Q4 2023 NV5 Global Inc Earnings Call

Operator: 2023 ended on December 30th, 2023. Joining us today are Dickerson Wright, Chairman and CEO of NV5, Edward Codespote, CFO of NV5, Alex Hockman, President and COO of NV5, and Ben Hurat, COO of NV5.

And at December 30 F 'twenty two 'twenty three.

Joining us today are Dickerson Wright, Chairman and CEO will then be five.

Edward Codispoti CFO of N V five.

Alex Hockman, President and C O O a N V five.

Bernhardt C O O will then be five.

Operator: Dan Levine, President of Geospatial at NV5, and Richard Tong, Executive Vice President and General Counsel at NV5. I would now like to turn the call over to Richard Tong. You may begin.

Dan Levine President of Geospatial at N V five and Richard Tong Executive Vice President and General Counsel at MB five.

I would now like to turn the call over to Richard Tong you may begin.

Richard Tong: Thank you, Operator. Welcome, everyone, to NV5's fourth quarter and full year 2023 earnings call. Before we proceed, I would like to notify all participants that today's presentation can be found on ir.nv5.com and remind everyone that today's discussion contains forward-looking statements about the company's future business and financial performance, which are based on management's current expectations and are subject to risks and uncertainty.

Thank you operator, welcome everyone to <unk> fourth quarter and full year 2023 earnings call. Before we proceed I would like to notify all participants that today's presentation can be found on IR dot <unk> dot com and remind everyone that today's discussion contains.

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.

Richard Tong: Factors 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.nv5.com. Please note that, unless otherwise stated, all references to fourth-quarter 2023 comparisons are being made against the fourth quarter of 2022, and any reference to full-year 2023 comparisons are being made to full year 2022. In this presentation, NV5 has included non-GAAP financial measures as defined in Regulation G promulgated 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 EBITDA. NV5 provides non-GAAP financial measures to supplement GAAP measures as they provide additional insight into NV5's financial results. However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation, and they are not in accordance with or a substitute for GAAP.

Factors 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 <unk> Dot com. Please note that unless otherwise stated all references to fourth quarter 2023 comparisons are being <unk>.

Made against the fourth quarter of 2022, and any reference to full year 2023 comparisons are being made to full year 2022.

In this presentation <unk> has included non-GAAP financial measures as defined in regulation G promulgated under the Securities and Exchange Act of $19 34 as amended.

The 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 <unk> financial result, 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.

Richard Tong: In addition, other companies may define non-GAAP measures differently, which limits the ability of investors to compare non-GAAP measures of NV5 to those used by peer companies. A reconciliation of non-GAAP and GAAP measures is included in the appendix to this presentation. We will begin the call with comments from Dickerson Wright, Chairman and CEO of NV5, before turning the call over to Edward Kodespotty, Chief Financial Officer, for a review of fourth quarter and full year 2023 results. Dickerson Wright will then provide closing comments before we open the call for your questions. Dickerson, please go ahead.

non-GAAP measures differently, which limits the ability of investors to compare non-GAAP measures of <unk> five.

Those used by peer companies.

Reconciliation of non-GAAP and GAAP measures is included in the appendix to this presentation.

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 fourth quarter and full year 2023 results Dickerson Wright will then provide closing comments before we open the call for your questions Dickerson. Please go ahead.

Dickerson Wright: Thank you, Richard, and thank you to everyone joining us for this call. 2023 was a year of positioning NV5 for profitability and growth above industry benchmarks. In 2024, we will focus on three specific segments of NV5 for continued growth and profitability. Infrastructure has focused on organic growth with the initiatives to place our key, most senior people with direct access to our clients.

Thank you Richard and thank you to everyone joining us for this call.

2023 was a year of positioning <unk> for profitability and growth above industry benchmarks.

And 2024, we will focus on three specific segments of 95% for continued growth and profitability.

Infrastructure has focus on organic growth with the initiatives to place our key most senior people with direct access to our clients. Our geospatial segment has more than doubled.

Dickerson Wright: Our geospatial segment has more than doubled, from $136 million in 2020 to a budget of over $320 million in 2024. We will diversify our offerings to include additional areas of the market, further developing our software, and recurring revenue offerings. We anticipate further growth of our building technology group, both nationally and internationally, through organic as well as M&A growth. Now, let's turn to page 5 of the presentation deck that you have been provided with

From $136 million in 2020 to a budget of over $320 million in 2024.

We will diversify our offerings to include additional areas of the market further developing our software and reoccurring revenue offerings.

We anticipate further growth of our building technology group, both nationally and internationally through organic as well as M&A growth.

So, let's turn to page five of the presentation deck.

Been furnished.

Dickerson Wright: As you can see, we grew revenue and earnings over the full year 2022. When comparing the fourth quarter with the fourth quarter of 2022, we increased our revenues, Net Income, EBITDA, EPS, and Cash Flow over Q422. However, we cannot rest on past accomplishments.

As you can see we grew revenue and earnings over full year 2022, when comparing the fourth quarter with the fourth quarter of 2022, we increased our revenues.

Net income EBITDA, EPS and cash flow.

Over Q4 'twenty two.

Yes.

However, we cannot rest on past accomplishments, we are providing initiatives and incentives for growth in 2024, you will notice a list of these initiatives and incentives for 2020 for growth on the right hand side of.

Dickerson Wright: We are providing initiatives and incentives for growth in 2024. You will notice a list of these initiatives and incentives for growth in 2020 on the right-hand side of this slide. We are also realizing a resurgence in our real estate transaction business, owner representation business, and our environmental service offerings. Now, let's turn to page 6, where I mentioned earlier that we had positioned our three major operations with a focus on organic growth. Our building technology group will expand into new markets for data center commissioning. We will further invest in human and technological capital to expand areas of building and technology services. We're particularly interested in improving the organic growth in 2024 of our infrastructure group by placing technical experts deployed to be in front of our clients. We've improved and accelerated the recruiting process to fill open positions faster, but also to enter new areas for our services.

Of this slide we are also realizing a resurgence in our real estate transaction business owner represent patient business and our environmental service offerings.

Let's now turn to page six.

I mentioned earlier that we have positioned our three major operations with a focus on organic growth.

Our building technology group will expand into new markets for data center commissioning.

We will further invest in human and technology capital to expand areas of building and technology services.

We are particularly interested in improving the organic growth in 2024 of our infrastructure group by placing technical experts deployed to be in front of our clients.

We've improved and accelerated the recruiting process to fill open positions faster.

But also to enter new areas for our services a portion of our corporate budget will be focused on funded new initiatives.

Dickerson Wright: A portion of our corporate budget will be focused upon the new initiative. Our geospatial group has grown dramatically from 136 million in 2020 to a budget of over 320 million in 2024, with 11% of this growth being organic in 2024. We will focus on strengthening our analytical capabilities by expanding our software and recurring revenue model. We have also strengthened our data acquisition capabilities of our geospatial business with capital expenditures. Please return to page 7, where we will discuss two specific acquisitions that will help grow NV5 in 2024. CHW was acquired in January of 2024 to expand our infrastructure platform in Florida. Their 130 employees will be fully integrated into our existing Florida operations and strengthen not only our existing serving and transportation capabilities, but we'll also introduce 75 to 4 new geographic locations.

Our geospatial group has grown dramatically from $136 million in 2020 budget of over $320 million and 24 with 11% of this growth being organic.

2024.

We will focus on strengthening our analytical capabilities by expanding our software and reoccurring revenue model we.

We have also strengthened our data acquisition capabilities of our geospatial business with capital expenditures.

Please turn to page seven.

Where we will discuss two specific acquisitions that will help grow <unk> five in 2024.

<unk> was acquired in January of 2024 to expand our infrastructure platform in Florida.

There are 130 employees will be fully integrated into our existing Florida operations and strengthen not only our existing Serbian transportation capabilities.

We will also introduce 75 to four new geographic locations.

Dickerson Wright: We also purchased Technical Design Services in the fourth quarter of 2023. This acquisition supports our rapidly growing building and technology group. They bring technical expertise in key areas, including aviation, government, finance, and healthcare. We've made other changes in 2024 to ensure the success of NV5, not only now, but in the years to come. Please turn to page 8.

We also purchased Tengelmann design services in the fourth quarter of 2023. This acquisition supports our rapidly growing building and technology group.

Bring technical expertise in key areas, including aviation government finance and healthcare.

Yes.

We've made other changes in 2024 to ensure the success of 85, not only now but in the years to come please turn to page eight in.

Ben Hurat: In 2024, I will step up to the executive chairman position. And reporting to me directly will be Alex Hockman as Co-CEO, having responsibility for our Infrastructure Group. Ben Harad, as Co-CEO, will be responsible for all building and technology operations both domestically and internationally. Dan Levine, as president of our geospatial group, will be responsible for all geospatial operations. Let's turn to page 9 and hear from Ben as he provides a building technology update and tells us of the opportunities for 2024. Thank you, Jackson.

In 2024, I will step up to the executive chairman position.

And reporting to me directly will be Alex Hockman as co CEO, having responsibility for our infrastructure group.

Ben Horizon as <unk> will be responsible for all building and technology operations, both domestically and internationally.

Levine.

As president of our Geospatial group will be responsible for all juice special operations.

Let's turn to page nine and hear from Ben as he provides a building technology update and tells us have the opportunities for 2024. Thank.

Thank you Jason 2023 represented a significant increase for our international mission critical business, which reflected an explosive demand for commissioning of data centers in support of cloud services.

Ben Hurat: 2023 represented a significant increase for our international mission-critical business, which reflected an explosive demand for commissioning data centers in support of cloud services. Our international planning and design business also drove 24% organic growth, supporting renovations and new construction in Asia and technology and audio-visual design in the Middle East. In the U.S., our clean energy and technology businesses lead the way with 23% organic growth, supporting clients' energy efficiency and electrification, as well as audio, visual, and technology building retrofits. Our domestic planning and design organic growth was impacted by interest rate-dependent capital investments by our clients.

International planning and design business also drove 24% organic growth supporting renovations and new construction in Asia, and technology and audiovisual audio visual design and the middle East.

In the U S. Our clean energy and technology businesses led the way with 23% organic growth supporting clients energy efficiency and electrification initiatives as well as audio visual and technology building rich but.

Our domestic planning and design organic growth was impacted by interest rate dependent capital investments by our clients.

Alex Hockman: 2024 growth opportunities are bright. We expect an increase in profitability of traditional MEP work, domestic and international data center expansion, market diversification for our technology design services, and the industry's conversion to clean energy are all expected to be drivers in 2024. Thank you, Ben. Alex Hoffman will now, on page 10, discuss our infrastructure results for 2023 and the opportunities for 2024. Thank you, Dick. Please turn to slide 10.

2024 growth opportunities abroad, we expect an increase in profitability of traditional MEP work.

Mystic and international data center expansion market diversification for our technology design services and industries conversions to clean energy are all expected to be drivers in 2024.

Thank you Ben.

Alex Hockman will now on page 10, and discuss our infrastructure results for 2023 and the opportunities for 2024.

Thank you <expletive> please turn to slide 10 and.

Alex Hockman: In 2023, we made investments to accelerate organic growth moving forward. We added key leadership in our Southeast and Pacific Northwest businesses. And in early 2024, we acquired CHW Professional Consultants, a leading provider of engineering design, surveying, transportation consulting, and landscape architecture to strengthen leadership in the Florida market.

In 2023, we've made investments to accelerate organic growth moving forward, we added key leadership in our southeast and Pacific Northwest businesses and in early 2024, we acquired <unk> professional consultants.

Leading provider of engineering design surveying transportation consulting and landscape architecture to strengthen leadership in the Florida market.

We are also seeing green shoots in the construction quality assurance markets in the east and West.

Alex Hockman: We are also seeing green shoots in the construction quality assurance markets in the East and West. In the utility services vertical, we were successful in bringing outsourced work into NV5, and our focus in 2024 is advancing organic growth. Our utility services continue to expand in the northwest and southwest, and we continue to pursue opportunities for geographic expansion of electrical transmission, distribution, and LNG services.

In the utility services vertical we were successful in bringing outsourced working into <unk> five and our focus in 2024 is advancing organic growth.

Our utility services continue to expand in the northwest and southwest and we continue to pursue opportunities for geographic expansion of electrical transmission distribution and LNG services.

We have also advanced our offshoring of utility and LNG designed to enhance our competitive advantage and improve margins.

Growth opportunities in 2020 forward include our strategic initiatives and infrastructure and transportation, putting some of our best technical experts and direct client facing positions.

Alex Hockman: We've also advanced our offshoring of utility and LNG design to enhance our competitive advantage and improve margin. Growth opportunities in 2024 include our strategic initiatives in infrastructure and transportation, putting some of our best technical experts in direct client-facing positions. Transportation infrastructure investments continue to drive opportunities, and we focus on additional investments in water and wastewater infrastructure. Electrical grid hardening continues to be a driver of growth to mitigate fires in the West and protect against storm damage in the East, and client electrification initiatives are driving the demand for additional electrical power delivery to reduce reliance on fossil fuels and support the conversion from petroleum energy to electricity.

Inspiration infrastructure investments continue to drive opportunities and we focus on additional investments in water and wastewater infrastructure.

Electrical grid hardening continues to be a driver of growth to mitigate fires in the west to protect against storm damage in the east and client electrification initiatives are driving the demand for additional electrical power delivery to reduce reliance on fossil fuels and support the conversion for petroleum energy to electricity.

I will now turn the call over to Dan Levine to give an update on geospatial.

Thanks, Alex Geospatial grew 67% in 2023, including contributions from acquisitions and 6% organic growth in our existing business. This impressive growth was achieved despite delays in federal contract award as a result of the continuing resolution status of the federal government's budget or.

Dan Levine: I will now turn the call over to Dan Levine to give an update on geospatial. Thanks, Alex. Geospatial grew 67% in 2023, including contributions from acquisitions and 6% organic growth in our existing business. This impressive growth was achieved despite delays in federal contract award as a result of the continuing resolution status of the federal government's budget. Our 23 acquisitions of Axum Geospatial and L3Harris Geospatial Software businesses gave us entry into the geospatial software market and expanded our defense and intelligence capabilities. Go to Beadaholique.com for all of your beading supply needs!

23 acquisitions of geospatial excellent geospatial and <unk> Harris Geospatial software businesses gave us entry into geospatial software market and expanded our defense and Intel capabilities.

In the fourth quarter of 2023 and continuing into the first quarter of 2024, we have increased our commercial sales opportunities in utility asset and vegetation management areas.

We entered 24, having strengthened our position as the nation's leading provider of geospatial data analytics.

Our 2024 growth opportunities are coming in several areas first federal infrastructure dollars are flowing through state departments of transportation and airports, providing numerous contract opportunities. We are pursuing sustainability and climate change initiatives are also driving demand for geospatial data acquisition and analytics and we are uniquely positioned for.

Dan Levine: In the fourth quarter of 2023 and continuing into the first quarter of 2024, we have increased our commercial sales opportunities and utility asset and vegetation management areas. We entered year 24 having strengthened our position as the nation's leading provider of geospatial data analytics. Our 2024 growth opportunities are coming in several areas. First, federal infrastructure dollars are flowing through state departments of transportation and airports, providing numerous contract opportunities we are pursuing.

We've developed new data acquisition and processing capabilities that provide us with competitive advantages that we've already fielded in 'twenty four and finally within our software group. We have released new technology platforms that is gaining that are gaining traction providing access to a broader market.

And we are now bundling services capabilities with our software sales to extract the full value of our comprehensive enterprise data.

Data analytics and software capabilities.

Turn it over to back to your desk.

Thanks, Dan.

<unk> mentioned.

As I mentioned, our backlog and for future work and it seems to be continuing in a strong growth mode. It's up to $838 million. So, let's turn to page 12 of the deck.

Dan Levine: Sustainability and climate change initiatives are also driving demand for geospatial data acquisition and analysis that we are uniquely positioned to address. We've developed new data acquisition and processing capabilities that provide us with competitive advantages that we've already fielded in 24. And finally, within our software group, we have released new technology platforms that are gaining traction, providing access to a broader market. And we are now bundling services capabilities with our software sales to extract the full value of our comprehensive enterprise IT data analytics and software capabilities. I'll hand it over back to you, Dick.

Where youll see that many projects on the right side of the stack that are listed.

All of these projects are just accumulative when representation of 5% of the backlog.

But are spread across all areas of our services.

I would now like to turn the call over to our Chief Financial Officer, Ed Codispoti to provide an overview go ahead Ed.

Thank you Dickerson and good afternoon, everyone.

If you would please turn to slide 14 of the presentation I will review, our fourth quarter and year end 2023 financial results.

Dickerson Wright: Thanks, Dan. Let me mention our backlog for future work, and it seems to be continuing in a strong growth mode. It's up to $838 million. So let's turn the page.

Our gross revenues in the fourth quarter were $215 5 million.

Compared to $189 8 million in the fourth quarter of the prior year.

A 14% increase in growth was driven by our accident and <unk> acquisitions.

Edward Codespote: Well, but the where you'll see the many projects on the right side of this deck that are listed. All of these projects are just a cumulative win representation of 5% of the backlog but are spread across all areas of our service. I would now like to turn the call over to our Chief Financial Officer, Ed Kodes-Bode, to provide an overview. Go ahead, Ed.

Gross margin expanded 140 basis points as we produced a higher proportion of revenue through internal resources this quarter rather than through sub consultants.

Our gross profit was $108 $6 million compared to $93 million in the prior year, an increase of 17%.

Net income was $9 $9 million in the fourth quarter of 2023 compared to $8 million in the fourth quarter of 2022, an increase of 24%.

Edward Codespote: Thank you, Dickerson, and good afternoon, everyone. If you would please turn to slide 14 of the presentation, I'll review our fourth quarter and year-end 2023 financial results. Our gross revenues in the fourth quarter were $215.5 million, compared to $189.8 million in the fourth quarter of the prior year. The 14% increase in growth was driven by our Axum and Viz acquisitions. Gross margin expanded 140 basis points as we produced a higher proportion of revenue through internal resources this quarter rather than through sub-contractors.

Our GAAP diluted earnings per share was <unk> 64 in the fourth quarter of 2023 compared to <unk> 52 in the prior year fourth quarter.

A 23% increase.

<unk> was based on $15 5 million shares outstanding this quarter compared to $15 3 million shares outstanding in the previous year quarter.

Our adjusted EBITDA was $37 3 million compared to $32 5 million in the fourth quarter of the prior year, an increase of 15%.

Our adjusted earnings per share, which excludes the impact of intangible amortization and acquisition related cost was.

Edward Codespote: Our gross profit was $108.6 million compared to $93 million in the prior year, an increase of 17%. Net income was $9.9 million in the fourth quarter of 2023 compared to $8 million in the fourth quarter of 2022, an increase of 24%. Our GAAP diluted earnings per share was $0.64 in the fourth quarter of 2023 compared to $0.52 in the prior year fourth quarter, a 23% increase. EPS was based on 15.5 million shares outstanding this quarter compared to 15.3 million shares outstanding in the previous year quarter. Our adjusted EBITDA was $37.3 million compared to $32.5 million in the fourth quarter of the prior year, an increase of 15%. Our adjusted earnings per share, which excludes the impact of intangible amortization and acquisition-related costs, was $1.14 per share in the fourth quarter of 2023 compared to $1.21 per share during the fourth quarter of the prior year.

It was $1 14 per share in the fourth quarter of 2023 compared to $1 21 per share during the fourth quarter of the prior year.

Our cash flows from operations were $16 8 million.

Compared to $13 6 million in the same quarter of the previous year, a 23% increase.

Our gross revenues increased 10% for the full year to $861 7 million.

From $786 8 million in the prior year.

The increase in growth was driven by our axiom and <unk> acquisitions.

Most margin expanded 80 basis points as we produce the higher proportion of our revenues through internal resources this year rather than through sub consultants.

Our gross profit was $434 million.

Compared to $386 million in the prior year, an increase of 12%.

Net income was $44 6 million for the year compared to $50 million in the prior year a decrease of 11%.

The decrease was impacted by $11 1 million of increased intangible amortization and $9 2 million of additional interest expense due to higher interest rates and debt to fund, our axiom and <unk> acquisitions.

Edward Codespote: Our cash flows from operations were $16.8 million compared to $13.6 million in the same quarter of the previous year, a 23% increase. Our gross revenue increased 10% for the full year to $861.7 million from $786.8 million in the prior year. The increase in growth was driven by our Axum and Viz acquisitions. Gross margin expanded 80 basis points as we produced a higher proportion of our revenue through internal resources this year rather than through sub-consultancy. Our gross profit was $430.4 million compared to $386 million in the prior year, an increase of 12%. Net income was $44.6 million for the year compared to $50 million in the prior year, a decrease of 11%.

Our GAAP diluted earnings per share.

We're $2 88 per share in 2023.

<unk> to $3 27 per share in the prior year.

EPS was based on a $15 5 million shares outstanding in 2023 compared to $15 3 million shares outstanding in 2022.

Our adjusted EBITDA was $137 9 million compared to $135 2 million in the prior year.

Our EBIT margins were affected by mix of business and the ongoing integration of our recent geospatial acquisitions Axsom inverse.

Our adjusted earnings per share, which excludes the impact of intangible amortization and acquisition related costs was $4 81 per share in 2023 compared to $5 19 per share in 2022.

Edward Codespote: The decrease was impacted by $11.1 million of increased intangible amortization and $9.2 million of additional interest expense due to higher interest rates and debts to fund our AXM and VIZ acquisitions. Our GAAP Diluted Earnings Per Share were $2.88 per share in 2023 compared to $3.27 per share in the prior year. EPS was based on 15.5 million shares outstanding in 2023 compared to 15.3 million shares outstanding in 2022. Our adjusted EBITDA was $137.9 million compared to $135.2 million in the prior year.

If you would please turn to slide 15, I'll now discuss our cash flows and balance sheet.

Our cash flows from operations in 2023 were $62 2 million and were affected by increased interest expense of $9 2 million and working capital timing driven by large project cycles.

Higher interest expense as I mentioned earlier was driven by higher interest rates and debt associated with the geospatial acquisitions.

However, we're still at a low net leverage our net leverage was one two times as of the end of the year and has now dropped for two consecutive quarters. If you recall at the end of the second quarter. Our net leverage was one four times. So we've made progress in bringing down our leverage.

Edward Codespote: Our EBITDA margins were affected by the mix of business and the ongoing integration of our recent geospatial acquisitions, Axum and Viz. Our adjusted earnings per share, which excludes the impact of intangible amortization and acquisition-related costs, was $4.81 per share in 2023 compared to $5.19 per share in 2022. If you would please turn to slide 15, I'll now discuss our cash flows and balance sheet. Our cash flows from operations in 2023 were $62.2 million and were affected by increased interest expense of $9.2 million and working capital timing driven by large project cycles. The higher interest expense, as I mentioned earlier, was driven by higher interest rates and the costs associated with the geospatial acquisitions.

We feel confident in the strength of our balance sheet and believe it positions positions us well for future growth.

I'll now turn it back over to Dickerson for some closing comments.

Let's go to page 17, and we will give further detail on how we are positioning <unk> for total growth organic growth and profitability measured by.

The industry benchmarks.

We're going to strengthen and expand our infrastructure platform by increasing organic growth from our existing platform and through strategic acquisitions that support future growth.

We will continue to expand our software and reoccurring revenue for all key areas of operations.

We will use the strength of our low leverage balance sheet to be opportunistic in all areas of growth.

Our guidance for 2024, it's 930 to 935 million and gross revenues and an adjusted EPS of $5 to $5 <unk> per share. Thank you.

Edward Codespote: However, we're still at a low net leverage. Our net leverage was 1.2 times as of the end of the year and has now dropped for two consecutive quarters. If you recall, at the end of the second quarter, our net leverage was 1.4 times, so we've made progress in bringing down our leverage. We feel confident in the strength of our balance sheet and believe it positions us well for future growth. I'll now turn it back over to Dickerson for some closing comments.

Yeah.

And ladies and gentlemen at this time I would like to remind everyone in order to ask a question Presto and the number one on your telephone keypad.

If you would like to withdraw your question Press Star one a second time.

And we will pause for just a moment to compile the Q&A roster.

And we will take our first question from Chris Moore with CJS Securities. Your line is open.

Dickerson Wright: Thank you, Ed. Let's go to page 17, and we'll get further detail on how we are positioning NV5 for total growth, organic growth, and profitability measured by benchmarks. We're going to strengthen and expand our infrastructure platform by increasing organic growth from our existing platform and through strategic acquisitions that support future growth. We will continue to expand our software and recurring revenue for all key areas of operation. We will use the strength of our low-leveraged balance sheet to be opportunistic in all areas of growth.

Hey, good afternoon, guys. Thanks for taking a couple of questions first of all congratulations Dickerson.

I assume this means you'll have a little bit more free time on your hands, probably not too much but.

The.

Two new Ceos.

Interesting development, so that's terrific.

Thank you.

Maybe we can talk about the the guidance ranges there are certainly tighter than.

We're used to at this time of the year end.

Kind of maybe just talk a little bit more about what's in there and.

Operator: Our guidance for 2024 is $930 to $935 million in gross revenues and an adjusted EPS of $5 to $5.06 per share. Thank you. And, ladies and gentlemen, at this time, I would like to remind everyone that in order to ask a question, press the star and then the number one on your telephone keypad. If you would like to withdraw your question, press star one a second time.

What kind of organic growth is there at this moment.

For the current range you were talking about.

Hi, Chris This is Ed Youre right historically, we've given broader ranges for both for revenue and EPS.

This year going into 2024, we're purposely keeping that that range much narrower.

Being conservative when it comes to.

Operator: And we will pause for just a moment to compile the Q&A roster, and then we will take our first question from Chris Moore with CJS Securities. Your line is open.

Our assumptions for organic growth, we're assuming very modest organic growth.

And with the goal to be Frank is too.

Have that.

Chris Moore: Hey, good afternoon, guys. Thanks for taking a couple of questions. First of all, congratulations, Dickerson.

Low target early in the year, but we have every.

Intention of beating and raising throughout the year and so we want to set conservative expectations, and hopefully be able to beat and raise throughout the year.

Chris Moore: I, I assume this just means you'll have a little bit more free time on your hands, probably not too much, but the whole thing about the two new CEOs is an interesting development. So that's, that's terrific. Thank you.

Got it that's helpful.

So backlog it looks like <unk> was $838 million at Q4.

Roughly how much of that is is is geospatial.

Edward Codespote: Maybe we can talk about the guidance ranges. They're certainly tighter than we're used to at this time of year and, you know, maybe just talk a little bit more about what's in them and, you know, what kind of organic growth is there at this moment, you know, for the current range we're talking about. Hi Chris, this is Ed.

Yes.

This is <expletive> that's.

That's a good question because we didn't get a full year of axiom and we didn't get a full year of <unk>.

This acquisition, but I think the run.

If youre looking for the exact number that was contributed in that year. It would be an estimate but I think one excellent Ed came in in April and one came in.

Edward Codespote: You're right. Historically, we've given broader ranges, both for revenue and EPS. This year, going into 2024, we're purposely keeping that range much narrower. We're being conservative when it comes to assumptions for organic growth. We're assuming very modest organic growth, and the goal, to be frank, is to, you know, have that be a low target early in the year, but we have every intention of beating and raising it throughout the year. And so we want to set conservative expectations and hopefully be able to meet and exceed them throughout the year. Got it, that's helpful. So the backlog looks like with 838 million in Q4, roughly how much of that is geospatial? This is Dick.

And in February right, where I think he is referring to the as of a point in time in December what the back of the backlog right.

What the composition was a geo versus core.

Is that what your question was yes, yes, yes, just trying to get a sense as to how much of that 838 is is geo at the end of the year.

Well I think it runs about the same percentage as the overall total percentage. So you can assume we're looking at that and a lot of it is being impacted because of the federal project delays, but it would roughly be a third.

The backlog would roughly be a third in geospatial, but it could certainly ramp up if we have the continuing resolution authorized which really impacts the geospatial group.

Dickerson Wright: That's a good question because we didn't get a full year of AXM and we didn't get a full year of our VIZ acquisition, but I think if you're looking for the exact number that was contributing that year, it would be an estimate, but I think one actually Ed came in in April and one came and then in February right. I think he's referring to the as of a point in time in December Yeah, yeah, just trying to get a sense of how much of that 838 is going to be GEO at the end of the year. Well, I think it runs about the same percentage as the overall total percentage.

Got it and that was my final question really that good segue. So so you had you had addressed that you talked about.

Funding funding delays for the federal government geospatial projects.

Is given it's an election years or any reason to believe that these are going to improve throughout 'twenty four.

Your thoughts on that.

While it would just be my thoughts.

What we hear from discussing with people is that.

There could be something as early as March which continues it but if it moves on into June it may be just the whole budget will will be revisited, so that could be longer but.

Dickerson Wright: So you can assume, and, you know, we're looking at that, and a lot of it is being impacted because of the federal project delays, but it would roughly be a third, the backlog would roughly be a third in geospatial, but it could certainly ramp up if we have the continuing resolution authorized, which really impacts the geospatial group. We got it. And that was my final question, really, a good se

Think best case scenario, we think that federal work can be sometimes towards the end of March.

But it could drag on June.

2024.

Got it alright, thanks, congratulations to Ben and Alex and I will.

Dickerson Wright: So you addressed that. You talked about, you know, kind of funding delays for federal government geospatial projects. I mean, given it's an election year, is there any reason to believe that these are going to improve throughout 2024 or, you know, just kind of your thoughts on that? Well, that would just be my thoughts.

Leave it here for now thanks, guys.

Okay.

We will take our next question from Andy Wittmann with Baird. Your line is open.

Oh, great. Good evening, thanks for taking my questions.

Congratulations on your on your next move in your career.

I guess the question I wanted to ask was also on the guidance and maybe just for a little bit more detail Ed here just on the you mentioned modest organic growth I mean, the total revenue guidance here is.

Dickerson Wright: What we hear from discussing with people is that there could be something as early as March which continues it, but if it moves on into June, it may be just the whole budget will be revisited, so that could be longer. But I think the best case scenario, we think the federal work can be sometimes towards the end of March, but it could drag on to June of 2024.

<unk>, 7% little bit over that maybe.

Your backlogs up 5% year over year.

So I guess.

What is in your mind modest organic growth I think you said that.

Is it that kind of order of magnitude with backlog up 5% and then.

Chris Moore: All right. Congratulations to Ben and Alex, and I will leave it here for now. Thanks, guys. Thank you for using Red Bee Media's Live Remote Broadcasting Service. You are currently listening to Red Bee Media's Live Radio Service.

2% of revenue here, that's that's M&A or how do we think about the components between organic growth and if there is any acquisition revenue.

Assumed in your guidance beyond the deals that you've already publicly announced.

Operator: Sounds great. Thanks. And we will take our next question from Andy Wittmann with Baird. Your line is open. Oh, great. Good evening.

There is no hi, Andy this is that there is no acquisition revenue.

Third.

Beyond those that have already been announced that being CH W.

Andrew John Wittmann: Thanks for taking my questions. And Dick, congratulations on your next move in your career. I guess the question I wanted to ask was also on the guidance and maybe just for a little bit more detail, Ed, here, just on the modest organic growth. I mean, the total revenue guidance here is, you know, around 7%, a little bit over that, maybe. Your backlog is up 5% year over year. So I guess what is, in your mind, modest organic growth? I think you said that.

And as far as the organic growth implied.

It's under 5%. So it's very it's very modest again, we're shooting for more.

But we have none.

One is as I said, our intention is to beat and raise throughout the year and we also have the uncertainty around the continuing resolution and so we figured it was it was a good place to start.

Out of the out.

Out of the gates here going into 'twenty four.

Okay. That's helpful. And then I guess, just because you don't you just give EPS and revenue.

I guess I'd like to try to get an understanding of kind of how you view your profit margins.

Andrew John Wittmann: Is it that kind of order of magnitude with backlog up 5% and then there's like 2% of revenue that's M&A? Or how do we think about the components between organic growth and if there's any acquisition revenue that's assumed in your guidance beyond the deals that you've already publicly announced? There is no acquisition revenue, like you just said, beyond those that have already been announced, that is, CHW. And as far as the organic growth that's implied, it's under 5%, so it's very modest. Again, we're shooting for more, but we have, number one, as I said, our intention is to beat and raise it throughout the year. And we also have uncertainty around the continuing resolution. And so we figured it was a good place to start out of the gates here, going into 24. Okay, that's helpful.

<unk> EBITA margin since that's the number that you reconcile too.

The mix of your business has changed you've added some of these higher margin software programs.

And so it's been kind of moving around but I'm just wondering.

Do you think that the reported adjusted operating adjusted EBITDA margin will be.

Up year over year with the new mix or how should we think about profit margins on a year over year basis.

I think that the.

When you consider the axiom in Venice acquisitions, and <unk> in particular, although it's a software company which has.

The scalability.

Have much higher margins down the road.

Andrew John Wittmann: I guess, just because you don't, you just give EPS and you give revenue. I guess I'd like to try to get an understanding of kind of how you view your profit margins. If maybe you'd say EBITDA margins, since that's the number that you reconcile to like. The mix of your business has changed, right? You've added some of these higher-margin software programs. And so it's been kind of moving around, but I'm just wondering.

They werent.

They werent significantly high margins relative to other software companies when we acquire them and so part of the strategy there was to integrate them into <unk>.

Be able to scale them through our through our synergies and grow them and so we in 'twenty three.

<unk>.

We benefit a lot from those margins as a matter of fact Q4.

Edward Codespote: Do you think that the reported adjusted EBITDA margin will be up year-over-year with the new mix? Or how should we think about profit margins on a year-over-year basis? I think that when you consider the Axum and Viz acquisitions, and Viz in particular, although it's a software company which has the scalability to have much higher margins down the road, they weren't... They weren't significantly high-margin relative to other software companies when we acquired them, and so part of the strategy there was to integrate them into NV5 and be able to scale them through our synergies and grow them. And so we, at 23, did not benefit a lot from those margins.

Edward Codespote: As a matter of fact, Q4, some of this is tied into, again, the continuing resolution, but our margins in Q4 were not great on the geo side. Going into 2024, as we continue to progress into the future and are able to, you know, recognize more synergies both on the top line and in terms of cost, I would expect those to improve. But I wouldn't anticipate a significant increase in EBITDA margins in 24. You know, we're striving for that, but in terms of modeling, I wouldn't anticipate a significant expansion of margins in 24. Okay, that's helpful. Thank you for that perspective.

The part of the business, where you serve as a municipal building inspector.

Four and that's dependent on kind of residential sometimes building permits that drives that business I just kind of curious as to how those performed in this fourth quarter versus the prior fourthquarter.

Dickerson Wright: I guess then, Dick, I just wanted to talk to you about some of these markets that have proven to be more cyclical over the years. You mentioned, I think, the term "green shoots" on, I think that was related to, I don't know if that was your real estate transaction services. Can you just talk a little bit? I know that the fourth quarter last year was where you started to see some of that cyclicality creeping

Okay. Good questions all of them, Andy let's start with the.

This is where all three are very dependent on interest rates. However, I can say this.

And I can't.

Want to speak too much forward, but we're seeing a we're very pleased with what has the turnaround that's been made in our real estate business or their their volume has increased the profitability has increased and the amount of actual assignments. They have as increase the same thing.

Dickerson Wright: Can you talk about the performance in the fourth quarter of the real estate transaction services, the construction quality assurances business that you have, and the part of the business where you serve as a municipal building inspector that's dependent on the kind of residential, sometimes building permits that drive that business? I'd just be kind of curious as to how those performed in this fourth quarter versus the prior fourth quarter. Okay, good questions, all of them, Andy.

Has.

And various pockets on the <unk>.

Area, It's really the same thing southern California, we've seen a real resurgence in.

Construction quality assurance business, and particularly in our San Diego and La markets and we're starting to see some real growth and and the Sandwich Keene Valley and that is that has been.

Dickerson Wright: Let's start with the, This is where all three are very dependent on interest rates. However, I can say this, and I don't want to speak too much forward, but we're very pleased with the turnaround that's been made in our real estate business; their volumes have increased, their profitability has increased, and the amount of actual assignments they have increased. The same thing happens in various pockets in the CQA area; it's really the same thing.

Somewhat specific to interest rates, but somewhat dependent on the overall on the overall growth of the economy in California, So it's coming back.

That quite a bit as far as what we call municipal outsourcing or a private provider building network, we deal with a lot of municipalities and obviously they are dependent very dependent on the interest rates, what we try to do with those though too.

Dickerson Wright: In Southern California, we've seen a real resurgence in our construction quality assurance business and, particularly, in our San Diego and L.A. markets, and we're starting to see some real growth in the San Joaquin Valley. And that has been somewhat specific to interest rates, but somewhat dependent on the overall growth of the economy in California. It's come back quite a bit.

Mitigate that somewhat as we do we charge, 8% of the building Department C and so that way the municipality will not be as sensitive to the to the overall interest rates, but will be the more dependent on what we can do as a percent of the building permit.

But obviously all three areas have been affected by interest rates and I would say I want to order and recovery.

Dickerson Wright: As far as what we call municipal outsourcing or a private provider building network, we deal with a lot of municipalities, and obviously, they are very dependent on interest rates. What we try to do with those, though, to mitigate that somewhat, is we charge a percent of the building department fee. And so that way, the municipality will not be as sensitive to the overall interest rates but will be more dependent on what we can do as a percent of the building permits. But obviously, all three areas have been affected by interest rates. And I would say if I want to order in the recovery, I think we're really starting to see some momentum in our real estate transaction business, and we're starting to see some major regional improvements in our CQA business. And then I think we have an overall general effect by municipalities, which are very dependent on interest rates and sales tax. And so that would be the third.

I think we're really starting to see some momentum and are a real estate transaction business.

And we're starting to see some vast regional improvements in R. R. C. Q a business and then I think we have an overall general facts municipalities, which are very dependent on interest rates and sales tax and so so that would be the third but all three have been impacted but we're making progress in growing them.

It's just that we feel the.

Real estate and <unk> is coming back a little quicker than the municipal business.

Okay.

Thank you for your time this evening have a have a good evening thanks well.

Well, let me just say one thing while everybody's listening I was listening and thank you Andy for saying that but I'm not going anywhere I'm not leaving.

Still going to be very involved with the with the company and I have a commitment to our board to.

To be very involved and so you'll see the three <unk> comment on our concluding comments, but I really wanted people to know that I'm not although many would probably wished that I'm not riding off into the sunset, So I'll I'll still be around but.

Dickerson Wright: But all three have been impacted, but we're making progress in growing them. It's just that we feel the real estate and CQA sectors are coming back a little quicker than the municipal business. Okay. Thank you for your time this evening. Have a good evening.

I think now it's time that we have some other people step up.

Excellent.

And we will take our next question from Rob Brown with Lake Street Capital market. Your line is open.

Andrew John Wittmann: Thanks. Well, let me just say one thing while everybody's listening. I was listening, and thank you, Andy, for saying that, but I'm not going anywhere. I'm not leaving. I'm still going to be very involved with the company, and I have an obligation to our board to be very involved. And so you'll see the three, and I'll comment on our concluding comments, but I really wanted people to know that I'm not, although many would probably wish that I was, riding off into the sunset. So I'll still be around, but I think now it's time that we have some other people step up. So, www.ncbi.nlm.nih.gov, and we will take our next question from Rob Brown with Lake Street Capital Markets. Your line is open. Agrippi, Hi.

Good afternoon.

I wanted to talk about the geospatial organic growth I know you said, it's dependent on some of the federal spending activity, but but where do you sort of see that organic growth over time, because it is still in the the double digit range or really wants to dependents. There in terms of organic growth and what do you think it would kind of be next year.

Yeah. Good question, Rob I think it's going to get a bit of a hockey stick.

If we do get the federal projects going which <unk> is very dependent on then you'll see an explosion in organic growth.

Others two segments.

Bottom spatial has had good.

Double digit organic growth and they are more they're not as dependent on specific federal projects, although although they do a lot that segment of the business also does an awful lot of an acquisition and we've made a significant capital expenditure.

Help them in the acquisition business, so I think that that.

Rob Brown: I wanted to talk about geospatial organic growth. I know you said it's dependent on some federal spending activity, but where do you sort of see that organic growth over time? Still in that mid-double-digit range, or...

Organic growth is fairly stable the software growth is kind of a.

A little bit different for us, we're all through Europe, and we're seeing a great effect of that business on other other portions are pieces of our business, but they also have some dependency on the continuing resolution so.

Dickerson Wright: Thank you. Thank you, group. Yeah, good question Rob. I think it's going to be a bit of a hockey stick.

Dickerson Wright: I think if we do get the federal projects going, which Axum is very dependent on, then you'll see an explosion in organic growth. The other two segments, Quantum Spatial, have had good double-digit organic growth, and they are more, they're not as dependent on specific federal projects, although they do a lot. That segment of the business also does an awful lot in acquisitions, and we've made a significant capital expenditure to help them in the acquisition business. So I think that organic growth is fairly stable.

What you'll see when this is funded you're going to see a very big explosion and organic growth and right. Now these projects have they been kind of pushed to the right. So.

If we were to measure it right now.

Being.

Being conservative I would say, we'd really see an increase in the organic growth around the second half of the year and geospatial.

Okay, great. Thank you for the color.

And then you mentioned the macro drivers in the market that are driving your business, but I just wanted to talk a little bit more about electrification and where do you see that kind of driving things and.

Dickerson Wright: The software growth is kind of a little bit different for us. We're all over Europe, and we're seeing a great effect of that business on other portions or pieces of our business. But they also have some dependency on the continuing resolution.

And maybe that's a trend line there how do you see that playing out et cetera.

24 and Packers.

Over time here.

Okay, I think Rob you're referring to the delivery system of the utility business in the improvement of the grid and some of the things that they're doing in any ways to mitigate.

Dickerson Wright: So what you'll see when this is funded is a very big explosion in organic growth. And right now, these projects have been kind of pushed to the right. So if we were to measure it right now, Bing would be on the right.

I'll, let Alex Hochman, Who's a utility group reports to him. He may have more he may add some more color to this.

Dickerson Wright: You know, being conservative, I would say we'd really see an increase in organic growth around the second half of the year in geospatial. Okay, great. Thank you for the color.

So we're seeing the growth and electrification taking place now and it will continue for for for years to come.

Rob Brown: And then you mentioned some of the macro drivers in the market that are driving your business. But I just want to talk a little bit more about electrification. And where do you see that kind of driving going?

And as that grows we're going to continue to see the other demands that we have in terms of distribution is transmission as well as the hardening as I mentioned weather on the east coast and fire heartening on the West coast. So it all plays to the fact that we have will have and continue to have peace.

Alex Hockman: Thank you, everybody, for tuning in. Okay, I think, Rob, you're referring to the delivery system of the utility business and the improvement of the grid and some of the things that they're doing in many ways to mitigate. I'll let Alex Hockman, whose utility group reports to him, have more. He may have more to add. So, we're seeing the growth in electrification taking place now, and it'll continue for years to come. And as that grows, we're going to continue to see the other demands that we have in terms of distribution and transmission, as well as the hardening, as I mentioned, weather on the East Coast and fire hardening on the West Coast. So, it all plays to the fact that we have, will have, and will continue to have these additional power demands through the electrification initiative.

Additional our demands.

The electrification initiatives.

And just another thought we've recently signed a.

A significant contract for the charging stations for electric vehicles, and so we see some of that we see more demands on the grid.

We see that with the growth of these charging stations, it's going to make the delivery of of electric electricity more critical.

Okay. Thank you I'll turn it over.

And we will take our next question from <unk>, well, giving Blair. Your line is open.

Alex Hockman: And just another thought, we've recently signed a significant contract for the charging stations for electric vehicles, and so we see some of that, we see more demands on the grid, but we see that with the growth of these charging stations, it's going to make the delivery of electricity more critical. Okay, thank you. www.ncbi.nlm.nih.gov. We will take our next question from Kim Mulrooney with Wilgen Blair

Yeah. Good afternoon, I had a couple of questions and utility, but more on the LNG sites, maybe this for Alex too but [noise].

Can you talk about how 'bout LNG business performance.

2023, and how you're thinking about growth potential for.

2024, just curious how project activities shaping up as we move through the winter months here.

Yeah sure so our LNG business.

Kim Mulrooney: Your line is open. Yeah, good afternoon. I had a couple questions on utility, but more on the LNG side. So maybe this is for Alex too, but can you talk about how that LNG business performed in 2023 and how you're thinking about growth potential for 2024. Just curious how project activity is shaping up as we move through the winter months here. Yeah, so our LNG business, as just so we're on the same page, is predominantly in the peak shaving arena. So the recent announcements have absolutely no impact on our business.

Just so we're we're on the same page is predominantly in the peak shaving arena. So the recent announcements have absolutely no impact on our business.

So.

Anticipating and continue to see demand in the peak shaving LNG.

So the issues that we have as we look at growth. It's just the cyclicality of how the project is being delivered but in terms of of long term performance, where it's still very bullish on our LNG business.

Alex Hockman: So, we're anticipating and continuing to see demand for peak shaving LNG. So the issues that we have, as we look at growth, it's just the cyclicality of how the project is being delivered. But in terms of long-term performance, we're still very bullish on our LNG business. Okay, you anticipated my next question about the recent announcements we've seen out of the administration, so that's good to hear that that's not impacting you guys. But can you talk a little bit more about the actual performance? What was the growth like?

Okay. You anticipated my next question about the recent announcements we've seen out of the administration. So that's good to hear.

That.

It's not impacting you guys, but can you can you talk a little bit more about the actual performance.

What was the joke like and what do you expect for growth.

Sure.

Check.

Comment a little further that the export LNG is what's been impacted by by by the announcement.

Are you are over year growth in terms of.

Alex Hockman: And what do you expect for growth? So, and just to comment a little bit further. Export LNG is what's been impacted by the announcement. Our year-over-year growth in terms of 2022, we were looking at in 23, It was $80 million for our LNG business, and that is at an even margin of 10%, 10.6%. The got it, So that business gets impacted again because that is a full EPC project delivery. So we do the engineering, the procurement, as well as the construction. So there is some cyclicality that takes place in that industry, depending upon when the project is ready to actually go into construction. I think this is Dick just adding another thought.

2022, we were looking at and 23.

Sure. He was 80 Murray was $80 million.

<unk> business and that is at an EBIT margin of 10% and 0.6%.

The got it.

So that business gets impacted again, because that is a full H P. C project delivery should we do the engineering the procurement as well as the constructions show. There is shown cyclicality that takes place in that industry, depending upon when the project is ready to actually go into construction.

I think this is <expletive> just adding another thought.

Dickerson Wright: The LNG business is one that we have that's very dependent on the construction schedule. It's a percent completion project. Projects that they do tend to be conservative, and so if anything towards the end of the year, you see a hockey stick in profitability because it's really based on what percent complete the project is and as it goes. So we do a lot of engineering; a lot of our engineers are certainly applied and utilized, but actually the actual transition is based on the construction schedule. Okay, thank you.

The LNG business is one that we have that's very dependent on the construction schedule the percent of completion project.

Projects that they do tend to be conservative and so if anything towards the end of the year you see a hockey stick.

And profitability because it's really based on what percent complete is the project and as it goes so we do a lot of engineering a lot of our engineers are certainly applied and utilized but actually.

The actual <unk>.

Transition is based on the construction schedule.

Okay. Thank you.

Kim Mulrooney: Moving to geospatial, you know, in that segment, I mean, we've seen, and you talked a little bit about margins here, but I wanted to ask a little bit more, just stepping back, and we've seen pre-tax income margins here near 20% on the lower side on an annual basis, as high as 27% on the high side over the last several years. But how should we think about, you know, steady state or normalized margins here if we're thinking about this business from a longer-term perspective on an annual basis, particularly if everything plays out as you expect it to? Well, let me start, and then Ed can certainly follow up with this. The geospatial business is much more dependent on depreciation and amortization than our other service lines. So equipment is not required.

[noise] I'm moving to geospatial.

In that segment I mean, we've seen and you talk a little bit about margins here, but I wanted to ask a little bit more just stepping back I mean, we've seen pretax income margins here near 20% on the lower side on an annual basis as high as 27% on the high side over the last several years, but how should we think about.

How should we think about steady state are normalized margins here. If we're thinking about this business from a longer term perspective on an annual basis, particularly everything plays out as you expect it to [noise].

Yes.

Well.

Let me start and then add can certainly follow up with this and.

The geospatial business is.

<unk> much more dependent on depreciation and amortization then.

Then our other.

Service lines so.

<unk> is required so the EBITDA the dark portion of that is.

Dickerson Wright: So the EBITDA, the DA portion of that, is certainly higher. So as we make these acquisitions and as we grow, there'll be, and as you saw, much more, much more of a commitment to capital expenditures. And that is probably one of the major differences where we are capital light in our consulting business. There's more capital required in the geospatial business. And to the extent that we're making those investments, you'll see some fluctuation in EBITDA. Okay.

Certainly higher so as we make these acquisitions and as we grow there'll be and actually saw there'll be a much more much.

Much more of a commitment to capital expenditures and that is probably the one of the major differences, where we were capital light and our consulting business.

There's more capital required and the and.

And the geospatial business and to the extent that we're making those investments you'll see some fluctuation in EBITDA.

Edward Codespote: And just to add to that, in 22, for example, and historically, those margins were in the 20% range, but more recently, in the fourth quarter, for example, with the continuing resolution, and also with the integration of the recent VIZ acquisition, which, as I mentioned, is coming in at a lower margin, it does dilute the overall geospatial margin so that it's currently in the high teens, you know, 17% range. But again, the long-term strategy is to grow that and scale that software business along with the rest of geospatial, and we expect that, in the long run, we'll get back to that 20% range for those margins. Okay, thank you very much.

Right and just to add to that.

22 for example, and historically those margins we're in the 20% range, but more recently in the fourth quarter for example.

With the continuing resolution and also with the integration of the recent viz acquisition, which as I mentioned this coming in at a at a lower margin.

Both dilute the overall deals facial margins so that it's currently in the in the high teens, 17% range.

But again, the longterm strategy is to grow that and scale that software business along with the rest of geospatial and we expect that in the long run, we'll we'll get back to those at 20 per cent range for for those margins.

Okay. Thank you very much.

Kim Mulrooney: Thank you for joining us. We hope you have a great day, and we look forward to seeing you again soon. Our next question is from Jeff Martin with Roth Capital Partners. Your line is open.

Maybe I'll take our next question from Jeff Martin with Roth Capital Partners. Your line is open.

Thanksgiving.

Hi, Jeff.

Jeffrey Michael Martin: Thanks. Good evening, guys. Hi Jeff.

<unk> wanted to know if you have diet, a little bit more intensity organic growth expected coming out of infrastructure.

Dickerson Wright: Dick, I wanted to know if you would dive a little bit more into the organic growth expected coming out of infrastructure. You know, is that an area where you see significant room for improvement? Is there anything tactical that you're doing internally or externally that's going to drive that organic growth increase? Yeah, thanks Jeff. I'm going to probably comment on that more with more specificity in my concluding comments, but overall, overall, I think we could do a much better job in organic growth for infrastructure. And I think it was really compact affected by two things.

Is that an area, where you see significant room for improvement is there anything.

Tactically that you're doing internally or externally, that's gonna drive that again across increase.

Thanks, Jeff.

I'm going to.

Probably comment that more and more with more specificity and my concluding comments, but overall overall I think we could do a much better job and organic growth for infrastructure and I think it was really compact impacted by.

Dickerson Wright: One, we've accelerated the recruiting process so that we fill open slots much quicker than we have in the past. And we've enhanced that. We've done specific videos.

Two things one we've accelerated the recruiting process, so that we still open slots much quicker.

Then we have had in the past and we've enhanced that we've done specific videos, we strengthen human resources and recruiting process.

Dickerson Wright: We've strengthened the human resources and the recruiting process to actually not take advantage of and not lose revenue because of open slots. The second thing, though, is we want our executives, and we want our technical people, to be much more outspoken, much more with the client, and be embedded and add value. And I think that

Actually not.

Take advantage and not lose revenue because of open slot. The second thing, though is we want our executives we want our attention will be able to be much more outpacing much more with the client and be embedded in add value and I think that.

Dickerson Wright: We may not have done that as well in 23 as we intend to do in 24. So the specific... And then the third initiative, we have incentivized... For organic growth, we've incentivized the entire infrastructure group by rewarding them for the highest organic growth by a specific segment of that business. So the three things that we're doing are expediting our recruiting process and really making that happen. We want to react quicker.

We may have we may have not done that as well as an twenty-three as we intend to do in 2004. So the specifics and then the third initiative we have incentivised.

Organic growth, we've incentivize the entire infrastructure group.

Bye bye.

By rewarding them for the the.

Highest organic growth by specific segment of that business. So the three things that we're doing is expediting are recruiting process and really making that Ah.

We want to react quicker.

Dickerson Wright: The second thing is to be much more outspoken with the clients. And, and we really want our people to really lead the way in supporting and adding value to the clients. And the third thing, of course, is incentivizing.

Second thing is to be much more outpacing with the clients and we we really want our people to.

To really lead the way and supporting and adding value to the clients and the third thing of course is the incentivising.

Dickerson Wright: The whole focus of the infrastructure group this year is on organic growth, and we're willing to reward that for the highest organic growth in the business. So we can do better, and we intend to do better in 2024 with the infrastructure organic growth. Thank you for that.

The whole focus of the infrastructure group. This year is an organic growth and we are willing to.

Reward that for the highest organic growth.

And the business so.

We can do better and we intend to do better in 2024 with the infrastructure organic growth.

Thank you for that and then one of the drill down a little bit more on her <unk> Avenue strategy, how much of the business today would you consider.

Jeffrey Michael Martin: I wanted to drill down a little bit more on the recurring revenue strategy. How much of the business today would you consider recurring revenue, and what do you think the growth potential is there, and what tactical steps do you need to take to implement that strategy? It's on again.

Currently Avenue and what do you think the great potential there and <unk>.

Technically do you need to do to cancel meant that strategy.

And it's only this.

Dickerson Wright: We don't have any recurring revenue... The BIS portion, which is software and all recurring revenue, is about $30 million of the total. We do feel, though, that recurring revenue does happen in our data center work, in our analytical work, in our energy efficiency work. For example, what we're doing in Macau right now is all a recurring model of revenue. So, you know, Jeff, I would say.

We don't have any recurring.

Okay.

The <unk> portion, which is software in all recurring revenue is about 30 million $30 million of the total.

We do feel though that recurring revenue does happen also in our data center work and our analytical work in our energy efficiency work.

For example, what we're doing in Macau right now is all reoccur as all reoccurring.

Model of revenues so.

<unk> I would say.

Dickerson Wright: I don't want to be specific. We really want to move the company towards more recurring revenue, but probably right now, it's only about $50 million of what it's in the budget. Okay, and then one more question, if I could. The West Coast has had a lot of severe weather since the start of the year. Just curious if you're seeing an impact on that in the first quarter from that.

I don't I don't want to be specific we really want to move the company towards more recurring revenue, but probably right now it's only about $50 million of the what's in the budget.

Okay, and then one more if I could west coast has had a lot of severe weather.

Since the start of the year, just curious if you're seeing an impact on that and and the first quarter from that.

Well [laughter].

Jeffrey Michael Martin: I can't speak of anything specific because we haven't released the first quarter results. However, we are pleased with results so far in the quarter, and surprisingly, our infrastructure group, which is the most impacted by severe weather, has done better than expected. Good to hear. Thank you. And as a reminder, press star 1 if you would like to ask a question.

Can't speak up any I can't speak of anything.

Specific because we haven't released.

First quarter results. However.

We are pleased with.

With the results so far in the in the quarter and it surprisingly our infrastructure group, which is the most impacted by severe weather has has.

That's done better than expected.

<unk>. Thank you.

And as a reminder, press star one if you would like to ask a question.

Operator: And we will take our next question from Michael Feniger with Bank of America. Your line is open. Thank you for listening. See you next time.

And we will take our next question from Michael Feniger with Bank of America. Your line is open.

Hey, guys.

Thanks Bye bye.

Michael J. Feniger: Hey, guys. Yeah, thank you. Hey, everybody.

Hi, everybody. Thanks for squeezing me and just.

Michael J. Feniger: Thanks for squeezing me in just at the 14% growth in Q4. Is that mostly organic or is there some acquisition contribution in the revenue growth in the fourth quarter? Yeah, in the fourth quarter, we acquired, if you recall, AXSM and VIZ in February and April of 23, respectively. So quarter over quarter, you're seeing the impact of both of those acquisitions. So most of that is acquisition related. Great, that's helpful.

14% growth in Q4 is that mostly organic or are there some acquisition contribution in the revenue growth in the fourth quarter.

The the fourth court, we acquired if you recall ask him <unk> in.

February and April of 23, respectively, so quarter over quarter, you're seeing the.

The impact of both of those acquisitions. So most of that is acquisition related.

Great. That's that's helpful and and if I could just follow up.

Edward Codespote: And Ed, if I could just follow up, I apologize if you kind of addressed it, just, you know, we're seeing the revenue growth guide for 24. Is there any reason why that growth doesn't translate to adjusted EPS growth on a year-over-year basis? Is there any posts and takes there, and is there any way you can kind of help us ballpark what, you know, would the EBITDA growth be similar to the revenue growth that you're expecting? Just kind of trying to put some, you know, guardrails around this so we're all on the same boat.

Projects it'd be kind of interesting.

We're seeing the revenue growth guide for 24 is there any reason why.

That growth doesn't translate to the adjusted EPS growth on a year over year basis is there any person thinks there and is there any way you can kind of help us ballpark, but.

EBITDA growth be similar to the revenue growth that you're expecting just kind of trying to put some.

Guard rails around so we're all on the same same boat.

Edward Codespote: Yeah, well, the EPS and the guidance does correlate to the top line. I mean, we're we're we assume that the trending the currently trending margin, so it should be it should be in the ballpark. And I would expect, yeah, on the adjusted EBITDA margins. Again, those should be pretty consistent with what we saw in 23. Got it.

Yeah, well, the EPS and the guidance does correlate to the top line I mean, we're <unk>, we assume that the trend being the currently trembling.

<unk> so it should be it should be in the ballpark and I would expect.

On the adjusted EBITDA margins.

Again, those should be pretty pretty consistent with what we signed twenty-three.

Got it helpful and add just the last one you just the Katherine opt in 23 was down but you had you had a nice jump in the fourth quarter.

Edward Codespote: Helpful. And Ed, just the last one for you, just the cash from OPT in 2023 was down, but you had a nice jump in the fourth quarter that you guys were highlighting. Just anything we should kind of think about for the cash flow, because there's some moving pieces in 2023, how to kind of think about that for 2025? Absolutely.

Guys are highlighting.

Anything we should kind of think about for the cash flow because there are some moving pieces in 2023 had a kind of think about that for 2024.

Absolutely when you look at the cash flow statement, you will see that we have drawing down on that on their cache of mobs about $15 million unveiled receivables and so that that's the nature of the business in particular and Geo with some of our larger projects the the billing.

Edward Codespote: You know, when you look at the cash flow statement, you'll see that we have drawn down on that cash from Operations about $15 million in unbilled receivables. And so that's the nature of the business, in particular, in GEO with some of our larger projects, the billing milestones are more on the tail end of the projects, as opposed to the actual work performed, if that makes sense. So that drags us down a little bit. We also had in 23. I'm sure many of you are familiar with Section 174D of the IRS Code that was passed along with the JOBS Act. And we paid an additional amount, it has to do with the capitalization for tax purposes of R&D expenses, where you must capitalize them and amortize them over a period of time rather than take them all at once. So in those first, say, five years or so, it takes you a while to bounce back. And during that ramp-up time, you're paying more than you historically paid in taxes. It's not that it affects your income tax effective rate at all; it's just more cash flow.

Milestones are are more on the tail end of the projects as opposed to the the actual work performed if that makes sense, so that drags us down a little bit. We also had an 23 I'm sure. Many of you are familiar with <unk> one.

174, the IRS code that was passed along with the jobs Act and and.

And we paid him additional it has to do with the capitalization of for tax purposes of R&D.

Of R&D expenses were you must capitalise and amortize them over a period of time rather than take them all at once so in those first say five years or so it takes a while to bounce out and during that ramp up time.

You're paying more than you historically paid in taxes, it's not that it affects your income tax effective right at all it's just more cash flow and so we had to pay around $19 million more than 2023 now the interesting thing is that I believe it was last month the house.

Edward Codespote: And so we had to pay around $19 million more in 2023. Now, the interesting thing is that, I believe it was last month, the House passed a bill to repeal that, and it's now going to the Senate. If that is repealed, then those payments that we've made for both 2023 and 2022 would come back to the company if that's the way that they administer the repeal. So those are just some of the unique items when you think about cash flow that are affecting us this year. Great

Passed a bill to repeal that and it's now going to the Senate if that is repealed than we would that those.

Those.

Payments that we've made for both 20th 23, and 2022 would come back to the company. If that's the way that they administer the repeal so.

But those are just some of the.

Unique items when you think about cash flow that are affecting us this year.

Great. Just lastly, maybe fixing you'll touch on this and youre, including remark congratulations by the way the secession plain just.

Michael J. Feniger: And just lastly, and maybe Dickerson, you'll touch on this in your concluding remarks. Congratulations, by the way, on the succession plan. Just anything we should be aware of in terms of changes to NV5 going forward? Is the M&A strategy changing, you know, maybe certain types of reporting with the co-CEO? Just curious, this is kind of a big deal to see this, and I'm just curious, seriously, if there's any shift in the strategy that we've been hearing from NV5, maybe going forward with the secession plan coming effective in March. Well, yeah, I think so. Let me answer the question, hopefully, in the order that you asked.

Anything we should be aware of in terms of.

Changes to N V. Five going forward is the M&A strategy changing.

Certain types of reporting with the <unk>. Just curious is kind of a big deal to see this and I'm just curious.

If there is any shift in strategy that we've.

Been here from Henry five maybe maybe going forward with it with the secession plan coming effective in March.

Well, Yeah I think.

Let me answer the question.

Hopefully in the order that you're asking are M&A is very active in fact, we're probably more active than I can ever remember us being we will focused and we're always going to be opportunistic and so will we be opportunistic in our three <unk>.

Dickerson Wright: Our M&A is very active. In fact, we're probably more active than I can ever remember us being. We will focus, and we're always going to be opportunistic. And so will we be opportunistic in our free..., and all of the key areas of growth that I announced with our building technology group, infrastructure group, and our geospatial group. So we will look for various acquisitions that really strengthen those platforms. And in my concluding comments, there are some specific things that are happening right now that we really feel we're in a good position to take advantage of. So, if you don't mind, Mike, I will speak specifically of some of the changes that we're going to make to the services that we may offer.

T areas of growth that I announced with our building technology group, our infrastructure group and our G.

Geospatial group. So we will look for various acquisitions that really strengthen those platforms and then my concluding comments. There are system specific things that are happening right now that we really feel we are in a good position.

To take advantage of it. So if you don't mind, Mike I will speak specifically of some of the changes that we are going to do in the in the services that.

That we may offer, but the real intent is to be opportunistic and to grow those.

Dickerson Wright: But the real intent is to be opportunistic and to grow those key areas. You'll notice that we made a large acquisition in our infrastructure group at the beginning of this year. So maybe there may be other acquisitions for infrastructure and for geospatial. And we really want to take advantage of work that's being done in our building technology group. So it's just a matter of.

Key areas, you'll notice that we made a large acquisition and our infrastructure group.

At the at the beginning of this year. They will maybe there may be other acquisitions were.

Infrastructure and for Geospatial and we re.

Really want to take advantage of work that's being done in our building technology group. So so so it's just a matter M&A activity is very active right now and we're gonna be up opportunistic and those three segments that we that.

Dickerson Wright: M&A activity is very active right now, and we are going to be opportunistic in those three segments that we mentioned. Great, thank you.

Dickerson Wright: Tate Sullivan, Michael Feniger, Jeffrey Martin, Tate Sullivan, NV5 Global Inc., And ladies and gentlemen, 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.

That we mentioned.

Great. Thank you.

And ladies and gentlemen, let's take a question and answer session.

Now like to turn the call back over to Mister right for closing remark.

Thank you I was listening to Bob to.

Dickerson Wright: I was listening to the questions on the call today, and I have a few things that I'd like to say about what we have accomplished in 2023 and what we look forward to in 2024. First, 2023 was a positioning year for NV5's future growth. We established this platform to really grow, and although, as you know, when companies are repositioning, and they internalize, we still had a very profitable year and a year of growth, even though we will certainly see the rewards of that in 2024. We remain, as I mentioned to Mike, very active in M&A activity, and in fact, we intend to conclude a number of acquisitions to expand our platform. So, we are very, very active in that role.

Through the questions and the call today and I have a few things that I'd like to say about what we have accomplished in 2023 and what we look forward to in 2024 first 2023 was positioning your friend divides future growth. We establish this platform to really grow and although as you know when when companies.

[noise] are repositioning.

And they internalize, but we still had a very profitable the year and a year of growth even though.

We will certainly see the rewards of that in 2024, we remain as Mike I mentioned to Mike We remained very active in M&A activity.

And in fact, we intend to shortly to conclude a number of acquisitions to expand our platform. So we are very very active in that.

Roll and the macro picture you may have noticed in the National news recent announcements that two trillion dollars will be spent in the next five years for worldwide data center production and improvements.

Dickerson Wright: And the macro picture, you may have noticed in the recent news announcements that $2 trillion will be spent in the next five years on worldwide data center production and improvements. NV5 is well positioned through our building technology group to take advantage of this opportunity. We have made three acquisitions specifically in support of data centers, with many more to follow.

N b five as well positioned through our building technology group.

Take advantage of this opportunity we have made three acquisitions, specifically and supportive data centers.

And button with many more to follow.

Dickerson Wright: Domestically, our infrastructure services group is off to a very good start in 2024. Initiatives that I mentioned earlier and incentives that I mentioned earlier seem to have provided a focus on organic growth, and so we're pleased with the results there. You heard us mention the business in our geospatial group. Although that business is strong, it's very robust, we're dependent on the Federal Government and work that's been delayed because of the continuing resolution is resolved, we will certainly increase our geospatial activity, but we are still dependent on the federal continuing resolution. And so if you've seen some, in fact, we probably would have had an even stronger quarter in the fourth quarter if we didn't have experienced those delays, and we're seeing that impact right now.

Domestically our infrastructure services group is off to a very good start.

In 2024 initiatives that I mentioned earlier and incentives that I mentioned earlier seemed that provided a focus on organic growth and so we're pleased with the results there.

You heard this mentioned that this is in our geospatial group, although that business is strong it very robust we are dependent on.

The federal government and work that's been delayed because of the continuing resolution so.

As that.

This resolved.

We will certainly increase our geospatial activity, but it but we are still dependent on the federal continuing resolution and so if you've seen some in fact, we probably would have had even stronger quarter and the fourth quarter. If we didn't have experienced those delays and and we're seeing that impact right now but.

Dickerson Wright: But as long as that resolution goes, then I think we will be well positioned to move forward. Overall, I am pleased to report that. Business for 2024 is strong. We have anticipated growth and profitability. And you'll notice, and it was a key comment that Ed made, while we were doing this, and as we did these acquisitions, we reduced our debt; we reduced our leverage from 1.4 times EBITDA down to 1.2 times. We are mindful of being a profitable, expanding company, but we need to adapt. We need to restructure to allow our key people to grow the business and grow the company. So we anticipate a very good year in 2024, and we thank everyone for listening today and look forward to working with us. We will join you again in the first quarter of 2024 to see where we are. So, thank you very much. www.ncbi.nlm.nih.gov. And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect. www.nv5.org

As that resolution goes and I think we will be well positioned.

To move forward.

Overall I am pleased to report that.

Business for 2000 to 2004 is strong.

We have anticipated growth and profitability.

You'll notice and it was a key comment that Ed made while we were doing this and as we did these acquisitions, we reduced our debt.

Reduced our leverage from one four times EBITDA down to one two times so.

We are mindful on being a profitable expanding company, but we need to adapt we need to restructure to allow our T people.

To grow the business and grow the company. So we anticipate a very good year in 2024, and we thank everyone for for you listen today and look forward to US we will join you again in the first quarter of 2024 to see to see where we are so thank you very much.

Ladies and gentlemen. This concludes today's call me. Thank you for your participation you may now disconnect.

Mmm.