability.
This was a one off phenomenon in that quarter. Gross margin net excluding depreciation and amortization was 50 4% on net revenue and SG and A expense was 44% of net billing. These are both improvements over 1st quarter And fiscal 2020 as a whole. Depreciation and amortization increased to $1,500,000 almost entirely because of the refinancing of our operating leases to capital leases in September of last year. This level of depreciation and amortization is representative of As Gary mentioned, we closed on the KCA acquisition in early January.
Inclusive of working capital we anticipated would be acquired first post acquisition. The purchase price was estimated to be a 5 times multiple of adjusted EBITDA. We have not finalized the purchase price accounting yet, But you will see a preliminary allocation in the 10 Q once it is filed early next week. The KTA acquisition And the IPO had a meaningful effect on our cash consumption this quarter. We did not purchase their accounts receivable or other current assets from KTA and as such use cash while waiting for the new KTA billing to turn into cash.
During the quarter, We added $1,200,000 of new inventory to our capital lease facilities and ended the quarter with $500,000 of inventory pending refinanced from our leasing company. We make every effort to limit the amount of fixed asset inventory that passes through our books, but on certain occasions, we purchase equipment directly before offloading it to our leasing partners. Our cash CapEx for the quarter was about $100,000 The total CapEx related to spending was approximately $1,800,000 Backlog on March 31, 2021 was $116,000,000 up from $113,000,000 at year end. The composition of backlog on March 31, 2021 was approximately 44% communities, homes and buildings, 21% transportation, 29% Power and Utilities and 6% Emerging Markets. This is roughly in line with the composition of backlog at year end and should not be construed as indicative of where we expect to see distribution of 2021 revenue.
Our revolving line of credit with Bank of America is due for renewal in January. As of now, there's no outstanding balance under the loan, So the renewal presents no liquidity risk. We are confident we will achieve a favorable renewal prior to the line's expiration. Finally, and consistent with prior direction, I'll reiterate that we plan to commence issuing guidance in connection with the 2nd quarter earnings release in August. As such, we will not be providing any specific forecasts in connection with this call.
Thank you. And I'll now turn the call back over to Gary. Great. Thanks, Bruce. Before we open the floor to questions, I'd like to take a talk a few minutes about the current state of the business post Thank you.
In May, we announced the hiring of Tim Bond to lead our M and A efforts. We're pleased to have an executive Tim Kaliber join us at this to the company's development. Acquisitions are a key component of our growth and diversification strategy moving forward. As we discussed previously, we're focused on relatively small and strategic acquisitions where we can expand our capabilities Our interactive metro markets where we can retain the talent we acquire and where we can achieve revenue synergies by layering on cross We're entering the acquired company's operations fully consolidated into our new year. With the capital that we raised in the IPO And the pipeline of opportunities we're evaluating, we're excited about moving forward and bringing deals to the finish line.
I remain confident that we will not when it comes to our goals for acquisitive growth. With respect to our Q2 operational performance, The momentum that we experienced in the Q1 has carried over. We believe we will continue to deliver results that are in line with our expectations for the quarter. Demand for our services is as high as I've seen in a long time and bookings of new work are on a record setting pace. In conclusion, the entire Bowman team is energized by their successful IPO, by the acquisition of KTA And by the return of in person collaboration, the year shaping up to be a successful one and our long term future is bright.
I look forward to our continuing dialogue and to delivering value to our shareholders. We'll now open the call to questions.
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. Your first Question comes from the line of Brent Thielman with D. A. Davidson. Your line is open.
Thank you. Good morning, Gary and Bruce. Congrats on a strong start.
Thanks. Thanks, Brent.
Maybe on the Transportation and Power Utilities Groups, it sounds like some of the factors that weighed on the quarter were sort of timing and transitory. Could you just Talk about maybe the levels of new business activity in those sectors and how the outlook for the rest of the year and what the pipeline looks like for Sort of new programmatic kind of the multiyear contracts you all talked about.
Yes, Brett. On the You're right. The comparison, the ups and downs for transitory and in transportation, We've got 2nd we're looking over the course of the past several months, some really good opportunities we landed for some Programmatic work, a long term occurring revenue type work, especially up in Illinois. And in the utilities markets, The work down in Florida with the undergrounding is really picking up through the middle of the year and from the second half of the year. And we're working in Ohio with the pipeline location works picking up well.
So the activity has been strong for Programmatic work in both those areas. Yes, the transportation section in particular, Brent, as you know, the lead time is a little bit longer then in some of the other sectors. And so we are seeing a lot of activity on that, the leading edge of work To be done, meaning getting proposals approved and in place. And then there's always some bureaucratic process To getting those to contract in conclusion, but the tailwinds in that market are strong. The infrastructure Bill, whatever is going on in Congress will go on, but ultimately, we believe that the need for spending It has been evidenced by the activity that we've seen in that market.
The availability of funding for that market is likewise evidenced by The amount of demand for services there.
Okay. Appreciate that. And then The commercial industrial sector within Communities, Homes and Buildings have been pretty good for you in 2020 despite the effects of the pandemic. What do you see today? Because I imagine clients would feel even more comfortable now deploying capital toward new projects.
I would almost just repeat what you said. I would say we're seeing even more confidence, even stronger indications of growth throughout the year evidenced by our new bookings in those areas. A lot of the KTA work falls into that commercial category. And certainly, the return to work, having positioned ourselves to Be in a position to provide services to the return to work Demand that is burgeoning in the economy as they're busy as ever answering their phones And doing air filtration and other related types of projects.
Okay. And then could you talk about some of the objectives of the National Energy Transition Services practice? Just curious Where you tend to take that and where you're focused?
Our 2 areas of focus that we're Involved in right now, photovoltaic solar, or 3 areas, photovoltaic solar, wind And utility scale battery storage. Utility scale battery storage is an area where we're seeing some Great synergies with the addition of KTA, some clients where we've landed the client through our traditional civil engineering and survey services. And now we're layering on the electrical engineering services to provide more full service. Michael Ginsberg, our new Vice President of Energy Transition, he's a thought leader in green hydrogen And solar desalination. So while we have no activity in those areas at this time, Those are sort of cutting edge energy transition areas that Michael is a thought leader.
We look forward to exploring those areas and think those are markets with tremendous opportunity over the future.
Okay. And just lastly, Bruce, I think you mentioned 5 times for KTA, maybe just refresh us on the range of multiples you're seeing out there in the acquisition to pipeline today.
Yes. So it's a little bit all over the board. You're seeing the ones that are making the list, the ones that are In our sweet spot are generally going to be in that range. There may be a plus 1, there may be A minus one on that. We're disciplined in what we're looking for.
And while we may stretch That a little bit for the right opportunity. That's for the size that we're looking at and The universe of companies that are of interest to us today, we think we'll be in that 4 to 7 with the 5 and 6s being in the sweet spot.
Okay, great. Thank you. I'll pass it on.
Okay.
Happy to have you come back. I'll let someone else come
Your next question comes from the line of Alex Rygiel with B. Riley. Your line is open.
Barry and Bruce and congratulations on your first conference call here.
Thanks, Alex.
Couple of quick questions. First, the residential market has been real strong For you all and strong in general. But it does seem like some homebuilders have been pulling back some, at least I'll start to pull back a bit here on concerns about homebuyer traffic in near term. Have you seen homebuilder development or land development activity, The pace of activity change at all and if so, in what direction?
It's As strong as ever, so we do not see a turn back. And we've and when the if the homebuilders If they're reacting to traffic, the lead time for what we do is so long. It takes a long time for them to change direction on developing to the pipeline of buildable lots. So we're seeing the demand for our services in getting the buildable lots ready as strong as ever. There's any recurring vision we have from the long history of the company, it's about the homebuilding cycles.
And I think that there's a lot of institutional Understanding of those here. When you look at inventory levels of lots, it's not homes that we care about so much, It's inventory of lots and there was such a pullback over the last 10 years on that, homebuilders Are as active as ever trying to secure forward inventory, and that's the slice of that market we play in.
It's very helpful. And then understanding you have no exposure to building materials, have you seen any of your customers change their scope of work Because of the transitory rise in building material costs?
We have not. And we certainly hear anecdotally. We read about it. We know our customers are affected But it doesn't change their procurement activities for our services.
And then lastly, more to you, Bruce. Adjusted EBITDA margins of 14% was very strong and better than Last year at 13.5% and better than 2019 at 13.5%. Can you talk about Directionally EBITDA margins over the next couple of quarters and over the next couple of years, where you think they're going to be sort of settling out on a normalized basis?
Sure. So without providing any official guidance to anything going forward and everything, Every bit of this answer was just going to be off of what we're thinking in the moment. The margins expanded part of it is They talked about it has to do with the composition of revenue at any given quarter where revenue was 91 net revenue was 91 And to gross revenue, if you're thinking about gross, that's one thing. But when we talk about net, That doesn't really affect us at all because when we talk about EBITDA margins net, so forget about that part of the answer there for a second. I think 14 is a good place for us now.
We certainly think that there is upward Mobility in that margin over time as we achieve scale, as we're able to leverage some of our overhead. So I think that as some of our Peers are in the high teens and maybe even have a 2 handle on it. I think that we can certainly approach that. I would not expect that This year, maybe not even early next year, but as we get into the 2023 world, that's what our aspirational goal is.
Very helpful. Thank you very much.
There are no further questions at this time. Mr. Bowman and Mr. Leibovitz, I turn the call back over to you.
Thank you, operator. Just want to thank everyone for participating this morning. Thanks to the analysts for the insightful questions and looking forward to be back on the next call, Bruce. Yes, this will be a short term for us between now and to our next conference call, which we will announce scheduling for shortly and should be in early August. So with that, we thank everybody for your participation and look forward to follow-up conversations.
Certainly, feel free to ping us and with any questions as you read through our disclosures. Have a great day.
This concludes today's conference call. You may now disconnect.