BWMN Q3 2025: Backlog Jumps 18% as Power and Transportation Fuel Multi-Year Visibility
BWMN’s third quarter delivered a decisive inflection in backlog, now up 18% year over year, driven by robust demand in transportation and power, utilities, and energy verticals. The business is leveraging scale, disciplined overhead control, and innovation to expand margins and sustain cash conversion, while positioning for accelerated growth and margin lift in 2026. With the expanded revolver and a clear M&A pipeline, the company is signaling confidence in both organic and inorganic expansion heading into next year.
Summary
- Backlog Expansion Signals Multi-Year Demand: Record backlog growth reinforces visibility across core public and private markets.
- Margin Leverage from Operational Discipline: Overhead growth trails revenue, supporting margin expansion and cash efficiency.
- Strategic M&A and Innovation Pipeline: Increased liquidity and targeted acquisitions set the stage for accelerated growth in 2026.
Performance Analysis
BWMN’s third quarter performance was marked by double-digit revenue growth and an 18% surge in backlog, underscoring sustained demand across key verticals. Net revenue reached $112 million, with transportation and power, utilities, and energy segments together accounting for over 40% of the top line and each growing more than 17% year over year. Organic net revenue was up 6.6% for the quarter, reflecting underlying strength beyond acquired growth.
Profitability metrics saw meaningful improvement: GAAP net income rose sharply to $6.6 million for the quarter, and operating cash flow more than doubled year to date, highlighting effective earnings-to-cash conversion. Disciplined cost control was evident, as total overhead as a percentage of net revenue fell by 290 basis points to 89.5%. Segment-level margin analysis confirmed transportation’s lower contribution margin due to cost-plus contracts, while building infrastructure and power and utilities maintained gross margins above 56%, and natural resources and imaging led at 57%.
- Backlog Acceleration: $448 million in backlog, up 18% YoY, with diversification across building infrastructure (38%), transportation (30%), power and utilities (23%), and natural resources and imaging (9%).
- Cash Flow Strength: Operating cash flow at $10.2 million for the quarter and $26.5 million year to date, both more than double last year’s levels.
- Margin Expansion: Adjusted EBITDA margin improved to 16.3% on net revenue, up 150 basis points year to date.
Revenue growth was broad-based, but the real story is the company’s ability to convert sales into backlog and backlog into cash, while maintaining cost discipline and preparing for further efficiency gains as innovation initiatives scale.
Executive Commentary
"For the third quarter, we delivered 11% year-over-year growth in both gross and net revenue and a 7.6% growth in adjusted EBITDA while maintaining healthy cash flow generation and a solid balance sheet. Our net revenue for the quarter was $112 million and was supported by strong activity in transportation and power and utilities and energy. Together, these end markets grew over 20% during the quarter, and account for more than 40% of our top line. Importantly, our backlog grew nearly 18% year-over-year to $448 million."
Gary Bowman, Chief Executive Officer
"We dramatically increased GAAP net income to $6.6 million and $10.9 million, respectively, compared to net income of $700,000 and a loss of $2.9 million for the same period last year. Concurrently, we more than doubled our cash flow from operations to $26.5 million from $12.4 million, affirming the capital efficiency of our effort. We achieved this improved performance in part through consistent and sequential growth in build revenue throughout this year, with an 11% year-over-year increase in net revenue in the third quarter, with no erosion of our net-to-growth ratio."
Bruce Labovitz, Chief Financial Officer
Strategic Positioning
1. Transportation as Recurring Revenue Backbone
Transportation remains BWMN’s most stable and resilient market, with double-digit growth and expanding relationships across state and municipal agencies. The company’s deep engagement in multi-year bridge, roadway, and multimodal infrastructure projects provides recurring revenue and backlog visibility through 2026. Less than 25% of IIJA (Infrastructure Investment and Jobs Act) funds have been released, suggesting a significant demand runway ahead.
2. Power, Utilities, and Energy as Growth Engine
This segment is now BWMN’s fastest-growing business, up 38% year over year, propelled by national trends in electrification, renewables, and grid modernization. Recent acquisitions—Sierra Overhead Analytics, ORCAS, and Ladies in Power Engineering—extend capabilities in automation, high-voltage transmission, and geospatial mapping, positioning BWMN to capture a larger share of utility-scale and data infrastructure projects.
3. Building Infrastructure and Data Centers: Balancing Cyclicality
Building infrastructure delivered 8% growth, balancing public and mixed-use projects against softer residential demand. Data center opportunities are expanding, with larger projects and more distributed site locations driven by AI and energy proximity. The company is leveraging its E3I acquisition to broaden its network and capitalize on the surge in data center feasibility and design work.
4. Innovation and Technology-Driven Efficiency
Internal innovation is yielding tangible efficiency gains, with investments in AI-enabled asset control kits, proprietary technology from the ORCIS acquisition, and geospatial asset upgrades. These initiatives are expected to drive further margin expansion and scalability, with disciplined investment measured against defined return thresholds.
5. M&A and Capital Allocation Discipline
With the revolver expanded to $210 million and $150 million in available liquidity, BWMN is positioned for strategic M&A, focused on service line and skill set gaps in high-growth verticals. Management is clear that M&A will supplement organic growth, with a pipeline of opportunities and a commitment to capital efficiency.
Key Considerations
BWMN’s third quarter underscores a business model increasingly built on recurring public sector demand, margin discipline, and multi-year growth visibility. The company is capitalizing on sector tailwinds while proactively investing in technology and talent to sustain its competitive edge.
Key Considerations:
- Backlog Quality and Diversification: Sustained backlog growth is spread across multiple verticals, reducing reliance on any single market and supporting long-term stability.
- Margin Expansion via Overhead Control: Overhead growth is consistently lagging revenue, enabling incremental margin lift even as the business scales.
- Innovation as a Margin Lever: AI and technology investments are designed to boost labor utilization and project delivery efficiency, supporting future profitability.
- Labor Market and Talent Acquisition: Aggressive recruiting and internal development are offsetting a tight labor market, with technology leveraged to moderate required headcount growth.
- Strategic M&A Pipeline: Expanded liquidity and a focus on service line gaps point to renewed acquisition activity, with a bias toward high-value, skill-driven targets.
Risks
Project delays, particularly in transportation and federally supported programs, present timing risk for revenue recognition, though management notes these are project-specific rather than macro-driven. Labor market tightness remains a challenge, necessitating continued investment in talent acquisition and automation. The competitive M&A environment could inflate acquisition multiples, and a prolonged government shutdown could delay select public sector projects, though BWMN’s exposure is weighted toward state and local contracts.
Forward Outlook
For Q4 2025, BWMN expects:
- Revenue acceleration, driven by utilization improvements and backlog conversion.
- Continued margin expansion as overhead leverage and innovation gains materialize.
For full-year 2025, management reaffirmed guidance and initiated 2026 targets:
- 2026 net revenue between $465 million and $480 million.
- 2026 adjusted EBITDA margin between 17% and 17.5%.
Management highlighted drivers including ongoing public sector demand, integration of recent acquisitions, and incremental efficiency from technology investments. Analysts probed the timing of margin gains and project starts, with management indicating that efficiency benefits will be most pronounced in the second half of 2026.
- Backlog conversion and utilization are expected to drive revenue lift.
- Margin expansion will be supported by improved labor efficiency and overhead control.
Takeaways
BWMN is entering 2026 with strong backlog, diversified end-market exposure, and a clear path to margin expansion, underpinned by disciplined execution and targeted innovation.
- Backlog Strength: Record backlog provides multi-year revenue visibility and supports guidance confidence.
- Margin and Cash Discipline: Overhead control and technology adoption are translating into industry-leading margin and cash conversion metrics.
- Strategic Growth Pipeline: Expanded liquidity and a robust M&A pipeline position BWMN for accelerated growth and capability expansion in 2026.
Conclusion
BWMN’s Q3 results demonstrate the business’s ability to scale profitably, convert backlog into cash, and invest in innovation and talent to sustain growth. The company is well-positioned for continued expansion, with strategic capital deployment and operational discipline setting the stage for further margin and revenue gains in 2026.
Industry Read-Through
BWMN’s performance provides a clear read-through for the engineering, infrastructure, and public sector services industry: Multi-year public funding cycles, electrification, and data infrastructure are driving sustained demand, while margin leadership is increasingly defined by operational discipline and technology leverage. The company’s experience with backlog growth, segment diversification, and disciplined M&A signals that firms with scale, recurring public sector exposure, and a focus on innovation are best positioned for the next phase of infrastructure investment. Competitors lacking these levers may struggle to keep pace with margin and cash flow gains as the cycle matures.