Q4 2022 NV5 Global Inc Earnings Call
Good afternoon, everyone and thank you for participating in today's conference call to discuss N V. Five financial results for the full year ended December 31st 2022 joining us today are Dickerson Wright, chairman and CEO of MB five Edward Codispoti CFO of N V five and Richard Tong Executive Vice.
President and general counsel at N V by Ey.
I would now like to turn the call over to Richard Tong. Thank you operator, welcome everyone to NV five full year 2022 earnings call before we proceed I would like to remind everyone that today's discussion contains 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 actual results to differ materially from these statements are included in today's presentation slides.
Ports 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.
W. Dot <unk> Dot com. Please note that unless otherwise stated all references to fourth quarter 2022 comparisons are being made against the fourth quarter of 2021 and any references to full year 2022 comparisons are being made to full year 2021, and this presentation. <unk> has included certain non-GAAP financial.
Measures as defined in regulation G promulgated under the Securities and Exchange Act of 1934 as amended.
non-GAAP financial measures included in this presentation are adjusted earnings per share and adjusted EBITDA.
<unk> provides non-GAAP financial measures to supplement GAAP measures as they provide additional insight into enterprise financial results.
However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation 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.
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 and on the investors section of the company's website.
We will begin the call with comments from Dickerson Wright, Chairman and CEO of <unk> before turning the call over to Edward Codispoti, Chief Financial Officer for a review of the.
Full year 2022 results. So Kristen Wright will then provide closing comments before we open the call for your questions. Dickerson. Please go ahead. Thank you Richard and welcome to everyone. Joining us on the call I would like to turn your attention to the investor deck, we will be using for our discussion today, which can be found on our investor website.
So let's begin by going to page five of the deck, which summarizes our successful calendar year 2022, we generated 11% growth in gross revenues. Despite the historic acceleration of interest rates throughout the year. For example, federal funds interest rates were at less than 1% in January due now over 4% in December of <unk>.
2022.
This increase had an impact on the portion of our businesses.
Interest rate dependent.
Namely real estate transaction services, which support portfolio transactions as well as our municipal service sector.
In spite of these increases in rates, we still experienced a 5% organic growth across the other segments of our businesses.
We are particularly pleased with a all time growth and profitability of our Geospatial service vertical. We're also pleased with the intercompany services. So between all of our 105 offices obtaining over $37 million in contracted sales business across the platform for 2022, we're very optimistic for 2023, we anticipate in <unk>.
Increase in organic growth, particularly from our high EBITDA services in geospatial and utility services.
We also anticipate our best year to date and mergers and acquisition activity in 2023.
Our organic growth in 2023 will be supported by strong backlog entering the new year.
We anticipate organic growth to be 6% to 9% for 2023 now, let's turn to page six I would like to report the acquisitions, we made in 2022, which strengthened our platform to allow for increased growth in 2023.
River City testing supports our current construction quality assurance or <unk> platform in southern California, and reinforces our services to a large client base in Riverside, San Bernardino and Orange counties.
The acquisitions of K K.
Intrepid engineering further supports our building technology and energy conservation services as well as giving any five a high profile to the hospitality industry, which expanded audio visual services in the year.
The acquisition of <unk> in the summer of 2022 allowed us to provide geospatial services to more southwest utilities, providing services that support the utility grid stabilization as well as mitigate the wildfire risk for providers of energy as I mentioned earlier, our M&A activity in 2023 is that a record base, having announced three acquisitions.
<unk> to date as our service verticals mature we can be more selective in our acquisition targets. We have the luxury of selecting high EBITDA or organic growth companies that support our current offerings.
For example.
We feel there is an opportunity further grow our owner's representation services.
So, let's turn to slide seven as you can see we have made an acquisition in this space in Q1 2023.
<unk> consulting solutions specialized and representing education facilities in the mountain West region.
We anticipate further acquisitions in this space in 2023.
We're also very excited about the large geospatial services acquisition that we have done this year on.
On page eight the <unk> Harris Geospatial Division, it's a subscription based revenue providing service to government and commercial clients.
This acquisition and 5% acquired 16 patents and other well known analytical products. This services provided by approximately 150 employees, serving 500000 global users.
Also as you know <unk> has wanted to structure the analytics portion of our geospatial services to a subscription based lease service model.
From a onetime sales mode. The acquisition of <unk> III Harris Geospatial component facilities. This endeavor the acts of geospatial acquisition aligns very well with our existing geospatial business.
It adds further defense and intelligence clients and further aligns with our software based initiatives.
<unk> 340 employees in over 200 proprietary tools for mapping and aerial survey.
We are excited about this acquisition as it dovetails and supports our existing geospatial services.
Good day review the progression of <unk> and growing our geospatial data solutions business on slide nine you readily see our entrance into this service line with the acquisitions of Sky seen in 2017, and our recent acquisitions about three Harris geospatial and Axel.
This progression now makes <unk>, the leading provider of geospatial data solutions.
We're excited about the growth opportunities for 2023, there is an increasing demand for infrastructure improvements as the population grows. Although there is an increased demand for energy it must be deliberated very clean and efficient way.
The concern over global warming increased focus on defense energy distribution and alternative energy production have all caused an increase in the demand for the services that <unk> provides we are further encouraged for 2023 based upon our ever increasing backlog, which is now approximately $800 million reflects only work we intend to do.
Due in 2023.
You'll notice on slide 11 that the backlog entering 2023 includes some key wins at a reference on the right side of the page.
I will now hand, the presentation over to our CFO , Ed Codispoti to provide an overview of our full year 2022 performance.
Thank you Dickerson and good afternoon, everyone.
If you would please turn to slide 13 of the presentation I'll review, our 2022 financial results.
Our gross revenues increased 11% to $786 $8 million.
<unk> to $706 7 million in 2021.
Net income increased 6% to $50 million in 2022 compared to $47 1 million in 2021.
Our adjusted EBITDA increased 2% to $135 $2 million in 2022 from $132 9 million in 2021.
Our GAAP diluted earnings per share increased to $3 27 per share in 2022 from $3 22 per share in 2021, a 2% increase.
It is important to note that our GAAP diluted earnings per share were impacted by $5 6 million of acquisition related costs of which $3 million related to contingent consideration and $2 6 million related to professional fees.
Of the $5 6 million of acquisition related costs $4 7 million was incurred in the fourth quarter.
Our adjusted earnings per share increased 2% to $5 19 per share in 2022 from $5 11 per share in 2021.
On Slide 14, you can see that our cash flows from operations during the year were $94 million. It's.
It's worth noting that this year there was a change in the tax law that required research and development expenses to be capitalized and amortized for tax purposes, instead of deducted in the year incurred.
As a result, we paid $9 4 million of tax related to these R&D expenses that we did not have to pay all at once in the previous year.
These are not additional tax payments, but rather a matter of timing across periods.
Cash on hand was $38 5 billion and our net leverage was down to 0.2 times compared to 0.6 times at the end of 2021.
Moreover, we have capacity under our line of credit of $358 million as of the end of 2022.
Our strong balance sheet position healthy cash flows and lower net leverage position us well for future growth as it allows us to complete larger transactions as opportunities arise.
I'll now turn it back over to Dickerson for some closing comments.
Thank you Ed our outlook for 2023 is Brian you will notice on slide 16, three key factors that support our optimism for.
Organic growth mergers and acquisitions and margin growth. We therefore are setting our guidance of 878 million to $950 million in revenues GAAP EPS guidance is set at $2 93 to $3 33 per share and adjusted earnings per share guidance is set at $5.
28 to $5 69 per share.
Thank you Sir we will now begin the question and answer session to ask a question at this time press Star one on your telephone keypad to withdraw your question Press Star One again, we'll pause for just a moment to compile the Q&A roster.
And our first question will come from the line of Jeff Martin with Roth MTM. Please go ahead.
Thanks, Good afternoon guys.
Hi, Jeff. Thanks, I wanted to just wanted to drill down on Q4, a bit revenue was about.
15 million below consensus or so obviously, you probably have some headwinds.
Real estate transactions business, but there are other areas, where you saw some either delays or.
Or the contracts that you thought would come in and that didn't come in quarter.
Yes.
That is correct.
Jeff.
I just want to maybe comment on the consensus there is of the analysts that we had one analyst that was.
We consider an outlaw who is significantly above the other five analysts so that kind of brought the consensus.
Higher than was expected. However, if you use the Bloomberg consensus we were actually above the analyst consensus, though it's really a matter of what youre looking at that does not say that we did experience significant headwinds in the fourth quarter, we had a tax rate of 30%, which was up was the highest that we've had before and we did see.
It's significant.
Drop in in the real estate transaction business, which as you know, it's a portfolio business.
Normally a very good reoccurring revenue streams, whether it's highly impacted by the increase in interest rates I mentioned in the comments concerning the interest rates. The real interest rates that are transactional service businesses using was more like six 5% interest and not the 4% that I used had mentioned in the federal funds. We also had some.
Delays in our geospatial business, which you'll see.
Recovering in those work projects that were just delayed because of funding that were moved over into the first half of 2023. So no all of those things combined made us we had a very good year, but our fourth quarter was.
On what frame of reference you used was either above or under analysts expectations.
Okay. Thank you for that and then two part question for my other question.
<unk> is.
In terms of the guidance what kind of assumption is included in that guidance for the recent acquisition, namely DSI in action.
And then second part of the question is.
At the midpoint Youre guiding revenue up 14% over 2022.
Just looking at obviously, you got an interest expense impact.
The EPS growth this year, but.
What is what is adjusted EBITDA growth looks like I would imagine.
Somewhere closer to that 14% at the midpoint of your revenue guidance. Thanks.
Al mentioned the first.
Some comments and I'll certainly added sitting next to me and he can he can mentioned some other ones concern a exact nature.
First I think you need to consider the increase in share count when you look at when you look at the earnings per share non-GAAP adjustment and I think we increased our share count by about 600000.
For the year. So that's of course those are in interest spread over a larger share count as far as the gross revenue.
Yes.
We had to take into consideration not knowing.
And I'll mention more of that in the concluding comments, but we really don't know when we can expect.
The revenue coming from the <unk> III Harris acquisition, which we are waiting on the government approval in October we have maybe another 45 days what is baked in there suggest a a rough estimate of what we expect.
Revenue from that acquisition and then more definitive we will be revenue, we expect from the accent acquisition, which we did get government group.
Which was up.
Hart Scott Rodino, we did get approval and so that revenue was contemplated to be.
Roughly from March on on their annual run rate basis. So.
And it has to really be definitive and what the acquisition revenue is it is it going to be a little bit difficult because of the government approval, but.
In that in that guidance, we do have the acquisitions that we.
We have made to date and when we could start to.
We can look for the impact that.
You may have some other comments I think thats.
Just to add some more color to that.
Assumptions for the guidance, Jeff we're really.
Mid single digits on organic and then layering in as <expletive> said axiom in March and then the.
The <unk> III Harris acquisition.
Sometime in the second half of the year.
Your question on EBITDA than what we would anticipate there as you know we had $135 million of adjusted EBITDA in 2022, and we would expect to be somewhere between 150 and $160 million next year.
Very helpful. Thanks, I'll pass it on.
Your next question comes from the line of Chris Moore with CJS Securities. Please go ahead.
Hey, good afternoon, guys. Thanks for taking a couple of questions.
Just can.
Can you remind me on the real estate transactions.
The revenue that was generated there in 'twenty, one versus 'twenty, two and kind of how youre looking at 'twenty three.
Okay, I'll, let Ed comment on <unk> front from what we had in revenue I can say this though.
Budget for 'twenty three shows in those two sectors that are the real estate interest rate dependent and a portfolio of businesses, they're showing roughly a 14% degradation from the budget last year. So we had in our organic growth we had to overcome the 14% degradation in the budget, but Ed asset specific numbers on where they were in.
Yes, essentially so just to give you an idea Chris.
2021.
Was about $47 $5 million or so.
That had a little bit if you recall, we acquired <unk> at the very end of 'twenty, one and literally I think it was the last week in December and so when you combine drs in Bakken Clark.
2022, those those combined revenues were 71 million.
Millions or so $71 3 million and as far as what we're forecasting for next year, where we're forecasting about.
<unk>, 7%.
Decline over 2022.
And that's already we saw some of that already in Q4, and so when you look at the full year 'twenty two versus 23, we think that will be about a 7% decline so that maybe there'll be in the mid $60 million range and that's been that decline has been factored into our guidance already and so as a whole that part of the business. Although it did.
Have those headwinds represents less than 10% of the overall business about <unk> about 7% or so.
Perfect very helpful.
And I know you don't the timing is uncertain on L three and axon body.
Can you give us a sense in terms of what leverage will look like once those once those deals close.
Absolutely and actually with respect to axiom that that one as you know did close yesterday. So that one is in the bag and the one that is still subject to regulatory.
Approval in some of those are international is L. Three Harris, so we're factoring that into the second half as I said, so now with axiom.
We were at 0.2 times Thats, what we said earlier as of year end in terms of net leverage with axiom will be.
About one to one one times net leverage.
With BMO will go to maybe about one five or so.
And then of course.
Depending on.
Projects going forward, we would like to pay that down over time, I think very very meaningful.
The thing to note is that when you consider that leverage that we just talked about and think about it in terms of the guidance that we've given.
There's about a 50 cent <unk>.
Tailwind that would be available to us once we pay off all of that in other words that net interest expense.
You convert to earnings per share if we can pay down the debt that we've leveraged as part of those two acquisitions, we've got 50.
That would basically be.
The incremental on top of that that EPS, if that makes sense.
That makes sense perfect I'll leave it there thanks guys.
Welcome.
Your next question comes from the line of Rob Brown with Lake Street Capital markets. Please go ahead.
Hi, good afternoon.
Hi, Rob.
Just wanted to talk to your comments on the on the <unk> business. I think you said, it's a subscription business is that as all other revenue subscription and sort of how does that work and I presume. It is.
It grows it.
Well.
Yes.
They don't do any.
They don't do any true acquisition work on the Geospatial services. So most of their work is analytic software based and that most of that revenue is subscription based theres some unit price contracts, but are good.
Majority portion of their revenue is reoccurring and it's basically it's basically on the analytics side of the geospatial and that's why we think it does very nicely with our existing geospatial business, which has two segments that has the acquisition side of it flying over mapping deepwater measurements and.
The analytics cyber side, the <unk> Harris is mostly analytic mostly software where and I am going to Youll notice in my concluding comments I mentioned that we did get the 16th patents that theyre doing and really some well known software that we will be using to support not only not only the existing clients.
But we hope to present them to some of the clients that we're doing in our traditional geospatial services.
Okay great.
And then the M&A pipeline, you talked about being active in 'twenty three you've closed the number already is that to imply there is there additional kind of.
As acquisitions coming Michelle.
Acquisitive and.
I hate to be giving showing my age, but the longer we're in this business the phone rings and right now we have.
A number of ongoing opportunities some that we've submitted term sheets for somewhere in due diligence but.
I would look.
One we think one in specific supports are really growing utility service businesses, but most of the acquisitions will not be a platform base, but mostly acquisitions that will support our existing platforms and we right now what we see in front of US is acquisitions in the core business and in the energy efficiency business.
And what we are calling our owners' preference that patient business I think we announced one of those acquisitions yesterday.
But mostly the smaller out of traditional.
Okay.
Thank you. Your next question will come from the line of Andy Wittmann with Baird. Please go ahead.
Oh, great. Thanks.
Sorry, I just wanted to try to understand the guidance a little bit better here on the revenue side with the acquisitions and the organic growth rate, but if you look I guess just doing some math here, it's 6% to 9% organic growth rate.
Suggest youre getting youre total growth rates are about eight to 12 or so.
Get to 3%.
From the acquisitions, implying about $15 million or to $30 million of acquisitive revenue does that seem like the right number that's embedded in your guidance or am I missing something or is that the right number for those two acquisitions.
And the interim in terms of the organic and the guidance itself.
The low end is.
The midpoint is closer to 5% it doesn't mean that that's what we're targeting we think it's very possible to do more but the midpoint is closer to that 5%.
The midpoint of organic guidance is 5% I'm sorry, yes.
Yes, that's correct, yes, okay. So what was the what was the comment of 6% to 9% in 2023 then.
That's it that's our target as a company we are striving for more of the guidance. We've given is.
A range that goes.
The midpoint is closer to five the high end.
7%.
Okay, hoping to BMO.
Exactly.
Domestic.
We hope to be.
Ed gave you what we're giving guidance at 5%, but we hope to do better than that.
Okay got it.
And then just maybe Ed just given that interest rates are moving.
And you've got these deals which have closed and are closing can you just help us with what the interest expense maybe quarterly run rate is embedded in that adjusted EPS recognizing that you could get.
That number could wind up in a lot of different places if we don't kind of explicitly put it out there and there would be helpful for everybody on the same page.
It can and what makes it it can vary like you said, obviously rates are all over the place these days, but.
And it's also going to be dependent on when these deals close in the case of axiom that one closed yesterday, so we know that.
L. Three Harris would be later on so that depending on when that leverage falls into place that would affect the overall interest expense.
We're factoring in about.
<unk>.
Seven $5 million or so for the full year I can say that Andy and.
And we were just shy of 6% interest and so to give you an idea.
We are.
Im sure Youre aware of this but our current facility is.
LIBOR base will be changed in order to sofa soon.
It's LIBOR based and our.
Our rate is 1% on top of that LIBOR rate. If we go to a one five times leverage then it's 125% on top of the LIBOR rate. So it will be somewhere in the 6% range is what we're factoring in.
Does that help I think.
I gave you the yes okay.
Yes, no that's.
That's totally clear and actually a LIBOR plus 125, it's pretty attractive borrowing for our credit facility in this industry. So.
That is actually helpful. So I appreciate that and then I guess my last question is just on the interest rate sensitive parts of the business.
You quantified the real estate business in the prepared remarks that there was another business. Besides the real estate transaction services that is interest rate sensitive I don't know if I heard it right or maybe I just don't understand what that business is I think he said municipal services I guess, maybe can you talk a little bit more about that in the size of that business. In 2022 was that included in the 71 million.
Net debt debt Ed quoted or is there another piece of revenue those attached to that that should be aware of that was not included in.
Initial services.
Business itself is buried within our infrastructure business, but let me explain why that is interest rate dependent and what that is it is the services, where we become the actual building departments or outsource for malls small municipalities around the country. As you will know their revenue depends on building permits.
Our fees are based on a percentage of the building permit and obviously as interest rates go up there is less building permits because theres less housing is less many many things that that are are dependent on interest rates. So building permits can be commercial or residential.
But so they will be impacted and they are impacted by the revenue they get from building permits in which they.
And which they pay us so that piece of the business, it's true it's a little bit.
Harder to quantify but if you look at all segments of the business, it's probably somewhere.
Under $30 million of about $30 million that you would add that too.
<unk> transactional businesses that were.
Where our portfolio of business of which.
Ed mentioned.
Okay. That's very helpful. Thank you very much.
Okay.
Your next question will come from the line of Michael Feniger with Bank of America. Please go ahead.
Yeah. Thanks for taking my questions everyone. The mid single digit organic growth outlook are there just any other verticals that you would flag that are slowing beyond the.
Municipal portion you mentioned in the real estate transactions I guess I'm, just trying to get a sense that with infrastructure clean energy utilities grid.
What is holding back this organic growth being more than just.
5% in 2023.
Well I think the midpoint that Ed gave you was 5% but <unk>.
Michael you have to understand when you have an erosion in some of the existing business and to grow the rest of the company you have to overcome the erosion of those sectors. So.
We are being conservative in that but the only real areas that are tremendously in our business <unk> rates are the ones that I mentioned, our geospatial business is growing at double digits and some of our other verticals are growing very significantly and we expect significant growth in our businesses that represent the facility.
Construction, and which you call our owner's representation business and we're going to speak a little bit more in my concluding comments on what we look forward to and growth in our core engineering business, which.
Alex Hockman this year will be speaking on and then also in our internationally.
Energy efficiency business, but the most the business that is impacted the most.
Has been the ever increase in interest rates and we're just not tremendously dependent on that we have other verticals all of the business is growing very well, we just have to overcome some of that as those interest rate sensitive businesses.
Alright.
The business is you're overcoming a day higher.
Higher margin than the core I guess I'm, just trying to get a sense of why.
When you look at EBITDA margins why wouldn't be we wouldn't see more benefit from some scale. There in 'twenty three based on based on the ranges. You provided is there any mix that we should be thinking of in terms of the growth and the profitability there.
Okay, Let me unpack your questions there if I could.
U S.
There is obviously some of those verticals are more profitable than others and it depends on how theyre measured our geospatial business requires a lot of equipment. So there. So thats a true EBITDA business, our core business, our engineering services business and other segments are not as capital intensive for our equipment.
Intensive however.
The higher profitability of our business I would say that our real estate transaction services business was probably on the higher end of EBITDA contribution than some of some of the existing businesses that were not affected by the interest rate, but overall overall you will see.
In 'twenty three we expect to see an increase in our profitability.
Any way you would like to measure that and that kind of shows that for us. The strategy that we have of having services provided in a number of different verticals that are not as dependent on.
One one client or one base of operation.
Great and just lastly is there a share count number that we should be thinking about for 2003.
Just like as we all try to make sure we're modeling the moving parts right and the 70% conversion from cash from ops that you guys did.
It was really it was good to see I mean, how do you kind of think about that for 'twenty, three and we think of the cash flow. Thanks, everyone.
Okay.
Youre welcome yes on the on.
On the share count when we look at next years.
Shares outstanding were.
I would model in around $15 million and $5 50 or so.
As you know for 2022, it was 15 million $2 60.
That should give you an idea.
I'm sorry, what was that there was another question.
And it was just on the cash flow what do you think some remote yes on the cash flow.
Yes.
Paul.
We're adding as you as I mentioned earlier our EBITDA.
Was $135 million adjusted EBITDA was $135 million in 'twenty, two and with these acquisitions the way we've modeled it into next year that EBITDA is going to range is going to be somewhere between the $150 60 range. So we see a significant increase projected for adjusted EBITDA Capex should stay pretty.
<unk>.
Pretty consistent and so I would expect cash flows to improve and in addition to that when looking at it from a cash from ops perspective, we had working capital of that.
Was.
Bringing that number down not from a cash flow.
Perspective per se, but just a timing issue so yes.
Yes, we are.
Very optimistic about.
The growth in cash from ops going into next year.
Our 2003.
Great.
Your next question comes from the line of Chris Sakai with singular research. Please go ahead.
Hi, I'm in for Dave.
Just two questions.
What type of economic environment.
Is your guidance predicated on and what happens if we slip into a recession.
Well.
Very good question, we have always structured our business not to be.
Dependent on the economy. So to speak obviously, we have a very profitable business that has a small portion of our business, which is subject to interest rates, but most of our businesses is infrastructure supporting labor and so.
Supporting services that comes about through increased population as you know in.
In the macro look at things that population will grow to $8 billion, but people still need to drink clean water and they still need to use the facilities. They still need to go for bridges. They still need the driver a Gulf of roads that are that are are safe and all of these things are supported.
By a population as separate increasing so our business is not really dependent on economic cycles. We have a very good solid budget from our transactional real estate business and as you heard we're not expecting tremendous growth in that area, but overall, we think we have we have some tailwind.
At our back because of our business is really structured to support mandated services and not services that are dependent on economic cycles.
Okay and then.
Yes.
Why why is the revenue growing faster than EBITDA can you comment on that.
Why is the revenue growing faster than EBITDA.
Right I certainly less.
Hey.
Yes, I mean, we are more profitable.
Our growing pieces of businesses and I'll speak a little bit more on the geospatial business, which is an EBITDA is very profitable, but as I said is more dependent on the Dol portion of EBITDA, the depreciation and amortization, but as you see an increase in that it really depends on it is the growth of services that we have.
<unk> that are more profitable.
Okay.
Okay. Thanks for those answers.
And as a reminder to ask a question. Please press star one. Your next question will come from the line of Marc Riddick with Sidoti. Please go ahead.
Hi, good evening.
Hi, Mark.
So I was wondering one of the things that we've talked about in the past or some of the costs servicing and selling opportunities just wanted to sort of bring us up to speed on maybe what your thoughts are as to maybe what or if there's a.
A specific goal.
You've had historically.
There is a goal that we should be looking at and how that might layer into the new acquisitions coming.
Well I'd like to say that our cross selling has been doing very very well I think our goal is $40 million.
Total contracted revenue for this year, which turns out to be about 700.
700.
<unk> per week.
But I want everyone to realize and to know that that is for total revenue over the life of a contract.
We also look for contributions in revenue and earnings that will actually go to 2012, but we strongly promote our cross selling I have a call tomorrow with our axiom folks and that's the very first thing that we looked at and we love the idea and I'll mention that in Iclusig closing comment theres not a lot of <unk>.
Location in services, but we really promote the cross selling our services between offices and network and delivered by the common ground that we have but no I think thats. The goal is higher this year its $40 million. We didn't have it we had it and then didn't have it on the investor deck, but there's no specific reason other.
Then to say that we really want to concentrate on the.
Work that is being done in cross selling that contributes to revenue for 2012.
Okay.
Okay, Great and then I was wonder if you could talk a little bit about putting aside the acquisitions are there sort of any thoughts or update us too.
<unk>.
Personnel needs or investment spend around technology is there a head count goal that you may have given the opportunities you see it before you visa B also recessionary concerns are the like how should we be thinking about sort of you need to add.
<unk> organic talent.
And in the year ahead.
Well Mark Thats, a very good question and the reason it's such a good question is im going to touch on that and are concluding comments, but I think that.
Right.
And our Oregon, and our organic growth, we have a number of corporate sponsored initiatives in which we.
The Corporation supports the operations and growing an initiative that will really grow organically. The business. So we have specific things were going on that attrition is always an issue, it's always something and we've addressed that by having.
Enhancing our recruiting staff, we have a dedicated recruiter just for our utility services business because obviously.
A vast majority of our fees are based on our.
Our unit price basis, and if we don't have the person the billable person we won't have that revenue. So that is a concern I think we're addressing yet so its twofold. One is protecting the budget and the existing revenue we have and then initiatives that will support our operations and growth that they would like to do.
For the year.
And how that works.
I'll mention a little bit on and are completing including comments, but how that works is.
We have research and development budget, and we have initiatives to grow the business and we get 30 or 40 solve them a year and we picked three or four that the corporation can support without any effect on that operation and until they can stand by itself. So I mentioned in my concluding comments some of those initial.
And I am sure.
Both Alex Hockman and <unk> will comment on.
Some of the positive things, we're looking for it to grow.
In 2022, but yes staffing attrition is important and we're addressing that but also we're looking at new services that may be that separates us from our competition. Our gives us entre into an area that we havent had before so you will see that what we're doing in initiatives that hopefully I mentioned that.
And touch on those and are concluding comments.
Excellent. 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. Thank you operator first I would like to thank everyone for listening today and those who participated in in the call. When we reported our full year 2022. Our results. We're very pleased with that we're very pleased in this economic environment to have a positive year.
That was the past.
We now look forward to what we're going to do in 2023, and we are very excited about and we anticipate a very good 2023 with increased growth over what we did in 2022.
We want to support this by those initiatives that I, just mentioned and we think those initiatives will get us to the organic growth that we are that.
We would like to have for the company and I mentioned that 6% to 9% and you saw what Ed had said about the mid guidance up 5%.
<unk>.
We want to support this organic growth not just in the M&A activity, but initiatives that we've had for this year.
Designed to really help our operations and our new markets provide new services.
Our strength and maybe some of the existing platforms. They have so.
I would like to mention if I could.
Some of those key initiatives and some of the things that have been successful in the past.
<unk>.
One of the initiatives that we have this year is to increase our.
The amount of activity with departments of transportation all around the nation, we have.
A resource group that is with expertise in each of the areas and so we are supporting an initiative that will hire someone that will support.
Specifically support that.
The department of Transportation growth. We also have an initiative that for geotechnical expertise and services that we will want to expand in new geographic areas and Thats. Another of our initiatives. We also have an initiative.
<unk> four is initiatives the third initiative we have is.
Is to support a reoccurring revenue stream and we're supporting initiative in our geospatial area that will lease if you will the analytic services, we're doing rather than a onetime sale to the client. So we really feel that this initiative will support.
The reoccurring and stability of the revenue and perhaps grow their revenue too. We also have initiative that will maybe speak more on later, but that is initiative and our energy.
Patiency area that will support and promote a carbon growth reduction and.
And help us in the in our surfaces service offering that has.
We will reduce the carbon impact and so that's an initiative that we were.
We are supporting I'd like to mention a couple of things that we're doing now that have been successful and now are in the operations and show growth. If you remember if you go to the first page and our web.
Our presentation Youll see a shift there and that has a logo that hopefully you'll recognize it says <unk> five in the site, we purchase and built that in commission that boats, specifically to do deep water oceanography mapping.
And we don't know no one on the east coast that will have the capabilities to do this and this is supported by an initiative we have done for our Geodynamics Ocean, Eric aggregate group, which has been growing significantly and will support our wind the wind farm initiative and will support many things and so that is one of the things that was supported last year by corporate and is going to.
Full action this year.
To grow that group, we also have had a initiative.
Fire mitigation for the West in one major utility, we supported a technical expert and a person with a client relationship to grow that and know that budget has grown from last year and this year's budget of $5 million in revenue. So we really feel that it's important to constantly.
Support <unk>.
This organic growth that we have I think.
So we're looking for those.
To grow we look for the support from the from our corporate support services do that.
I know we've been speaking a lot of the opportunities we have with.
With the acquisition, so I wouldn't want to speak a little bit about that later, but I think it's really good for you to understand how we view, what's going to be happening with our engineering services group, which is by far the biggest portion of our business. So Alex Hockman will report on what he anticipates in 2023 and some of the things that we're looking at.
Forward to okay.
Thank you Dickerson I'm, just going to comment on three areas, which I think highlight the.
Growth potential that we have within our core business group. The first is our utility services and with our comprehensive design services led by our utility business unit. We continue to see we continue to see high growth in investor owned utilities desire to create a more reliable and safe means of delivering electricity.
While enhancing the grid.
In addition to the fire and storm hardening benefits and other safety feature of underground Ing is eliminating the vehicle impact occurrence and allowance for system improvements to handle additional electrification demands and we will be required for EV charging stations.
One of the benefits of the <unk> team is that we provide design and consulting services from conception through construction.
Another area is water.
We see increased opportunities for water resources in engineering services earlier this month, California's Governor issued an executive order for increased capture of storm water runoff as a source of water supply.
And in the past two budget cycles, California has committed more than $8 6 billion.
To build water resilience.
We are seeing extreme from drought to flooding at our water resources group covers a full range of services to meet the mandated requirements.
And finally.
Had quite a bit of conversations about the infrastructure spending bill and we're seeing great opportunities within infrastructure.
Infrastructure projects.
Our ability to provide a full range of consulting services, including environmental Geotechnical survey several structural and many other engineering and technical services allows for NV five to engage with clients as a single source consultant able to assist with their projects for the entire lifecycle of the asset.
So with that we see great opportunity for having a very successful 2023. Thank you Doug Thanks, Alex.
You've also we've mentioned many times the international work, we're doing and some of the work that we're doing in building technical services of Ipass <unk>, who runs those groups and manage those group to give a view of what we expect in 2023.
Work that will be done and we're looking forward to from these areas in 2023. So go ahead Ben.
Yeah, Thanks, Doug our buildings and technology vertical continues to bode on last year's organic growth we've had.
Many exciting opportunities ahead of us our ability to support clients in every phase of a boating's lifecycle from master planning through operations has increased their market share in a number of sectors. Some specific highlights I just wanted to ship in 2022, our technology services group had a record year of sales and we're seeing the state to continue we remain market leaders.
In higher education, and are seeing growth into other segments, such as hospitality, notably with regard to consultants for hard rock hotels and have active projects currently in the U S, Canada, Spain and Greece.
Energy group is benefiting from very high demand in the market for Decarbonization services and were forecasting strong organic growth in 2023.
These services, including energy efficiency building analytics electrical vehicle fleet planning renewables and policy advice, often serve as an entry point with our clients, creating significant follow on projects for other offerings within MB five.
Our mechanical electrical and plumbing group's gain to Ben service is growing rapidly by converging, our geospatial Lidar and imaging expertise with MEP services. We're building new high margin revenue streams. This is setting us up for recurring contracts off the back of more traditional engineering projects.
Our international operations remain market latest in the mission critical sector with recent back to back contract wins with Microsoft Equinix advantage across multiple geographies.
New strategic wins in other sectors, including electric vehicle battery production pharmaceuticals, and semi conductor manufacturing is resulting in further diversification of our services here. We're also very well positioned to benefit from the recovery with the gaming industry in Macau and have multiple contracts already confirmed this quarter.
Thanks, Doug.
Thanks Ben.
I thought I'd, maybe want to touch on the geospatial acquisitions that we reported recently.
Got a significant com.
Comments on both the <unk> acquisition, which we announced today and as was mentioned previously we have.
340 employees of their firm joining us and really it's a national acquisition platform. What we really are encouraged with is we really don't see a tremendous.
Duplication of revenue and services Act does an awful lot with the department directly with the department of defense of which we at.
We in our normal existing and <unk> <unk>.
Special services group did not supply as much as that we also like that they are capital equipment light they do very little acquisition.
<unk>.
And are using others to provide that service and then they do the analytics and so that is a natural fit for us with axon with spatial.
Spatial services with the acquisition and I'll mentioned L. Three Harris, but with the acquisition of axiom and <unk> Harris, It makes and <unk>.
The leader the largest geospatial firm in North America.
And we really look at this as a good national platform to support our services and it has the geospatial has a tremendous support to our existing core business, our natural gas pipeline business and other business. So we are really looking forward to that a little bit I can talk about the announcement of <unk>.
Harriss, you know we signed an agreement we're waiting to close waiting government approval, which we hope will be in the next 45 days, what we really like about that services. They also are really purely analytical services and they have software and they have entrees.
Aerospace and department of Defense that we've never had before and so we really think this will enhance our geospatial support and that will really grow the growth grow the Pat from they have so with those two acquisitions, we really feel that we're in a high growth area.
And we look forward for a very positive thing so that so I thought I would just touch on on those acquisitions I really think this.
Concludes what we're going to mention today I once again want to thank all of.
Our employees, we want to thank those of you that have believed in the company invest in follow US we look forward to supporting that service. We had a successful 2022, but we're really looking forward to increase activity in 2020 early and I look forward to speaking to everyone. Once again.
In the <unk>.
In the first quarter results of 2023. So thank you everyone for your time today and this will conclude our conference.
Thank you all for joining you may now disconnect.
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