RESTON, Va. - Bowman Consulting Group Ltd. (NASDAQ: BWMN), a national engineering services firm, announced its definitive agreement to acquire Exeltech Consulting, Inc., a Washington-based company specializing in infrastructure design and environmental compliance. This move aims to enhance Bowman's service offerings and presence in the Pacific Northwest.
Exeltech, led by Santosh Kuruvilla, PE, SE, PMP, is recognized for its expertise in bridge design, transportation planning, and civil engineering. The acquisition is expected to complement Bowman's existing services and geographic reach, particularly in transportation and ports and harbors practices.
Gary Bowman, CEO of Bowman, expressed confidence in the acquisition, citing revenue and utilization synergies from the companies' collaboration on projects. Exeltech's president, Santosh Kuruvilla, also conveyed enthusiasm for the merger, anticipating the expansion of their reach nationally through Bowman's growing firm.
The financial terms of the deal include a mix of cash, seller term notes, and a convertible note with a conversion strike price of $32.32 per share. The acquisition is projected to contribute an annualized net service billing run rate of approximately $7.0 million and is expected to be immediately accretive to Bowman's earnings. The closing, subject to customary conditions, is anticipated on or after November 5, 2024.
Exeltech, with a history dating back to 1989, provides a wide range of services, including the planning, design, and management of various infrastructure projects. Bowman, headquartered in Reston, Virginia, operates across the United States with over 2,200 employees and more than 95 offices.
Morrissey Goodale, a specialized management consulting firm, facilitated the transaction, advising Exeltech on the deal.
This acquisition is part of Bowman's strategic expansion in the infrastructure sector, aligning with its operational metrics and target multiples. The information is based on a press release statement from Bowman Consulting Group.
In other recent news, Bowman Consulting Group Ltd. has been awarded a $1.2 million contract for well management in Texas and has secured contracts for 13 infrastructure projects across Virginia. The company has also expanded its share repurchase program from $10 million to $25 million. Bowman's President, Michael Bruen, is set to retire in 2025, with his current role being transitioned to other leaders within the company.
Bowman has also been active in acquisitions, purchasing Element Engineering LLC and FCS Group, both expected to immediately enhance the company's earnings. Despite disappointing second quarter results, Bowman raised its net revenue guidance to between $382 million and $397 million and reported a 31% year-over-year increase in net service billing backlog for the first quarter of 2024.
The company has secured contracts from the Pennsylvania Department of Transportation for safety upgrades along Roosevelt Boulevard in Philadelphia, and from the Arizona Department of Transportation for a new pedestrian and bicycle infrastructure project at Arizona State University's Tempe campus. Despite a price target reduction to $32, Bowman maintained its Buy rating, with analysts from Baird and BofA Securities giving positive ratings. These are recent developments at Bowman Consulting Group Ltd.
InvestingPro Insights
Bowman Consulting Group's acquisition of Exeltech Consulting aligns with its growth strategy, as reflected in recent InvestingPro data. The company's revenue growth of 26.53% over the last twelve months and a 26.28% quarterly growth indicate a robust expansion trajectory. This growth pattern supports Bowman's capacity to integrate Exeltech's projected $7.0 million annualized net service billing run rate effectively.
InvestingPro Tips highlight that analysts anticipate sales growth for Bowman in the current year, which could be further boosted by this strategic acquisition. Additionally, the company boasts impressive gross profit margins, with the latest data showing a 51.32% gross profit margin. This strong profitability metric suggests Bowman has the financial flexibility to pursue acquisitions like Exeltech while maintaining operational efficiency.
It's worth noting that while Bowman's stock has faced recent challenges, trading near its 52-week low, the acquisition of Exeltech could potentially reinvigorate investor confidence. The deal's structure, including a convertible note with a strike price of $32.32, is significantly above the current trading price, indicating management's optimistic outlook on future value creation.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Bowman Consulting Group, providing deeper insights into the company's financial health and market position.
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