Q4 2020 NV5 Global Inc Earnings Call
Yeah.
Good afternoon, everyone and thank you for participating in today's conference call to discuss <unk> financial results for the fourth quarter and full year ended January <unk> 2021.
Joining us today are Dickerson Wright, chairman and CEO of MP five Edward Codispoti CFO has been defined and Richard Tong.
Executive Vice President and General Counsel and NV five.
I would now like to turn the call over to Richard Tong.
Thank you operator, welcome everyone to NV <unk> fourth quarter and full year 2020 earnings call.
System with social distancing speakers today are connected from different locations. So thank you for your patience regarding any latency that we may encounter when we answer questions.
Before we proceed I would like to remind everyone that today's discussions contain forward looking statements about the company's future business and financial performance.
These are based on management's current expectations and are subject to risks and uncertainties.
<unk> that could cause actual results to differ materially from these statements are included in today's presentation slides and in our reports on file with the SEC.
During this call GAAP and non-GAAP financial measures will be discussed a reconciliation between the two is available in today's earnings release and on the company's website at Www Dot NV five dot com.
Please note that unless otherwise stated all references to fourth quarter 2020 comparisons are being made against the fourth quarter of 2019 and any references to full year 2020 comparisons are being made to full year 2019.
In this presentation NV five has included certain non-GAAP financial measures as outlined and regulation G promulgated under the Securities Exchange Act of 1934 as amended.
Non-GAAP financial measures included in this presentation are adjusted earnings per share adjusted EBITDA and.
And adjusted EBITDA margin.
<unk> provides non-GAAP financial measures to supplement GAAP measures.
They provide additional insight into NV five financial results. However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation and are not in accordance or a substitute for GAAP.
In addition, other companies may define non-GAAP measures differently, which limits the ability of investors to compare on non-GAAP measures of NV five to those used by peer companies.
A webcast replay of this call and its accompanying presentation are also available via the link provided in today's news release on the investors section of the company's web site. We will begin the call with comments from Dickerson Wright, Chairman and CEO of NV five before turning the call over to Edward Codispoti, Chief Financial Officer for a.
A review of the fourth quarter and full year 2020 results.
Kristen Wright will then provide closing comments before we open the call for your questions Dickerson.
Jim. Please go ahead.
Thank you Richard and thank you to everyone joining us for NV <unk> fourth quarter and full year 2020 conference call.
We are pleased to announce our positive results for the fourth quarter and for the full year 2020.
We released a deck illustrating our overall results afford this call. So I will start on slide five with a year on review.
We delivered a strong performance in 2020 with a 30% growth in gross revenues at 52% growth in adjusted EBITDA.
And a 16% adjusted EBITDA margin.
On gross revenue is generated by NV five employees. The percentage is 22%, we improved cash flow throughout the year generating a 141% increase in cash flows from the operations in 2021st 2019.
We measure cash on a daily basis, which has recently and range between 65 million to $82 million and it's readily available for corporate use this strong cash position. It's more impressive when you consider that we acquired media Tech and international Technology, and engineering design firm through the operating cash flow and reduced our debt.
52 million in 2020.
This debt reduction has resulted in a net leverage of two four times at the end of 'twenty 'twenty compared to three two times at the end of 2019.
We also had a successful 2020 growth in EBITDA. This is noteworthy considering the unusual market conditions due to the pandemic.
The unanticipated impact of Covid has affected all aspects of the economy.
NV five has been insulated being an essential service provider, which is eliminate the impact on our business.
We have always managed a scalable business that limit fixed costs.
Our organization's ability to adapt led by our employees is the key reason for our success this year.
Employee strictly followed the Covid health and safety practices as recommended by the centers for disease control and prevention across the entire organization and in remote locations.
We also grew our virtual tools to continue delivering services to our clients remotely.
You May have heard me say that the greatest challenge of the Covid environment is maintaining communication with clients and prospects.
Our employees developed a creative approaches to foster these relationships. We also use our virtual environment to increase resource sharing across offices.
As a result of this coordinated effort, we maintained our forecast of $105 million adjusted EBITDA, which was projected at the beginning of 2020, resulting in a 52% increase over the full year 2019.
On slide six I will describe some of the highlights of the fourth quarter.
In Q4, we delivered $160 million on gross revenues, which is a 22% increase compared to the fourth quarter of 2019.
I think it is important to point out that Q4 2020 also had two less billable days in the fourth quarter of 2019.
We also increased profitability in Q4, 2020, with a 28% increase in adjusted EPS, 37% adjusted EBITDA growth.
And a 29% increase in cash flows from operations compared to the fourth quarter of 2019 Inter operations, we continued to drive growth in our utility services vertical.
Supported continued investments improving the aging electrical grid.
Our LNG business supported that utility services vertical with a good quarter.
And B five continues to support domestic utilities and reliable power delivery and fire mitigation services Geospatial services continued its strong performance our real estate transaction service, which is part of our environmental vertical was impacted by significantly by Covid.
Well, we're pleased to see this business rebounded quarter for.
We anticipate year over year improvement in 2021 for this business.
And our infrastructure business, we continue to see a strong performance from the west.
New York City is zooming contracts that were delayed since March due to Covid and the North Carolina Department of transportation as increased funding, which are two positive developments for our infrastructure business entering into 2021.
We are heading into 'twenty 'twenty, one with good momentum our backlog is strong going into the year and we believe our margin improvement is sustainable.
We maintain a strong cash position to fund acquisitions and reduced debt.
We see further opportunities ahead with the new administration are expected to increase investments in clean energy.
Energy efficiency and sustainable infrastructure that present opportunities for NV five.
We expect the reopening of the economy to positively impact our business.
We're already seeing benefits of a reopening our economy in New York City, where engineering design work has restarted and the north on department of Transportation's increased funding.
Finally, we have a healthy acquisition pipeline with over 30 acquisition pursuits at various stages.
Please turn to slide seven for a review of our 2020 cross selling results and they look at some of the key contracts we have secured so far in 2021.
Our cross selling has benefit due to NV, five and a twofold way it increases our profitability by performing work within the other company, but it also serves to strengthen the integration of our offices and acquisitions.
Cross selling has become a part of <unk> corporate culture.
And our employees are continually finding new ways to add value for our clients and become more embedded in our clients' organizations.
We had an excellent cross selling year in 2020, delivering almost $33 million in cross sales, which was 26% ahead of our target for the year and 41% higher than the cross sell total for 2019.
We expect to see continued growth in our cross selling program in 'twenty 'twenty, one, particularly between the core business and our geospatial business.
As we looked at 2021, we began the year with a strong backlog and we have secured some significant wins in 2021.
We were selected for a 100 million dollar contract with a utility in the west to support power grid monetization and improved service reliability and safety.
This is the largest single award for our utility services group.
And the contract include services from all six of our verticals.
Validating the benefit of our comprehensive service offerings or utilities.
In California, NV five was awarded a $15 million of Civil program management, and engineering design contract to support transportation and water infrastructure improvements by California's municipal government.
We were selected by utility in the east for a $7 million geospatial vegetation and asset Management Award.
The award is part of a multiyear sole source geospatial vegetation management contract.
With this prominent utility client.
And if I was also awarded a five year contract by South East State Department.
Transportation to provide geotechnical engineering materials testing and inspection along one of the state's toll roads.
Our municipal client base has been strengthened by the resurgence of the residential housing market.
Associated building permit applications. Please now turn to slide eight where I will provide you with some details about our latest acquisitions.
Our acquisition strategy focus on strengthening our verticals to provide greater value to our clients and expanding our capabilities and technologies that deliver higher margins and have significant barriers of entre.
Let's discuss two of our recent acquisitions.
First industrial design Associates International is an example of a technology based acquisition.
<unk> delivers commissioning services to the high growth high margin data center and technology markets.
The large volume of electricity and data use at these facilities requires more specialized higher margin commissioning than would be required for a typical building or a facility.
In addition, I'd also offer subscription based energy efficiency services that monitor energy use real time using sensors placed throughout the facility to alert the building owner or property manager of a problem.
These services complement <unk> existing energy efficiency services that are also deliberate on a subscription basis.
Our most recent acquisition is tariff Tech engineers.
Technical engineering, environmental consulting and materials testing companies, serving the public and private sectors in North Carolina, South Carolina and Georgia.
We expanded our presence in the south east infrastructure and environmental markets in 2018 with the acquisition of Calix.
We've been looking to strengthen our testing inspection and consulting capabilities and expand our existing environmental health science offerings in the region to complement our infrastructure capabilities.
<unk> has been working with NV five for many years on projects for the North Carolina Department of transportation and other clients.
<unk> strong management team the quality of their work and their long standing client relationships make it a good fit to strengthen our verticals in the southeast market and we're excited to add to them. The NV five organization, we anticipate terror attack also supporting our northeast infrastructure and design operations.
We are actively pursuing additional acquisitions for 2021 and the M&A pipeline is strong.
Our intention is to complete additional acquisitions this year and we have a number of targets that we're currently pursuing.
Let's go to slide nine.
The new Federal administration has been proactive in environmental protection and sustainability with new executive orders targeting greenhouse gases infrastructure and permitting water conservation and protection of public lands.
These executive orders demonstrate the growing importance of sustainable infrastructure clean energy and environmental concerns at the federal state and local level.
This presents an opportunity for NV five.
Which has a well established service portfolio to help our clients achieve a sustainable future.
Sustainable infrastructure has been a growing requirement infrastructure for many years.
And NV five it's been at the forefront of this field with employees, serving as board members on Harvard University's program for sustainable infrastructure from the last 10 years.
<unk> worked on over 300 sustainable projects census, signers program managers inspectors and consultants and that number will continue to grow as our focus on minimizing impacts and improving resiliency growth.
Energy efficiency and clean energy are fields that we expect to see additional investments in the upcoming years.
Our growing energy efficiency service helps both private and public sector clients identify energy at the inefficiencies in real time through monitoring based commissioning on a subscription basis.
There are currently $3 6 billion and utility rebates and incentives across the country to fund these energy efficiency programs.
As the country continues to migrate to clean energy sources reliability will continue to be important as.
As we saw in Texas, a couple of weeks ago, all of us depend on the reliable delivery of electricity and natural gas.
Renewable power generation battery storage and reliable transmissions and delivery of electrical power are expected to be drivers of our power delivery and energy compliance groups.
We also expect LNG to continue to grow as a bridge to renewables and feed our LNG services that help you until the store gas for times of peak demand.
We also expect a focus on natural resources water resources and sea level rise, which are all drivers of geospatial services.
Many of our federal state and local governments geospatial clients.
Such as Noah the department of interior NASA and the U S. G. S depend on NV five per mapping of forestry water resources flood plains wetland delineation.
In coastal near shore areas for sea level rise.
Please turn to slide 10.
Environmental sustainability is a key component of all six of our verticals with service office in each vertical to support our clients' sustainability goals.
The current administration has placed an emphasis on environmental issues in the marketplace is dripping a push towards sustainable infrastructure energy efficiency, and renewables and protection of water and natural resources.
To address these issues NV five has been positioned to address the market demand for green solutions through investments in technology based solutions, such as geospatial surveying and monitoring based commissioning as well as providing a sustainable design renewable and low impact building materials and system.
On a reliable generation and delivery of renewable energy.
That's a bottom on slide 10, you'll see some examples of recently completed ongoing projects in each of the sustainable fields that we support.
For the sake of time I won't go through each of these project. Examples of please reach out to US if you would like some more information about sustainable projects, we have performed.
I'll now hand, the presentation over to our CFO, Ed Codispoti to provide an overview of our Q4 and full year 2020 performance ad.
Thank you Dick and good afternoon, everyone.
You would please turn to slide 12, I'll review, our fourth quarter and full year 2020 results. As you can see we had strong results this quarter as our gross revenues increased 22% to $161 2 million.
For the full year, our revenues increased 30% to $659 $3 million.
I will note that we had two business days less in the fourth quarter of 2020 versus the fourth quarter of 2019.
For the full year, we had an extra week in 2020 compared to 2019 due to the way our fiscal calendar works.
Once again, our business model performed well in light of the coronavirus pandemic.
Our adjusted EBITDA also showed substantial growth as it increased 37% in the fourth quarter to $24 4 million and 52% for the full year to $105 4 million.
Our adjusted EBITDA margin continues to improve as it increased 170 basis points compared to the prior year fourth quarter, and 240 basis points year over year we.
We attribute this margin expansion to our scale as we grow the business and to our mix of business as we grow our higher margin verticals. Our adjusted EPS was also strong this quarter as we came in at <unk> 82 per share a 28% increase over the same quarter last year and.
And $3 72 per share for the full year, representing a 14% increase over 2019.
Our cash flows also continued to show strength in the fourth quarter as we generated $23 6 million in cash flows from operations of 29% increase over the same period last year.
Full year cash flow from operations were $96 million, a 141% increase over 2019.
These strong cash flows have allowed us to further strengthen our balance sheet.
As you can see on slide 13, we ended the quarter with $64 $9 million in cash.
This is more than double the amount of cash we had as of the end of 2019.
Moreover, we increased this cash position, while also paying down $51 $8 million of debt throughout the year.
As a result, we were able to bring down our net leverage from three two at the end of 2019 to two four at the end of 2020.
This is equivalent to a 25% reduction in our net leverage with that said, we feel well positioned to go into 2021, and we are excited about the future.
I'll now turn it back to Dickerson Wright for some closing comments.
Thank you Ed Please turn to slide 15.
The greatest contribute to <unk> ongoing success is the strength of our employees, we depend on them to help set our growth targets and then hold them accountable to deliver on those calls at a management meeting in 2014, we worked together to set our company wide growth target of $300 million of gross revenues by 2017. This was an ambitious goal.
As we were only generating around $100 million in annual revenues in 2014.
We announced about publicly so that we would be held accountable by our investors.
In 2017 rolled around we exceeded our goal on delivered $333 million in revenues.
So at our 2017 annual meeting we set another goal to grow the business to $600 million by 2020.
And again announced the target publicly.
In 2020, we exceeded that goal by delivering 659 million and gross revenues.
Our third quarter 2020 earnings call, we announced our new target of $1 billion in gross revenues by the end of 2024.
We are confident in our ability to deliver on this goal and believe that our platform scalability. We will continue to build upon the higher margins that we have generated in recent periods.
Our business model has proven to be successful.
We expect to build upon our momentum to deliver strong organic growth.
And we will continue to make strategic acquisitions that strengthen our protocols and expand our high margin services. This completes our prepared remarks and now we'd like to open the call for your questions.
Yeah.
Ladies and gentlemen to ask a question you will need to press star one on your telephone to withdraw your question press the pound or cash Keith Please standby, while we compile the Q&A roster.
Our first question on comes from Chris Moore with CJS Securities. Your line is open.
Hey, good afternoon guys.
Well, that's a good alright thats opening.
Thank you.
Yeah, maybe just start with that 100 million dollar contract for their power grid modernization net.
Obviously, a really important area and just trying to understand a little bit better you know kind of how did you guys. When it is at a really competitive market out. There. You are you are there are a lot of other players in there or is that kind of that full scope of work is the differentiator here.
Well.
Chris Yes, there's always a lot of competitors Theres always a lot of competition and Theres always a lot of firms seeking to have.
A contract of this size I think our relationship and I can't name the utility, but we've had a long history, we're embedded with them. We do a lot of support work for them and we were the go to we were the go to firm because we had a <unk>.
Experience and track record in doing that work and one of the things that was enlightening to me was.
The estimates they used for delivery of utility services on underground services previously they were anticipating the cost to be about $4 million and they assigned a small amount of this work initially to us and their cost is $2 8 million. So we were a natural selection for this work.
I think it's going to greatly contribute to.
Our work going forward.
Over the years.
Terrific.
Maybe just talk a little bit about where you are in realizing the synergies with <unk>. So I did did COVID-19 slow that a bit did it accelerated.
<unk> looks like it was a terrific acquisition. It just seems like there's still a lot more there just trying to understand kind of where you are in that you know that process.
Well, yes, it's an ongoing process, Chris they've been with us a little over a year now we are really doing the full integration process with them now in the back office support but in the.
Application to clients and cross selling which is very important they've been very active and the natural synergy is the work that they were doing.
And the work that they could do with US for example, they had little presence with utilities in the west and through our relationship with utilities. They are doing much of the monitoring and safety monitoring it and work.
Worked for transmission load on the on the large tower so that.
They can prevent the fire mitigation also on vegetation support an aerial support that they've been doing it as a natural entre to work that we were providing from an engineering.
Perspective, they are now providing from a geospatial our perspective, so we see a lot of opportunities there, but we're learning as we go we're integrating and we're introducing them to many of our services and vice versa. They are also introduce us to some of their clients on basis and I think the key difference.
That we've been able to support them. The main work that they were doing was with the federal government and the department of defense and various federal agencies that measure everything from.
Global our global warming to two.
Many of the things that for security reasons, we now have an entre with those with those people at our Arlington office, which was doing work directly for the federal government has really enhanced their presence, but we've now introduced them to.
The Minnesota market utility market and markets that perhaps they work they were doing but not to the extent that they can now do with us. So we're very pleased with that they deliver a higher margin of service and we anticipate.
The synergy and cross selling will develop even further with them.
Got it very helpful I'll jump.
I jumped back in line I appreciate it.
Yeah.
Our next question is from Rob Brown with Lake Street Capital markets. Your line is open.
Good afternoon.
Hi, Rob.
The first question is on the I think you talked about the real estate transaction business normalized in Q4, a bit could you give some further color on that and I know it got hit earlier in the year, but.
How does it come back on how's it looking into 2021.
Well.
They had a very strong fourth quarter and usually in our business.
Whether it be the real estate transaction or the core business of NV, five and even the geospatial our first quarter tends to be slower it just historic and so but they are starting to see now a lot of portfolio acquisitions that were delayed because of the not knowing the environment. Most people are have been coming back to <unk>.
Doing that work so they are starting to see the larger transactions and portfolio actions. They do very little with individual residential real estate.
As that whole market comes back and transactional work comes back.
Bakken Clarke our transactional.
<unk> has benefited from that and they are starting now to see as the economy reopens and we're starting to see much more investment by the larger portfolio acquisitions.
And mark in markets that have been benefiting from this.
Okay, good and as you look into 2020, one how does the organic growth rate look.
This year with the backlog that you have in the.
The environment normalizing a little bit how do you sort of see organic growth playing out this year.
Well, we still.
And we want to be conservative, we're still considering anticipating.
Anticipating organic growth at high single digits somewhere between five and 9% and the <unk>.
Some of that everyone has with.
Firms that do a lot of acquisitions is how do you measure that we'd like to integrate we like to look at opportunities, sometimes we acquire a company and there may be one old piece of our portfolio that we don't think fits our core business, but we do like the overall company so sometimes that piece.
Goes away so it's very difficult to measure organic growth through same store sales, but we generally think and measuring firms that we've had for one year.
And we can start to apply our our systems to them and so.
We still this year are anticipating organic growth to be in the high single digits.
Okay, great. Thank you I'll turn it over and nice job on the quarter on the year and hitting your EBITDA number.
Sure. Thank you.
Thank you Rob.
Our next question is from Jeff Martin with Roth Capital Partners. Your line is open.
Okay.
Thanks, Good afternoon, guys on the Echo Rob's comment on nice job hitting the original EBITDA target for the year, that's really impressive.
Nick I wanted to dive a little bit into the path to the 2024 goal of $1 billion of revenue.
It appears to me that yeah.
Pursuing technology and compliance services.
I know youre layering in more.
<unk> type recurring revenue.
Monitoring type solutions that help us kind of understand.
As we go from six.
660 today $1 billion revenue to get to 1 billion on some of that is going to come from a name, but what what is the strategy behind that M&A and then yeah.
Assuming organic growth is probably embedded in that mid single digit assumption.
Yes.
It's not a it's not content, but we assume a brown, 5% organic growth and as we do acquisitions the base for that organic growth gets larger.
Jeff where we have and this is just me, saying seeing how we're involved we see a lot more opportunities to be selective in the acquisition now our platforms are pretty well established we can look at acquisitions in two ways. One we can support the existing.
Platforms from our traditional businesses, but actually you listened and heard we think theres phenomenal opportunities in this new technology.
And we can look for those and be very selective in acquisitions and still grow them. So I think that growth is going to come from organic growth about 50%, maybe 40% to 52% and then acquisition will be the balance of that and the organic growth, though is a constantly moving thing because.
As we 5% of $600 million is certainly more than 5% of $300 million. So as the as we grow the organic growth.
And.
Constant contribution is although the percentage maybe.
Mid to high single digits, it will be more cumulatively so.
We can be a little more selective and we could be a little more strategic in our acquisitions now that we've really developed our platforms.
Okay, and then if I could ask you'll see that you'll see that coming up you'll see that in the future.
Right right. Okay. That's helpful. And then if I could ask a detailed model question here on your.
Your sub consultant.
As a percentage of gross revenue as well as the other direct cost, which I think is mostly free.
Reimbursed travel expense were outside of the normal range I was just curious if you could comment on whether that was kind of an abnormal event. This period or if there's some sort of underlying change in the structure of things that.
It's caused us to maybe reconsider how we model that.
Next couple of years here.
Yeah, well, let me first comment and then Ed make get add more specificity to the comment.
<unk>.
Geospatial has a higher percentage of sub consultants than at our core business, so that tends to add.
As it adds as the percentage goes up.
And I also think that R. R.
Transactional real estate and environmental.
Is growing and coming back stronger they tend to have a higher utilization of sub consultants, whereas the core business, we tried to limit that even more so because of.
Minority and disadvantaged business requirements in absolute set requirements and then many people limit the amount of actual markup that we could have on those so as our mix of business has changed somewhat we tend to have the sub consultant so be a little bit higher but Ed maybe you have some more that you'd like to add yes, I would agree.
Free with Dick I mean in Q4, the percentage of sub consultants or revenue was 18% versus 15% in the third quarter. So it has ticked upward, but as Vic alluded to that's really just a product.
The mix of business in.
The real estate transactional business would be an example of that so we expect it to.
On tissue.
Shift back and forth within the range that we've seen throughout 2020, but do not expect a significant change going forward.
Okay, great. Thanks for that.
Just to add.
Many of the public agencies have a minority.
A sub consultant and we use are disadvantaged business.
Consultants for this has at least 17% so.
That was good that was at 18%. So it shows that our core business is making real progress on Friday, and it really kind of to me, it's encouraging because I see the cross selling efforts really starting to have an impact on our overall company revenue.
Yeah, No I agree that that's far below industry average. Thanks. Thanks for the time guys I appreciate it.
Our next question is from Michael Feniger with Bank of America. Your line is open.
Hey, guys. Thanks for taking my questions.
Hi, everybody nice job hitting your original.
EBITDA target for 2020, sorry, if I missed this dickerson.
Whats the EBITDA target for this year for 2021, and if there is a range for EPS.
Yeah, I'll, let Ed.
To answer that question I think I've seen it moving around but I think our EBITDA target, it's about $124 million, but Ed maybe you have more.
Specificity on that.
Yes.
We're not necessarily giving guidance, but I think that.
That $120 million range as is possible.
Oh.
Okay.
Sorry go ahead, what was your second question, Michael You had a second question I'm sorry.
First question was on.
Are you are.
Are you comfortable with the EPS range as well that you see with the consensus.
Yes, I think.
Yes, we're not giving guidance, we're not giving guidance, but the consensus for the last few quarters seems to be.
In line with what we said and.
I think the overall consensus looks looks obtainable, but as I said, we're just right now coming out of this whole.
Covid situation and we're just reluctant to provide guidance until we get more clarity.
Okay fair enough and I think your backlog at $5 60.
Down a touch versus the third quarter kind of flat on a day.
Year on year basis.
Anything you'd want to flag that.
Is weighing on the ability to build backlog because you thought.
We're going to see organic growth.
Five to you were saying high single digit range. Your backlog is flat. So do we need to build backlog in the early part of 2021 for that growth on just trying to understand the moving pieces of the backlog.
Oh, that's a great question Michael.
The awards are not linear and so.
The impact this this quarter or in the last the fourth quarter on backlog, what's the delay in some of our geospatial.
That will be pushed and moved over and you can understand with the federal government and there were many people that were not working and they were waiting on contract awards. There were some contracts that were pushed further into the year, but we don't we don't think that this we think this is something that was an aberration that will they will recover this in the.
Second half of the year, but they they backlog flattening what's really.
Growth in our core business and then some some tapering in the geospatial business and that was only because these contracts were not so much.
Going away, but deferred to a later later time of the year. So we hope and expect to pick that up in the air.
In the latter part of the first quarter, the second quarter, and then forward with with Geospatial. So I don't think its any harbinger of a flatness, but really indicated to me that the.
On the core business backlog was strong and the geospatial backlog has been pushed pushed.
Forward and somewhat the late.
Okay fair enough and maybe add take out of the 22% growth in the fourth quarter, 30% full year really strong growth in U S.
Any way to help break that down for us between or I know, it's difficult sometimes between like you would think as organic first first acquisitions.
Yes.
For us we've talked about this in the past.
And given that we were so acquisitive in 2019, when we acquire a company we integrate them, we absorb them and.
If there are any specific business lines that aren't performing well as we bring them in those might get dropped and so to come up with a true organic figure is a little bit complex for our business.
But yes, as Dick said going forward, what we're targeting for 2021 is the high single digits in terms of organic growth.
Okay and is that and just last question just on that high single digit organic growth do you feel Dickerson does it start off slow in 2020, then builds up as the economy recovers back from to get rolled out.
T budgets.
On better footing or is it actually kind of even throughout the year. Thank you everybody.
Okay, well Michael.
Thank you I can just mentioned historically and sometimes the best view of things is in the rearview mirror, we have always had in the core business in the engineering business, the first quarter tends to be the slowest quarter.
Second and third quarters are.
Actually much stronger and then the fourth quarter can be strong or it can be.
It can be slightly weaker, but that's kind of the natural sequence. So I haven't seen a tremendous.
On a tremendous.
Amount of impact.
In that we're seeing and that we're seeing the same thing we're seeing.
More of a slowness on the <unk>.
First quarter that we've always seen and then we send we tend to see things building, so, but I don't know how much of it is COVID-19 related.
We think that.
We certainly it hurts us when we can't be in front of our clients and we can't be visiting them and seeing them and we continue to work remotely, but I hope hope there as the economy opens up we will benefit from that and then the last thing not to be too long winded with this answer is we have been doing all of this growth since two.
2000 and.
10.
And we really have never had any tremendous support from the government on infrastructure. So now we're hearing things that infrastructure is something that is going to be needed and it's going on.
That has to be addressed net does and we can help them be the benefit of that so our we're not our guidance is not anticipating this infrastructure.
But it's certainly good to have.
The wind at our back rather than facing the headwinds that we had since I've been facing since 2010.
Thank you.
Our next question is from Marc Riddick with Sidoti Your line is open.
Hi, good evening.
Hi.
Wanted to touch a little bit it was encouraging to hear commentary it and positive and upbeat commentary around the ankle.
Acquisition pipeline and the things that you have available to you and and and I. Appreciate the commentary on having how youre, how youre viewing those opportunities and I guess, maybe it's a wider lens than maybe in the past, but I was wondering if you could touch a little bit.
In general about what the what the pricing dynamic might be out there maybe relative to a year or two because it's certainly at least in general seems like there's a lot a lot of money out there chasing M&A action and.
Certainly things have picked up significantly beginning in the back half of last year. Overall. So I was wondering if you could talk a little bit about maybe what the pricing dynamic might look like and if you feel.
Any different than what you've seen in the past.
Well sure I guess I can tell you only from what we're experiencing and I can see that.
The traditional on multiple of EBITDA has been going up but in our case being a public company.
We've also seen the uptick in <unk>.
And our prices in stock and so theres, a natural arbitrage off that we're looking for that but as the the valuations have increased.
We have been using more components of our stock we want shareholders. We want partners, we want to have.
We want to have.
People with us and so we want acquisitions to have our stock, but as the price of our stock goes up we tend to use you don't have to use the lights out a little bit more and that kind of.
Is that kind of help.
It helps us in structuring the valuation, but we haven't seen that but there has been we've seen some increase in valuations and <unk>.
But equity firms tend to.
Trying to enter a market tend to.
And I don't want to use the word deal trade, but they tend to initially go with a very high multiple and then.
And then what is that what happens is maybe that's not quite the multiple that the that the.
Farmers required for R. R.
What we've seen in our experience I haven't seen a lot of the deals that we havent done because of private equity I havent seen those deals close yet so.
Got you.
Mark to your question price as the valuations tend to be going up a little bit yes.
Gotcha and that was what I wanted to circle back on the.
On the cross.
Cross selling successes and that certainly has been it's clear that's something you guys from working on for quite some time its good to see the levels that you've achieved I was wondering should we how should we should we continue to think about but the goal.
Cross selling for this year and potentially next year as being similar to what the goal was going into last year or how should we be thinking about the future of cross selling.
Our goals.
Well I'm sure the people that are managing the cross selling effort, but love to see the gold stay the same but we increased that we insist that.
So if you saw on achievement of 328, this year, we're probably expecting more like $340 million or so for.
We're cross selling this year and remember this is also it's another factor on organic growth because that is on pure net revenues.
As we cross sell Theres, one office that does the work.
And the other work office that reports of sale. So there is a natural.
There's higher profitability, but as we add the cross selling it's only measured in net revenue not in total revenue.
Okay and then the last thing from me is should we be how should we be thinking about potential capex spend for the year or any maybe technology.
<unk> spend needs or anything along those lines. Thanks.
Ed is here just dying to answer your questions.
Yes.
Okay.
Yes, so our Capex for 2020 was was just under $10 million, we expect it to be very similar in 2021.
Yes.
Out of our entire organization.
The geospatial vertical tends to be a little bit more.
Capex intensive so they make up about it.
Make up about 80% of that number so.
Just over $10 million next year would be a reasonable assumption.
Okay. Much appreciate it thank you everyone.
Thanks.
Once again, ladies and gentlemen, thank you for your question. It is star and then one on.
Our next question is from Scott Blumenthal with Emerald Advisors. Your line is open.
Good afternoon, good afternoon Ed.
Hi, Scott Good afternoon, good good to hear from you nice to hear your voice too Nick.
Dick following up on Michael's question.
Couple of questioners ago on it.
The backlog I think it's.
Important to note that you did call out those.
Large awards and those would not have shown up in the Q4 backlog because they were booked in January.
Correct.
Yes, that's right you will see them.
What youll start to see those recorded in the first quarter.
Okay. So we should see a potentially.
Potentially a pretty decent boost.
From those even though you called those out those didn't appear in the 560 number that was reported.
Yes, just on also some clarification.
Scott those are total contract awards now some of that we only record the backlog that we're that we're going to use on a rolling 12 month period. So for example that 100 million backlog I believe it was over three years or five years.
It's $100 million total win, but we would probably record $20 million of that in the quarter not the full $100 million.
Okay, Great. That's really helpful and maybe just one for Ed Ed the portion of the sales that come from backlog versus kind of the transactional business.
Bakken Clark was mentioned as the real estate real estate transaction business.
Can you kind of gauge that for us or have you answered that already I just wasn't paying attention.
Yes.
Four four Bakken Clark.
Yeah.
There is some we do have some some marketing parking that backlog number.
Sure.
It's not it's not a whole lot it's probably.
Sure.
Somewhere in the $20 million to $30 million range.
But what essentially.
The way we look at backlog is that if we got if we got backlog equivalent to at least 65% of what we expect to come through for for revenue during the year. We know we have an adequate backlog.
At this point it appears to be.
More than adequate going into 2021 in terms of our expectations.
Okay, Yeah, that's really.
Yeah, Yeah, I just wanted to add I can't help myself, but no Bakken Clark and Thats, our transactional boats are more churn and burn guidance.
They are thrilled that they could have a 60 day that 90 day window on backlog. They just portfolios, it's transactional rate and it's not unlike M&A you never know, what's going to pop up and you can't anticipate that so their backlog tends to be nowhere near as high as the rest of our core business.
Got it duly noted thank you Dick I noticed that with Iga and terror attack that you all did not disclose an annual revenue number.
Could you give us a gauge on that ore as well.
No.
I'll be more than happy.
Happy to do that I think they are both about eight 8 million.
Oh, yes, <unk> around $6 million or so give or take.
No.
Yes.
I think the combined is about that.
$8 million or so for.
At least the last numbers I've seen on for this year.
Looking at historic but.
<unk> is more like closer to $8 million, a little over seven 7 million in change and <unk> with <unk>.
$6 9 million.
I think the noteworthy thing that I would like to mention Scott as we did this we bought those right out of cash flow and we still reduce debt also because we've been cash flowing so nicely. So neither one of those we needed to go through our facilities or borrow money to do either one of those acquisitions.
Yes, absolutely that's that's.
That's terrific.
And thank you for that and I guess, one last one if I may I did notice your stress there on sustainability.
Being an important initiative for you.
Could you give us an idea maybe maybe this is a better question for Ed.
Or are you able to break out what you think the sustainable.
The revenue stream.
The sales level for sustainable projects as a percentage of overall projects now and what the growth rate of that might be.
We think about that sustainability, that's sustainable business is about 20, 25% to 30% of our of our overall business I think that's a good a good rule.
Rule of thumb at the moment.
Okay.
Is that growing faster than the rest on perspective.
Yeah.
On <unk>.
Certain areas, it's really taking hold our geospatial is really starting to see a lot more reliance on that as opposed to the traditional defense business and so it's no what's up.
With seawater seaworld.
Ocean erosion in land erosion and.
No cap.
They measure of water on a snow cap and things like that they're constantly their work is even more on sustainability and even with the utilities utilities are really starting to push on sustainable.
Means to support the support the grid the grid aging grid, but they've been we've been seeing a real push towards.
Solar power power, where we do shop fabrication inspection on on this.
On the solar power, where we've seen a big a much bigger push for alternate alternate forms of energy wind farms and things like that so we know we want to position our company to take advantage of this share.
Sure sure.
Okay. That's really helpful. Thank you thanks for taking my questions.
Thanks, Scott Thanks, Scott.
At this time. This concludes our question and answer session on I'd like to turn the call back over to Mr. Wright for any closing remarks.
Well, thank you everyone for listening to us.
Our results were very proud of the results we had for the year 2020.
And Ah.
We just can't sit on our hands.
And we really and I can tell you from all of our employees on the ones that hopefully I can get this even more after this COVID-19 ends that we want to be a continued to be a vibrant growing company.
And we want to have one of our services to adapt.
Two what we see in the in the marketplace and sustainability and things that protect our overall environment. We all whether we're part of NV fiber, where anyone we all want to have clean air clean water and we want to protect our environment any way we can.
Our engineers on our technical people, though are on the forefront of this and we're doing things now and I wanted I want to thank those people for the work that they're doing to really improve what we're doing we're where the help is coming technology is going to be key in this our acquisitions and are positioning our company you will hope to see in the.
Coming from future.
More acquisitions that really strengthen our technology technology, you'll see recently that geospatial.
Had a software package that we've released in this package in software, it's really going to help in the analytics and help our clients to understand their from married of data that is coming coming to them. So we look at this this software package is.
Software package growing.
Yeah.
Excuse me, while I'm Louise I'm, losing.
I Hope you can still hear me, but the software software packages insight and what that Youll see more and more of the software applications to improve our delivery systems.
<unk> in our geospatial analytics and though it is growing we anticipate that will add to our services.
Anticipating at a slow buildup of $2 million to $4 million in that so.
I want to thank everyone. In this order I would like to thank our investors for believing in our company I think we truly are a company that wants to deliver services and get embedded with our clients to be at the forefront of technology and support services that really enhance and help the <unk>.
Environment and to deliver this I mean, we want to say, we're doing well, we can always do better, but we want to say, we're doing well because were measurable and how do we measure that we measure and that's why our growth we measure that by our profitability and we measure that by having you our investors that's our partners in doing this and that's why.
When we.
Said that the growth that we're going to have the $1 billion by 'twenty four we want to announce that we want you to watch US we want you to measure us and see how we're doing so look for us in the future. We think 2021 is we're positioned for a very good strong year and hopefully all of us will get past this COVID-19 situation.
And we will be able to go about our lives.
Always so we will adapt to the situations that are in front of us. So I want to thank you I want to thank all our employees at <unk> and I want to thank our investors and with your support we will continue to have a good a growing company and we look forward. We're very excited about 2021 this year.
To grow even more so thank you very much and thanks for listening.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect.
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