Q2 2022 NV5 Global Inc Earnings Call

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Good afternoon everyone and thank you for participating in today's conference call to discuss NB5 financial results for the second quarter 2022, ended July 2nd, 2022.

Joining us today are Dickerson Wright, Chairman and CEO of NV5, Edward Kaudestotti, CFO of NV5, and Richard Tong, Executive Vice President and General Counsel at NV5. I would now like to turn the call over to Richard Tong.

Thank you, operator. Welcome, everyone, to NB5's second quarter 2022 earnings call. Before we proceed, I would like to remind everyone that today's discussions contain various 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. Factors that could cause extra results to differ materially from these statements are included in today's presentation slides in our reports on file with the SEC. During this call, gap 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.NV5.com.

Please note that unless otherwise stated, all references to second quarter 2022 comparisons are being made against the second quarter of 2021. In this presentation, NV5 has included certain non- GAAP financial measures as defined in regulation G promigated under the Securities and Exchange Act of 1934, as amended. The non- GAAP financial measures included in this presentation are adjusted earnings per share and adjusted EBITDAQ.

NV5 provides non-GAAP financial measures to supplement GAAP measures as they provide additional insight into NV5 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 non-GAAP measures of NP5 to those used by peer companies.

A webcast replay of this call in its accompanying presentation are also available via the link provided in today's news release and on the Investors section of the company's website.

You may also find today's presentation, which will be referenced during this call on the Investors section of the company's website.

We will begin the call with comments from Dickerson Wright, Chairman and CEO of NB5, before turning the call over to Edward Cotas-Pote, Chief Financial Officer, for a review of the second quarter 2022 results. Dickerson Wright will then provide closing comments before we open the call for your questions.

Nickerson, please go ahead. Thank you Richard and thank you to everyone for joining us on today's call.

Hopefully you all have gone to our investor website to view the NV5 second quarter investor deck. roofs.

So let's turn to slide five.

to discuss our second quarter, 2022 results.

Which sheet?

Double-ditch it.

Q2 growth in growth revenue, net income, adjusted EBITDA and earnings for share.

We actually delivered 203 million in gross revenues, which is a 13% increase over Q221, and 38 million in adjusted EBITDA for the quarter, which is a 10% increase over the second quarter of 2021. Which is a 10% increase over the second quarter of 2021.

Adjusted earnings per share grew 11% versus Q221 to $1.49 per share for the quarter.

The record results were once again driven across all verticals.

Throughout the quarter, we secured multiple significant contracts.

And we enter the second half of 2022, with a strong backlog of $6.85 million.

which is a 14% increase over the same quarter in 2021.

This will support our organic growth throughout the balance of the year and well-ended 2023.

On the Mergers and Acquisition Front, if you look to the right side of the page, we acquired G01 in the second quarter, strengthening our electrical utility to the special leadership position.

GIO I was founded in 2004 and has a long-term relationship with Key Southern California utilities.

We continue to pursue a strong pipeline of M&A activity and opportunities, and we currently have multiple potential acquisitions and due diligence.

Let's now turn to page 6, where we'll discuss the economic resilience of NB5 and why we are sheltered from economic downturns.

The services that NV5 provides are non-discretionary.

safe and reliable delivery of energy.

Safe transmittance and clean water are essential.

in good or bad economic times.

As we know, infrastructure and the electrical grid in the US are inadequate to support the growing population demands.

and maintenance and improvements to the grid must continue.

These are not just our words.

As you see in the quotes below from...

The F&P Global, the Department of Energy, the California Public Utilities Commission, and the American Society of Civil Engineers, the drivers of our business remain strong. The drivers of our business remain strong.

We are a fiscally conservative company and our preferred capital structure is to maintain a strong cash position with minimal leverage.

In addition, the majority of all.

of our acquisitions.

are funded at up operating cash flow.

The structure of our business gives us a competitive advantage.

Low fixed cost and support service efficiencies make our business.

easily scalable.

Our gas position minimizes our dependence on debt, which is also a competitive advantage that has entered straights rise. The gas position minimizes our dependence on debt, which is also a competitive advantage that has entered straights rise.

Our international operations allow us access to engineers and technical experts to give strong, offshoring support as the lake of remarket to the North America.

Going to page 7.

We have highlighted some of our growth areas in our six verticals to demonstrate our growth in the first half of this year 2022, versus the same period in 2021.

The growth of our business is derived primarily by

Taking Market Share.

In the Infrastructure and Tick Business

We have given growth in the East and the West.

Our utility services continue its expansion into new geographic areas, new clients, and broadening our service offering, as well as growing the relationship with existing clients.

Sustainability and clean energy is a rapidly growing part of our buildings, business, and our mechanical electrical plumbing and technology design is continuing to rebound. And this continues to rebound. And this continues to rebound.

Our subscription-based energy efficiency and international operations are performing very well in 2022. And we continue to leverage our access to international talent to support our U.S. operations. To the international talent to support our U.S. operations.

We achieved 83% growth in environmental health services driven by our real estate transaction business growing and it's demand for environmental compliance.

In geospatial, we continue double-digit organic growth across the vertical and acceleration of the offshore wind farm growth initiative, which we anticipate to increase revenue.

on page 8.

I would like to highlight a few key wins in the quarter and touch on our backlog growth.

Our LNG or a liquefied natural gas business for utilities continues to secure large projects.

including the $39 million for a Midwest utility.

We secured $8 million in large federal and state geospatial contracts. And in California, we awarded two large contracts by the City of Oceanside and Caltrans for water transportation and infrastructure projects.

As I mentioned before, our backlog to begin the third quarter was 685 million, which is a 14% increase over our backlog for the same time a year ago. During this period, it's very probable that $24,500 would find a 18% increase or, say, $11, this is $24, you know, depending on the backlog ?eija runs our Entscheidung for what we do in the week, after ?iserlang engagement we take what is happening in the Prague one-hour for you, and this is while I as much as possible by reading there for the next four weeks or so and I will be testing it out. So let's talk about a part of this, next week, and please select a single and TURLDY keskamp ASSO is the first róa set ahead of us, in the December 24th release, you

On page 9, I will discuss our latest acquisition.

H.O.I.N.

which expands our national electrical utility geospatial leadership position.

GIO1 specializes in the electrical utility market and delivers innovative, light-art imagery in advanced data analytics. GIO1 specializes in the electrical utility market and delivers innovative, light-art imagery in advanced data analytics. GIO1 specializes in the electrical utility market and delivers innovative, innovative, analytics.

The acquisition complements our existing offerings in utility asset inspection, vegetation encroachment, and wildfire mitigation.

And Gia1 provides us with access to a key utility in the West.

that will provide growth, opportunities in both our geospatial and core businesses. that lightly advised.

We will now transition the presentation to our CFO , Ed Codospodi, to provide an overview of our second quarter performance. Ed, please go ahead. Thank you, Dickerson, and good afternoon, everyone.

If you would please turn to slide 11 of the presentation, I'll review our second quarter financial results.

We had double-digit growth across the board as our gross revenues for the second quarter of 2022 increased 13% to $202.7 million compared to $179.5 million in the same period last year.

Net income increased 27% to $17.3 million in the second quarter of 2022, compared to $13.6 million in the second quarter of 2021.

Our adjusted EBITDA increased 10% to $37.8 million in the second quarter of 2022 from $34.2 million in the same period last year.

Our gap earnings per share increased to $1.13 per share in the second quarter of 2022, from 91 cents per share in the second quarter of last year. This was a 24% increase.

And our adjusted earnings per share increased to a dollar 49 cents per share in the second quarter of 2022 from a dollar 34 cents per share in the 2021 second quarter. On 11% increase.

On slide 12, you can see we continue to be well positioned to execute our business model.

We paid down $35 million in debt under our credit facility during the second quarter and ended the quarter with $44 million of cash on hand. And the end of the quarter with $44 million of cash on hand.

Minimal leverage of 0.4 times.

and over $336 million in capacity under our credit facility.

This puts us in a very good position to drive growth since we are able to fund our typical sized M&A deals and growth initiatives out of our cash from operations. And growth initiatives out of our cash from operations.

while still maintaining a robust balance sheet.

All this while being well positioned to protect our margins.

As a result, we remain very excited about the future of NB-5.

back over to Dickerson for some closing comments.

Thank you, Ed. Let's turn to slide 14.

As you can see, NV5 has now delivered a record first half in terms of growth and profitability. We also believe that our strong performance will continue in the second half of the year. In the second half of the year.

Infrastructure spending and utility investments continue to be strong, and our momentum in geospatial growth continues across the vertical.

Emergency and acquisition activity pipeline continues to deliver opportunities. And we enter the second half of the year with a record backlog.

In terms of the macroeconomic uncertainty, the mandated nature of our service offerings, sustainable drivers of our business, and our strong balance sheet provides NB5 with an economic safety net to perform well during any macroeconomic downturn. The

As we solve of our strong performance in the first half of 2022, we are increasing our guidance for the full year 2022 in gross revenues, which were previously $785 million, $810 million.

dollars to now $795 million to $815 million. And we'll also increase guidance for the full year 2022 in adjusted earnings per share, which were previously $5.39 to $5.80 per share, which will now be $5.43 to $5.82 per share. Thank you.

At this time, I would like to remind everyone, if you would like to ask a question, please press star followed by the number 1 on your telephone keypad.

And our first question will come from Andy Whitman with Baird. Please proceed.

Great, good afternoon gentlemen. Thank you for taking my questions. I just wanted to get a little bit more detail here on some of the numbers. Ed, I hope you could help us understand the organic growth rate in the quarter, maybe by telling us how much revenues gonna be disclosed in the 10Q as coming from companies acquired in the last 12 months. I would also like to understand a little bit more about how the change in the revenue got into.

understand the organic growth essentially for the six month period, it was about an eight percent organic growth if you were to exclude the benefits we received from anything acquired during the last 12 months.

And with respect to the guidance.

We raised the guidance, as you noted, the amount of incremental revenue incorporated into that raise was really about, say, $2.5 million or so, very immaterial. The only acquisition we had this quarter was, or this year, was GEO-1. The two smaller ones towards the beginning of the year were really not material. They were more strategic in nature. And so when you consider that that GEO acquisition came in in June .

And its relative size, just assume about $2.5 million or so, was incorporated into the revenue raise.

Thanks for that. And then <expletive> , for you, I guess, I would like, excuse me, an update on your cross-selling initiatives from your acquisitions. You're always really good about setting a target and then kind of updating against that target. So I was hoping you could give us an update there so we can see how much that's contributing to your organic growth. So we can see how much that's contributing to your organic growth.

Yeah, good question, Andy. Our cross selling is really...

twofold. I always look at the main purpose of being inclusive for all of the acquisitions and showing that by joining NB5, they're part of a platform that can really help you. So we do monitor it. So far this year, we're at 15.8 million in cross selling for 2022 and our overall goal is 30.

34 million, 34.3 million for the entire year. So we looked, we're looking for a stronger half of next year. So in doing the math, if we're giving guidance for over 800 million, we are looking for the cross-selling portion of that. And all of that cross-selling will be with companies that primarily have joined us at the beginning of the year. We haven't figured in what the cross-selling would be from those that are joining us later.

Watch that.

You keep, you ask the same questions that I ask myself all the time. So that's very, very good, Andy. I think if you listen to what Ed said closely, we did two of the very small, not you, one, but two of the very smaller actors that we did were just really key hires to support some of our needs that we had in the area. One key was mechanical, electrical need.

The other was for a need in our transportation area. And those were hires that we needed to fill slots that were open. And we felt by doing those through acquisition of their small, very small practices, they were for strategic and hiring. But it's always a challenge I have on, if you're ever visit my office, you'll see right on the wall. I always measure attrition. And we are under the industry standard for public companies.

But it's still not, it's still always a challenge and it's always a need that we're looking for. We have though recently been strengthening our offshore capabilities where we're getting a lot of support for billable positions are being offshored and supported from our Middle East and Asian operations. So that has helped, but attrition is still a challenge.

And we just need to do that better than our competition, just like we want to perform better than our competition. And we just like we want to perform better than our competition.

Excellent.

Your next question comes from the line of Chris Moore with CJS Securities. Please proceed.

Hey, good afternoon guys. Thanks for taking a couple questions. Hi, Chris. Hi, over the last...

I've taken a couple questions. Hi, Chris. Yeah, so, hi. Over the last few quarters, you know, you've...

You've got the opportunity for NV5 to work with utilities as they bury the power lines on ground. I wish I made it good. I wish I made it good.

dig into that a little bit deeper. You know, it looks like California utilities are the driver. Can you kind of talk about where utilities are assessed? You know, one reasonable expectation that NV5 could start, you know, generate meaningful revenue from that kind of work.

Well, it's it is in center for utilities to. For fire mitigation to put the.

transform more trans electoral transition underground.

Pacific Gas and Electric has the initiative. We have a special initiative to regenerate from that. We have not seen much from that. Most of our work is coming now from Sandio Gas and Electric Utility. If you look closely at GO1

acquisition, that was made strategic for us to approach the mitigate for the other Southern California utilities and one of which they're very strong and had a long relationship. So we're starting the revenue from all three of those things. And I would say total revenue that we're seeing right now is somewhere near 30 million, which can certainly grow a lot more. It's probably 4% or so are our progenitor then. And that's what we want that to be more, of course.

Gotcha. And you see that kind of accelerating in 23. I'm just – I've heard news out there in terms of kind of what it's going to cost per mile to go ahead and bury these, and it sounds like you guys are in a position to getting like 10 percent of that total cost. Is that a fair statement?

Alex is here too and so we've woken him up and he's ready to answer maybe some of the questions. I think that's important to provide a little bit more is that a lot of work we're providing now is related to substations and other work that we do for the utilities. So the undergrounding is a relatively new initiative that we're pursuing with some of the Northern California utilities. But I think it's important to appreciate that our overall revenue we generate from power utility companies. As far as £ Nep?? office is concerned, it can be a side that doesn't help.

is far exceeds what the

is currently being performed for the young running.

With that, what we expect to see right now, we're in the process of negotiating contracts. We've also submitted our qualifications. I would expect to see that by the end of 2022, we'll have contracts underway, but real work will start in 2020. We do have an initiative that includes our geospatial services for this very portion of with our utility.

Mark Abalso here, and Mark, maybe you can comment on what we're doing with geospatial and how we're extending that service to utilities.

It sure to. As we've grown our service offering in the inequality space, we've had a horrific time in terms of translating one of our core solutions, which is vegetation management and other analytics from the transmission line in a largely corridor environment where there's roughly about 400,000 line miles of United States. It is seen and is basically never-exit over until 8. United States.

And we've taken out, we've been able to transition that in a ployet in a distribution line environment where the market is significantly larger. There's some 14 times more line-mile in a distribution circuit than there are in the transmission across the US. So we've been able to, again, translate for our solutions that much larger opportunity for electrical utilities.

That's Mark. Chris, let me just add one other comment, actually two comments. One is we did a pilot program for Southern California utility and what would be the cost per mile of changing or transitioning from overhead electrical delivery to underground. And we came in at almost 40% cost savings to that opposed to what they had funded for that same, for those same miles. But we look at it a very robust opportunity.

We just recently and there was a net been on that or we in announcement

Have we announced the Arizona Public Service? There'll be another announcement shortly on a very large Western utility that we have an expanded services and some of that will include.

mitigation, fire mitigation work, so I wanted to add those two things to all of it, Chris. But go ahead.

Awesome, that, very helpful. Yeah, the last one for me really is back to Ed. I just wanted to understand from a, looks like a pretty good quarter from from, um,

from a pre-cash flow perspective.

First half of the year is $54 million. Are you looking to kind of match?

catch generation that you did in 21 or that I look this year versus 21.

I think what you would find Chris is that as we as we grow right and as we're ramping up as we are now in terms of double-ditch, we have an impact on working capital, right? It's just a natural consequence of growing at the rate that we are. So, you know, we

We've expected me upwards of 100 million in cash from off for the full year. I like to look at, as a proxy, if you strip out the impact of work capital, just consider our adjusted EBITDA, less our cat-x, right? And that gets you to about a $56 million dollar number the first half of the year. But keeping it when you do that, that we have been investing as <expletive> was talking about earlier in offshore wind fringes. So where a lot of 10 million dollar cash is not a recreen rate of

capital markets. Please proceed.

Hi <expletive> , hi Ed.

Hi, Rob. Good to hear from you.

First question on that, you mentioned the nice utility LNG contract. How are you seeing that market develop? Are you seeing more conics there? And is there a bunch of stuff out there? Is there a bunch of other things that you Tonight's meeting started in late February .

They are having a very good year. They're extremely busy. In the pipeline, I think there's going to be continued work. Alex, maybe you can answer that if you know of any additional work that they're there.

So, historically, it's an interesting business because it will be a little bit lumpy. Right now we have Tremendack Log and we are in the process of negotiating a very large contract that will have a significant announcement as we are successful. I think the announcement has were successful.

Now, in addition to what we've already announced the rob.

Thank you very much. And the question is, with the business hitting scale here, can you change sort of your view on the EBITDA margin targets that you can get to? Is any view on that creeping up?

Yeah, well, I think we can always improve and the whole premise of the business and I'll mention a little bit of that in the concluding comments, but we need to be scalable. And so you can imagine as we bring on more, our support services is scalable, our fixed costs are scalable. I think the only thing that we're seeing, but that on the EBITD line, we'll certainly see a greater improvement because of the capital expenditures that additional expenditures we're taking.

We think that it's a work process, but we certainly see room for additional EBITDAG and, and as we grow and become more scalable, I think this should be easier.

Okay, thank you. I'll turn it over.

Your next class comes from Jeff Martin with Roth Capital Partners. Please proceed.

Thanks. Good afternoon.

Hi there. <expletive> , I'm curious if you could give us an update. You mentioned there was a discussion at investor day earlier this year about using clean energy. I was wondering if you could give an update on the progress there and what you see ultimately the long term opportunity for MD5.

Well, really that, the business has been growing quite a bit. We haven't, on a release, announced it, but we just very significant track with one of the gaming, one of the gaming institutions and that was energy efficient for all of their homes and that's in the States. International, we're really seeing quite an improvement in operations, we have an operation in Singapore.

which is fairly specialized in energy efficiency on their data entry-mances, acquisition. Activated water pressure. The Luke receives a?izing water pressure?, powerful water pressure, and manufacturers interactively vezarinly include contaminants in one of the stock rounds and aggravated loudspeakers in another automated hot pressure. This time a He'll meet... In the next review by Developer CEO .

projects that they do for a lot of the international firms.

for a lot of the international firms.

such as Google and Microsoft. And energy efficiency seems to be growing quite a bit internationally. And we have additional opportunities where we look for in Pains and Kuala Lumpur for efficiency.

Okay, great. And then could you give us an update on the real estate traction side of the business? That's one area that people would appreciate and given kind of an increase in uncertainty. Yeah, I know that.

Great question and why it's a great question is I really do. I just with our group warning, so I'll sound much more knowledgeable than I really am. But we have two key areas of the transaction and the reality efficiency business. On one deals mainly with low portfolio companies and they seem to, they're both looking for even stronger second half. That is it's counterintuitive because

on the portfolio side, people want to get any of the projects under the way for interest rates go any higher. And that's on the one side. And then you have the side of our build, this is that position we did with global realies of support services. They, their main business has been with federal funding projects, May and Ginny Mac, and they go through three large banking incidents to do that. And they have, they've just seen some increase. So they're for jet, they're running a 17% of work where they were at the same time. So where they were at the same time.

So I was fully surprised, you know, I was always under the impression of interest to go up and maybe that transactional business goes down. We do see some softening, we're not very much of it, we do see softening of that in the red market and that's reflected on our municipality business. And so, but as far as a key component setter than by the real estate environmental transaction business, it's really coming from those two sectors.

And I thought I may have announced there, I said, we've had an 80% growth in environmental. It's really growth came from that real estate transaction business, those two key components.

Great, thank you. One other question, and really for ad here. Looks past four quarters we've seen subconsultants of the percentage of growth revenue at an eligible relative to.

you know, as to what numbers. Here's if there's a specific element of the business that is did that and help us understand and then secondly, the other direct cost which I was reimbursed and as an L of past two quarters was also prepared that there's a specific demand. It was also prepared that there's a specific demand.

Yes, so respect to the subconsultants, it was really primarily by, do you recall the GRS acquisition was at the very end of last year. And so when you, year over year, you're going to see the impact of that. There as a percentage of consultant costs are about 55%. Of course, they have markup, they just tend to outsource a lot of that. And the other aspect is just the natural cyclical nature of the business and how that.

You know changes throughout the year, but that's more temporary in nature and Jeff. I'm sorry the second part of your

The other direct cost line, which I believe is reimbursement.

Right and that's where that's more attributed the LNG business just to have pass-through cost as They build out their their projects some of that flows through that other direct cost and so that that will Kind of change the year, but it's it's not something that we'd like to stay at that at that rate

Got it. Appreciate the help.

As a reminder, I'd like to ask a question at this. Please press star, followed by the number one on your telephone keypad.

Your next question come Mark Radick, this your line is open.

I agree with you one.

Hi Mark.

I think I heard that you have your mark there, and so I want to take advantage of that if I could. And it sort of asks us kind of what we're seeing with Giospecial especially, and maybe we take into a consideration the G01 acquisition. It seems as though, at least for the outside, it's the opportunity to continue to build on the service offerings. What it kind of looks like in the position of being a candy store. I think if maybe it's an update, it's sort of.

not just with gel one, but some of the other entities that we might see with geospatial.

which are one but some of the other enemies that we might see with geospatial. We are facing on...

Thanks Mark, good question. We are focusing, you know, I'll be, we look for very good companies and we have quite a bit of acquisition opportunity in that line. But as far as geospatial, we really think it's looking a platform to grow in the air that we want to grow. And but you'll, you know, we'll focus some acquisitions that are coming up that will really grow further our geospatial service line. And thanks.

The EO-1 really helps with analytics and they do a lot of acquisition work, but they were stronger analytics and they take data and make that data usable for their clients and that's going to be a big help for the Grozation Plus. It's going to be a big help for the Grozation Plus.

You took client that here before, if not had much to do with. So we think that's really gonna grow or get through the expansion and then the network and are being introduced to new or client. As far as other opportunities, the real defreator in geospatial is not so much the acquisition data, but it's actual analytics of that data. And I think we're very strong that way. And we're looking for opportunities that may hold the pieces.

in the area. As I said, Mark Abado is on the phone now and he knows very well what we're looking at of quarter and things we just can't. He kind of knows all this.

He has really been really been on our software and analytics and being up to speed. You can just give a little chat.

Yeah, I think what I would add is that the sub-arce solutions are targed toward the environmental sector as well as infrastructure. And I'll include utilities. And I'll include utilities.

in infrastructure. And I think those are two highly attracted and growing markets that are relying more and more on technology to manage the natural and the as built environment. You don't need much further than the infrastructure built to understand where funding is going, whether it be transportation or resiliency, certainly from an environmental standpoint, the RISD programs are aimed at.

coastal environment and the nation's grid, transportation solutions, water availability, flood and land-wide threat detection. They're all just great examples where geospatial access can certainly make a difference. And the other thing I'd say is at the same time, geo solutions are highly relevant in developing clean energy sources like wind and both on and off.

carbon sequestrate capacity and identifying and managing critical mineral stores that support energy transition and emission goals. I think that our solutions and advancing technology is really well beyond the acquisition, as <expletive> was just pointing out. It's on the analytics and the insights delivered through geospatial solutions. I think you described it very appropriately. We are something like candy stores.

And then I guess my question is, and it's really more of a big picture when it seems though, you know, it's one thing to sort of have growing back log and only the new dissensors that are on a regular basis. I was wondering though, it seems though, given the environment that were functioning ahead of, you know, funding visibility. There's one thing you can talk a little bit about.

That backlog is not just a number. It certainly seems as though, relatively speaking, relative to history, it seems as though you might be in a position where not only do you have a numerical visibility, but this may be more certainty from client activity. Or maybe you could talk a little bit about, a better way to put it, maybe is the crystal ball a little cleaner now than it would have been in the past, given sort of maybe hearing from customers and what plans are and does that allow you to...

to sort of manage your side of things, whether I'm a S-G-N-A line and go opportunities as well.

side of things, whether I'm a S-GNA line and go opportunities as well. I like to.

say that old saying I see said the blind man. Anyway, I don't know what discipline we have. I'd like to speak to how we record backlog, and this has been over the years. I mean, if there's anything that's important to us, our backlog's really aligned with the budget. It's not indefinite quantity, it's not something we're gonna do over three or four years to just work. We feel.

comfortable with that we'll do in a rolling 12 month period. So we rely on the backlog and a number for backlog that we have been over the years is backlog usually represents 65% of the budgeted revenue that you plan on doing that means 65% of that is already maintained.

And then now, the get piece of that would be the balance of that. Right now, if you look at the backlog we have, it's 185,000, and our new guidance for slightly over 800 million, that's running closer to 80%. So we feel comfortable with the work that we've booked and that we will do that work in the next 12 months. But you know, something happens. Something stops on...

Some work is not projects may cease, but then again, others come in. So the longer we have, or the better we have as a percentage of the get portion being lower. So 65% if you've got a now, turn on getting a 35% additional, that is a little bit more difficult than 80% and then having to get 20% additional. So we know we're comfortable with the backlog.

We think we can see things a little clearer as we grow. And I watched the backlog very carefully. And so that tends to give a good indication of what we, of the guidance that we give. So I don't want to add answers to your question, Mark. But that's kind of how we see things and we hope to improve on that.

That was very helpful. Thank you.

That was very helpful. Thank you. Okay. Thank you.

At this time, this concludes our question and answer session. I would now like to turn the call back over to Mr. Wright for closing remarks.

Thank you, operator, and thank everyone for listening in and let me do this two ways. We want to thank our clients. We want to thank all of you that are listening. And even more importantly, we want to thank all of our employees that are the ones generating this work and doing the work and performing. And two things, we need to perform, we need to do work that we can really add values to the clients so I want to thank our...

are people for doing that. You see that we're growing. You see that we, once again, I want to thank everyone for a very good and successful quarter, but I just like to maybe comment on what is fueling our ability to grow. I think you have to grow as a company, and if you're not growing, then you cannot fulfill all of the promises that you make to those people that we mentioned to you.

it has to have the ability to grow. So we want to now do those.

acquisitions of companies joining us that can be very strategic and really help that organic growth so We grow through companies that we integrate we grow through acquisition, but more importantly We grow by having strong operations and strong business units, and so I want to compliment everyone for doing that But that's you kind of see that's our business You know our business is not something that is dependent on

economic times. I mean, obviously, we tend to be in the public sector. We tend to have businesses that are not as reliant on what is done economically or what is the commercial thing. But the second thing, and you heard Ed comment on that, and it's in our slides, we want to be leverage light. We want to have a business with cash, which we have. We want to have a business that can support our growth. b

financially and so we tend to be conservative that way.

So I just wanted to comment on, you know, what are the results? What are the things that are driving those results? So if you look at us look at how we grow the company, look how the acquisitions that are integrated we really believe in integration and then what is our ability to help those companies and expose them to the network. So the last comment I'd like to make is one of that ways that we can be inclusive to everyone in the company.

is through our cross-selling, is through all of our offices dependent on other offices, and that's why we measure that. It's extremely important to us. So I want to thank everyone for listening to our call today. I want to thank our people that are building that, and we want to be inclusive with everyone. So you'll notice today that we had comments from our operating people in Geospatial. We had comments also and participation from our core business, and I want to thank Alex Hochman and Mark Abato for joining.