Q2 2024 NV5 Global Inc Earnings Call

Speaker Change: Good afternoon, everyone, and thank you for participating in today's conference call to discuss NV5's financial results for the second quarter 2024 and the July 29, 2024.

Speaker Change: Joining us today are Dickerson Wright, Executive Chairman of NV5, Edward Codispoti, CFO of NV5, Alex Hockman, CEO of NV5 Infrastructure,

Speaker Change: Ben Heraud, CEO of NV5 Buildings and Technology, Dan Levine, President, Geospatial at NV5, and Richard Tong, Executive Vice President and General Counsel at NV5.

Unknown Executive: NV5's financial results for the second quarter 2024 and the July 29, 2024. Joining us today are Dickerson Wright, Executive Chairman of NV5. I would now like to turn the call over to Richard Tong.

Operator: Now, I'd like to turn the call over to Richard Tong.

Speaker Change: I would now like to turn the call over to Richard Tong.

Richard Tong: Thank you, Operator. Welcome, everyone, to NV5's second quarter 2024 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 uncertainties.

Richard Tong: Thank you, operator. Welcome, everyone, to NV5's second quarter 2024 earnings call. Before we proceed, I would like to notify all participants that today's presentation can be found on ir.nv5.com.

Richard Tong: Factors that could cause actual results to differ materially from these statements are included in today's presentation slides and in our report on FI with the SEC. During the 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 second quarter 2024 comparisons are being made against the second quarter of 2023.

Speaker Change: and remind everyone that today's discussion contains forward-looking statements about the company's future business and financial performance.

Speaker Change: 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 and in our report on PHY with the SEC.

Speaker Change: During the call, GAAP and non-GAAP financial measures will be discussed.

Speaker Change: A reconciliation between the two is available in today's earnings release and on the company's website at www.nv5.com.

Speaker Change: Please note that unless otherwise stated, all references to second quarter 2024 comparisons are being made against the second quarter of 2023.

Richard Tong: In this presentation, NV5 has included certain 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 an accordance with or a substitute for GAAP. In addition, other companies may define non-GAAP measures differently, which limits the ability of investors to compare non-GAAP measures of NV5 to those used by peer companies.

Speaker Change: In this presentation, NV5 has included certain non-GAAP financial measures as defined in Regulation G promulgated under the Securities and Exchange Act of 1934 as amended.

Speaker Change: The non-GAAP financial measures included in this presentation are adjusted earnings per share and adjusted EBITDA.

Speaker Change: NV5 provides non-GAAP financial measures to supplement GAAP measures as they provide additional insight into NV5's financial results.

Speaker Change: However, non-GAAP

Speaker Change: Measures have limitations as analytical tools and should not be considered in isolation.

Speaker Change: and are not in accordance or a substitute for GAP.

Speaker Change: 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.

Richard Tong: A webcast replay of this call and its accompanying presentation are also available via the link provided in today's news release in the Investors section of the company's website. You may also find today's presentation, which will be referenced during this call, in the Investors section of the company's website. We will begin the call with comments from Dickerson Wright, Executive Chairman of NV5, before turning the call over to Edward Codispoti, Chief Financial Officer, for a review of the second quarter results. Dickerson Wright will then provide closing comments before we open the call for your questions. Dickerson

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

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

Speaker Change: We will begin the call with comments from Dickerson Wright, Executive Chairman of NV5, before turning the call over to Edward Codispoti, Chief Financial Officer, for review of the second quarter results. Dickerson Wright will then provide closing comments before we open the call for your questions. Dickerson, please go ahead. Thank you.

Dickerson Wright: Thank you, Richard, and we thank everyone joining us on this call today. Although we are very pleased to report a successful second quarter, which reflected strong organic growth and profitability, the second quarter results further represented the positioning of NV5 to meet the expected increase in demands for the second half of the year. As many of you know and have attended, an Investor Day was held on July 25th, which emphasized our position for not only the second half of this year but our goals for NV5 in the three years to come, using technology to better deliver these services.

Richard Tong: Although we are very pleased to report a successful second quarter, which reflected strong organic growth and profitability, the second quarter results further represented the positioning of NV5 to meet the expected increase in demands for the second half of the year. Global population growth has placed tremendous demands on infrastructure and energy production and delivery. We have strengthened all aspects of NV5 infrastructure and energy production and delivery services. As an example of this, our backlog, which has increased to $877 million for the year, as you can see on slide three.

Dickerson Wright: Thank you, Richard, and we thank everyone joining us for this call today.

Speaker Change: Although we are very pleased to report a successful second quarter, which reflected strong organic growth and profitability, the second quarter results further represented the positioning of NV5 to meet the expected increase demands for the second half of the year.

Speaker Change: As many of you know and have attended, Investor Day was held on July 25th, which emphasized our position for not only the second half of this year, but our goals for NB5 in the three years to come, using technology to better deliver these services.

Dickerson Wright: Current market conditions confirm the NV5 positioning of being in a mandatory business. The global population growth has placed tremendous demands on infrastructure and energy production and delivery. We have strengthened all aspects of NV5's infrastructure and energy production and delivery services. This has proven to be a very stable business model during all economic conditions.

Speaker Change: Current market conditions confirm the NV5 positioning of being in a mandatory business.

Speaker Change: The global population growth has placed tremendous demands on infrastructure and energy production and delivery.

Speaker Change: We have strengthened all aspects of NV5 infrastructure and energy production and delivery services. This has proven to be a very stable business model during all economic conditions.

Dickerson Wright: As an example of this, our backlog, which has increased to $877 million for the year, represents an increase of 5% over Q1'24 and 9% over the second quarter of last year. As you can see on slide 3... We have presented the combined performance for NV5 in the second quarter of 2024. These totals represent the sum of three segments of our business: Infrastructure, Geospatial, and Buildings and Technology. These three segments are supported by our six service verticals.

Speaker Change: As an example of this, our backlog, which has increased to $877 million for the year, represents an increase of 5% over Q1-24 and 9% over the second quarter of last year.

Speaker Change: As you can see on slide 3,

Speaker Change: We have presented the combined performance for NV5 in the second quarter of 2024. These totals represent the accumulation of three segments of our business, infrastructure, geospatial, and buildings and technology.

Dickerson Wright: Construction Quality Assurance, Utility Services, Infrastructure, Environmental Health Sciences, Building and Technology, and Geospatial. We will report the second quarter performance of these verticals as well as annual and future goals for each of these segments. We will also convey the competitive advantage of how these verticals work with each other to deliver effective and meaningful results to our clients through a robust cross-selling program across all our offices. The first segment we would like to discuss is our infrastructure segment, which will be presented by Alex Hockman, CEO of Infrastructure. We will not only discuss the second quarter results but how we use technology to deliver these results and the cross-selling support that infrastructure receives from our other verticals. Alex

Speaker Change: These three segments are supported by our six service verticals, Construction Quality Assurance, Utility Services, Infrastructure, Environmental Health Sciences, Building and Technology, and Geospatial.

Speaker Change: We will report the second quarter performance of these verticals as well as annual and future goals for each of these segments.

Speaker Change: We will also convey the competitive advantage of how these verticals work with each other to deliver effective and meaningful results to our clients through a robust cross-selling program of all our offices.

Richard Tong: The first segment we would like to discuss is our infrastructure segment. We will not only discuss the second quarter results but how we use technology to deliver these results and the cross-selling support that infrastructure receives from our other verticals. Alex

Speaker Change: The first segment we would like to discuss is our infrastructure segment.

Alex Hockman: which will be presented by Alex Hockman, CEO of MIF Infrastructure. We will not only discuss the second quarter results but how we use technology to deliver these results and the cross-selling support that infrastructure receives from our other verticals. Alex?

Dickerson Wright: Thank you, Dickerson. Please turn to slide 5. Infrastructure as a reporting segment generated 101 million dollars in gross revenue in Q2. If you turn to slide 6, our sustainable infrastructure addresses many facets of the built world. One of the ways in which we are distinguishing our platform is to be leaders in adopting and enhancing technology. Slide 7 provides a summary of our DOT initiative. One of the unique aspects of our DOT initiative is our ability to integrate our geospatial services to complement our engineering expertise.

Alex Hockman: Thank you, Dickerson. Please turn to slide five. Infrastructure as a reporting segment generated $101 million in gross revenue in Q2. The three verticals that comprise this segment include our business units that provide engineering, design, and surveying, which accounted for 51% of Q2 revenues. Utilities were 29%, and construction quality assurance services were 20% of Q2 revenues.

Alex Hockman: Thank you, Dickerson. Please turn to slide 5.

Alex Hockman: Infrastructure as a reporting segment generated 101 million dollars in gross revenue in Q2.

Speaker Change: The three verticals that comprise this segment include our business units that provide engineering design and surveying, which accounted for 51% of Q2 revenues.

Speaker Change: utilities were 29% and construction quality assurance services were 20% of Q2 revenue. Of note, revenues generated by our geospatial and technology reporting segments associated with infrastructure as an end market are reported separately.

Alex Hockman: Of note, revenues generated by our geospatial and technology reporting segments associated with infrastructure as an end market are reported separately. In 2023, we established key initiatives to focus on targeted growth sectors, shown in the lower left of this slide. I will briefly discuss each of these initiatives.

Speaker Change: In 2023, we established key initiatives to focus on targeted growth sectors shown in the lower left of this slide. I will briefly discuss each of these initiatives.

Alex Hockman: If you turn to slide 6, our sustainable infrastructure addresses many facets of the built world. One of the ways in which we are distinguishing our platform is to be leaders in adopting and enhancing technology to refine the process from conceptual design through construction and operation. And this has resulted in increased profitability and growth. These technologies include the use of scanning, modeling, and visualization tools that allow us to create 3D images of in-situ infrastructure and the proposed design, which reduce construction costs and delays and allow for the stakeholders to readily understand the proposed design.

Speaker Change: If you turn to slide 6, our sustainable infrastructure addresses many facets of the built world.

Speaker Change: One of the ways in which we are distinguishing our platform is to be leaders in adopting and enhancing technologies to refine the process from conceptual design through construction and operation phases, and this has resulted in increased profitability and growth.

Speaker Change: These technologies include the use of scanning, modeling, and visualization tools that allow us to create 3D images of in-situ infrastructure and the proposed design, which reduce construction costs and delays and allow for the stakeholders to readily understand proposed designs.

Alex Hockman: Slide 7 provides a summary of our DOT initiatives, which bring our technical people and solutions to all DOT clients to increase organic growth and profitability. Through these initiatives, we are experiencing strong growth in DOTs in North Carolina, California, and New Jersey. Last quarter, I mentioned the acquisition of CHW, and with the success of the integration and statewide opportunities, we plan to double the size of our Florida DOT and municipal engineering services by 2028.

Speaker Change: slide seven provides a summary of our doott initiatives which brings our technical people in solutions to all doott clients to increase organic growth in profitability

Speaker Change: Through these initiatives, we are experiencing strong growth in DOTs in North Carolina, California, and New Jersey.

Speaker Change: last quarter i mentioned the acquisition of chw and with the success of the integration and statewide opportunities we plplanant to double the size of our florida dott and municipal engineering services by two thousand and twenty eight

Alex Hockman: One of the unique aspects of our DOT initiative is our ability to integrate our geospatial services to complement our engineering expertise. This differentiator allows us to offer services throughout the CAPEX and OPEX phases of an S. Some recent key wins are a direct result of our DOT initiative, including $60 million in civil program management contracts for Caltrans that have been secured this year. We also recently announced $10 million in North Carolina DoD contracts.

Speaker Change: One of the unique aspects of our DOT initiative is our ability to integrate our geospatial services to complement our engineering expertise. This differentiator allows us to offer services throughout the CAPEX and OFFEX phases of an asset.

Dickerson Wright: This differentiator allows us to offer services throughout the CAPEX and OFFEX phases of an asset. These growth drivers create high demand for our utility. With NV5's multidisciplinary and integrated service offering to the utility market, we are well-positioned to grow with the increased demand and able to provide our services throughout the United States.

Speaker Change: Some recent key wins are a direct result of our DOT initiative, including $60 million in civil program management contracts for Caltrans that have been secured this year. We also recently announced $10 million in North Carolina DOT contracts.

Alex Hockman: Slide 8 identifies several growth drivers in our utility services business. Some key items to note are that $42 billion in grid modernization costs proposed by the 50 largest investor-owned utilities have received approval from regulatory agencies. Other drivers include the growth in renewable energy, which is forecast to double over the next 20 years, increased electricity demand, and public demand for increased reliability and resilience. These growth drivers create high demand for our utility. On page 9, you'll see examples of undergrads.

Speaker Change: Slide 8 identifies several growth drivers in our utility services business. Some key items to note is that $42 billion in grid modernization costs proposed by the 50 largest investor-owned utilities have received approval from regulatory agencies.

Speaker Change: Other drivers include the growth in renewables, which is forecast to double over the next 20 years, increased electricity demand, and the public demand for increased reliability and resiliency.

Speaker Change: These growth drivers create high demand for our utility services.

Alex Hockman: This technique has been proven to be extremely effective in grid hardening transmission lines. NV5 has been involved in designing over 700 miles of undergrounding, and through experience and innovation, the cost of undergrounding a mile of line has decreased over 50% since 2019. Further, our solutions and analysis result in opportunities for all of the infrastructure vertical and our unmatched geospatial capability. With NV5's multidisciplinary and integrated service offering to the utility market, we are well positioned to grow with the increased demand and able to provide our services throughout the United States.

Speaker Change: On page 9 you'll see examples of undergrounding. This technique has been proven to be extremely effective in grid hardening transmission lines.

ny five: NV5 has been involved in designing over 700 miles of undergrounding and through experience and innovation the cost of under running a mile of line has decreased over 50% since 2019.

ny five: Further, our solutions and analysis result in opportunities for all of the infrastructure vertical and our unmatched geospatial capabilities.

ny five: With NV5's multidisciplinary and integrated service offering to the utility market, we are well positioned to grow with the increased demand and able to provide our services throughout the United States.

Dickerson Wright: Dickerson

Dickerson Wright: Thank you, Alan. The second segment is our geospatial services. Dan Levine, the president of our geospatial segment, will discuss how this vertical provides key services to our clients, but it also delivers advanced technology to support our core business. Dan, please go ahead. Thanks, Dickerson.

Dan Levine: Thank you, Alex. The second segment is our geospatial services. Dan Levine, the president of our geospatial segment, will discuss how this vertical provides key services to our clients, but it also delivers advanced technology to support our core business.

Dan Levine: Thanks Dickerson. If you would please turn to slide 11. I'm going to spend a few minutes talking about the geospatial sector results for Q2, as well as some of the emerging trends in our markets and the technologies we use, and how these are creating competitive advantages for us across all sectors of NV5. We have a strong and growing backlog in the utilities sector, with several large wins in the quarter, including two totaling over $13 million from both the southeast and SoCal regions and a larger contract pending from the northeast region.

Dan Levine: Dan, please go ahead.

Dan Levine: Thanks, Dickerson. If you would please turn to slide 11. I'm going to spend a few minutes talking about the geospatial sector results for Q2 as well as some of the emerging trends in our markets and technologies we use and how these are creating a competitive advantages for us across all sectors of NV5.

Speaker Change: So Q2 gross revenue totaled $72 million, driven in large part by continued strength in the utilities market. We have a strong and growing backlog in the utilities sector, with several large wins in the quarter, including two totaling over $13 million from both the southeast and SoCal regions.

Dan Levine: Additionally, our aircraft and sensor utilization continue to set records for us in flight times and miles flown. These are revenue drivers for both our data acquisition and our data analytics services. I mentioned in the Q1 earnings call that we expected to start seeing contracts flowing from the federal government towards the end of Q2 and into Q3 as a result of the continuing resolution being resolved in late March. This is exactly what we've experienced, in May and June, and ongoing through today, with over $35 million in federal contract awards from just four agencies in both defense and civilian sectors. Finally, during May and June, we were able to book over $8 million in contracts for our hydrospatial business, creating a positive turn in that sector for us. If you could, please turn to slide 12.

Dan Levine: and a larger contract pending from the Northeast region.

Dan Levine: Additionally, our aircraft and sensor utilization continue to set records for us in flight times and miles flown. These are revenue drivers for both our data acquisition and our data analytics services.

Speaker Change: I had mentioned in the Q1 earnings call that we expected to start seeing contracts flowing from the federal government towards the end of Q2 and into Q3 as a result of the continuing resolution being resolved in late March. This is exactly what we've experienced.

Speaker Change: In May and June , and ongoing through today, with over $35 million in federal contract awards from just four agencies in both defense and civilian sectors.

Dan Levine: Finally, during May and June , we were able to book over $8 million in contracts for our hydrospatial business, creating a positive turn in that sector for us.

Dan Levine: The geospatial business is, at core, a technology-driven business, and one of the things about technology is that it's constantly changing. This keeps us in touch with our existing clients, as they always want the next best thing. As the largest geospatial services business in the market, we have inherent advantages. NV5 Geospatial has a large and diverse portfolio, requiring and supporting the development of expertise in new and emerging technologies. This allows us to maintain our early adopter position in the spaces we are active in and provides access to new markets that benefit from leveraging our technology. These technological advantages are in the form of land, sea, and air sensors and the ability to combine the multiple sensor types into a single collection system.

Dan Levine: If you would please turn to slide 12.

Speaker Change: The geospatial business is, at core, a technology-driven business. And one of the things about technology is that it's constantly changing. This keeps us sticky with our existing clients, as they always want the next best thing.

Dan Levine: As the largest geospatial services business in the market, we have inherent advantages.

Speaker Change: NV5 Geospatial has a large and diverse portfolio requiring and supporting the development of expertise in new and advancing technologies. This allows us to maintain our early adopter position in the spaces we are active in and provides access to new markets that benefit through leveraging our technologies.

Speaker Change: These technology advantages are in the form of land, sea, and air sensors and the ability to combine the multiple sensor types into a single collection system.

Dan Levine: Additionally, our commercial software with over half a million users worldwide is built on 18 paths. These and the thousands of bespoke solutions we use internally for data production and analysis and externally by creating specific enduring solutions for our customers keep us ahead of our competition as well. Can you please turn to slide 13?

Speaker Change: Additionally, our commercial software with over half a million users worldwide is built on 18 patents.

Speaker Change: These and the thousands of bespoke solutions we use internally for data production and analysis and externally by creating specific enduring solutions for our customers keep us ahead of our competition as well. If you please turn to slide 13.

Dan Levine: Not only does that help the geospatial business directly, but the technologies and expertise we develop for that business apply directly to our infrastructure and building technologies businesses. We are experiencing an increasing level of cross-selling and project work through leveraging geospatial technologies across the sector. Examples include using our scanned BIM equipment and expertise to support that building technology as it is doing for data centers and bringing that into airports and other facilities. We are actively supporting the power team and infrastructure with data for asset management and assessment.

Speaker Change: Not only does that help the geospatial business directly, but the technologies and expertise we develop for that business applies directly to our infrastructure and building technologies businesses.

Alex: We are experiencing an increasing level of cross-selling and project work through leveraging geospatial technologies across the sector. And we are seeing several areas in both transportation and water where geospatial technologies are able to expand our client base and the work we do in these seconds. This phenomenon goes both ways, as deep domain expertise in the power, water, and transportation areas of the business is directly supporting geospatial teams' ability to win work where they would not have even attempted to win in the past.

Speaker Change: We are experiencing an increasing level of cross-selling and project work through leveraging geospatial technologies across the sectors.

Speaker Change: Examples include using our scanned BIM equipment and expertise to support that building technologies is doing for data centers and bringing that into airports and other facilities.

Speaker Change: We are actively supporting the power team and infrastructure with data for asset management and assessments.

Dan Levine: And we are seeing several areas in both transportation and water where geospatial technologies are able to expand our client base and the work we do in these seconds. This phenomenon goes both ways, as the deep domain expertise in the power, water, and transportation areas of the business is directly supporting geospatial teams' ability to win work where they would not have even attempted to win in the past. If you'd please turn to slide 14.

Speaker Change: And we are seeing several areas in both transportation and water where geospatial technologies are able to expand our client base and the work we do in these sectors.

Speaker Change: This phenomenon goes both ways, as the deep domain expertise in the power, water and transportation areas of the business is directly supporting geospatial teams' ability to win work where we would not have even attempted to win in the past.

Dan Levine: I wanted to speak for a moment specifically about our software capabilities. The NV ecosystem is a recognized leading software package that provides scientific image processing capabilities to our customers. Traditionally, that has been used by scientists and academia and large research agencies. Our software was embedded on the Hubble telescope, for example. It is also becoming a key component to some medical imaging analysis automation. X-rays and MRIs are being read by computer algorithms, largely driven by our software.

Speaker Change: If you'd please turn to slide 14.

Speaker Change: I wanted to speak for a moment specifically about our software capabilities. The NV ecosystem is a recognized leading software package that provides scientific image processing capabilities to our customers.

Speaker Change: Traditionally, that has been used by scientists and academia and large research agencies. Our software was embedded on the Hubble telescope, for example.

Speaker Change: It is also becoming a key component to some of the medical imaging analysis automation. X-rays and MRIs are being read by computer algorithms, largely driven by our software.

Dan Levine: Our software-as-a-service platform is enhancing our traditional capabilities, allowing non-scientists to perform similar analyses but to do it over and over again. This capability is being used by large oil companies worldwide to auto-detect issues with their assets, for transportation applications, assessing subsidence along roads and railways, and finally, the DoD and intelligence communities are using this more and more as a force multiplier for detecting and assessing activities in parts of the world experiencing rising tensions, which were traditionally performed by banks of animals. The NV software platform is a unique differentiator for NV5. Back to you, Dickerson.

Speaker Change: Our software-as-a-service platform is enhancing our traditional capabilities, allowing non-scientists to perform similar analyses, but to do it over and over again.

Speaker Change: This capability is being used by large oil companies worldwide to auto-detect issues with their assets.

Speaker Change: for Transportation Applications Assessing Subsidence Along Roads and Railways. And finally, the DoD and intelligent communities are using this more and more as a force multiplier for detecting and assessing activities in parts of the world experiencing rising tensions.

Dickerson Wright: were traditionally performed by banks of analysts. The NV software platform is a unique differentiator for NV5. Back to you, Dickerson.

Dickerson Wright: Our third segment is our buildings and technology segment. This segment has seen significant organic growth domestically and internationally. The demand for energy delivery and efficiency is increasing. Ben Heraud, the CEO of Buildings and Technology, who leads this group, will speak about our second quarter results and how we are using technology and analytics to meet this ever-increasing demand. Ben, please go ahead.

Unknown Executive: and our third segment is our buildings and technology segment. The demand for energy delivery and efficiency is increasing. Ben, please go ahead.

Speaker Change: Thank you, Dan. Our third segment is our Buildings and Technology segment. This segment has seen significant organic growth domestically and internationally.

Speaker Change: The demand for energy delivery and efficiency is increasing.

benharard: Ben Heraud, a CEO of Buildings and Technology, who leads this group, will speak about our second quarter results and how we are using technology and analytics to meet this ever increasing demand.

Ben Heraud: Thank you, Dickerson. Let's turn to slide 16. Our buildings and technology segment delivered 64 million in the second quarter of 2024, which represents 18% growth over the second quarter of 2023. Some of the areas that are driving this growth are data centers, clean energy, and building digitization. Please turn to slide 17.

Ben: Ben, please go ahead.

Ben: Thank you, Dickerson. Let's turn to slide 16. Our buildings and technology segment delivered $64 million in the second quarter of 2024, which represents 18% growth over the second quarter of 2023.

Ben: Some of the areas that are driving this growth are data centers, clean energy, and building digitization. Please turn to slide 17.

Speaker Change: Some of the areas that are driving this growth are data centers, clean energy, and building digitization.

Ben Heraud: To show our strong commitment to the continued growth of our services associated with data centers, we have set a 5 year target of $400 million in revenue, which is 10 times our current volume. We will achieve this by continuing to grow with our largest base of hyperscale clients, leveraging our strong expertise to win new clients, and expanding the services we provide within this sector. We won over $25 million in mission-critical and data center awards in the first half of 2024, and the pipeline for new opportunities continues to be strong in our data center business.

Speaker Change: Please turn to slide 17.

Speaker Change: To show our strong commitment towards the continued growth of our services associated with data centers, we have set a five-year target of $400 million in revenue, which is ten times our current volume.

Ben: We will achieve this by continuing to grow with our largest base of hyperscale clients, leveraging our strong expertise to win new clients, and expanding the services we provide within this sector. We have also seen strong growth in our digital twin services for data sensors, which we deliver in concert with our geospatial business. With the use of software, this service is highly profitable, scalable, and recurring. Working with our geospatial and surveying teams, we're able to create highly functional digital twins to improve a building's operation, reduce energy costs, and carbon emissions.

Speaker Change: We will achieve this by continuing to grow with our largest base of hyperscale clients, leveraging our strong expertise to win new clients and expanding the services we provide within this sector.

Speaker Change: We have won over $25 million in mission-critical and data center awards in the first half of 2024, and the pipeline for new opportunities continues to be strong in our data center business.

Ben Heraud: We have also seen strong growth in our digital twin services for data sensors, which we deliver in concert with our geospatial business. A key factor limiting the growth of the data center market and the domestic market is the availability of power, and according to recent studies, over 30% of data center capacity is unused due to a lack of sufficient energy. NV5 is uniquely positioned to address this issue and is currently leveraging multiple service lines to help our clients unlock this unused capacity, including energy efficiency, power delivery, MEP design, and commissioning. On slide 18, another challenge facing this sector is the complexities that AI servers are bringing to the operation of these facilities. Large and unexpected spikes in load cause heat load issues.

Speaker Change: We have also seen strong growth in our digital twin services for data sensors, which we deliver in concert with our geospatial business.

Speaker Change: A key factor to limiting the growth of the data center market and the domestic market is the availability of power and according to recent studies, over 30% of data centers capacity is unused due to a lack of sufficient energy.

Speaker Change: NV5 is uniquely positioned to address this issue and are currently leveraging multiple service lines to help our clients unlock this unused capacity, including energy efficiency, power delivery, MEP design and commissioning.

Speaker Change: On slide 18, another challenge facing this sector are complexities that AI servers are bringing to the operation of these facilities. Large and unexpected spikes in load cause heat load issues.

Ben Heraud: NV5 is at the forefront of solving these problems with our clients, utilizing cutting-edge technology and expertise. Through the use of software, this service is highly profitable, scalable, and recurring. On slide 19, our building digitization service is a great example of how we are leveraging technology to engage multiple NV5 services to support our clients. Working with our geospatial and surveying teams, we are able to create highly functional digital twins to improve a building's operation, reduce energy costs, and carbon emissions. This service is deployed for the entire lifecycle of the facility and puts us in a very strong position to bring all NV5 services to our clients over a long period.

Speaker Change: NV5 is at the forefront of solving these problems with our clients, utilising cutting edge technology and expertise. With the use of software, this service is highly profitable, scalable and recurring.

Speaker Change: On slide 19, our building digitization service is a great example of how we are leveraging technology to engage multiple NV5 services to support our clients.

Speaker Change: working with our geo spatial and surveying teams we are able to create highly functional digital twins to improve our buildings operation reduce energy costs and carbon emissions

Speaker Change: This service is deployed for the entire life cycle of a facility and puts us in a very strong position to bring all NV5 services to our clients over a long time period.

Dickerson Wright: Let's see how we did in Humility in Q2 of 2024 when we put all the three segments that you've just listened to together and what we can then anticipate for the balance of the year. Now, let's listen to Ed Codispoti, our Chief Financial Officer, as he addresses our financial results.

Speaker Change: Thank you, Ben.

Speaker Change: Let's see how we've done humility in Q2 of 2024 when we put all three segments that you've just listened to together and what we can then anticipate for the balance of the year. Let's listen to Ed Codispoti, our Chief Financial Officer, as he addresses our financial results.

Ed: Thank you, Dickerson, and good afternoon, everyone. Our gross profit was $123.3 million compared to $110.3 million in the prior year, an increase of 12%. Gross margins expanded 270 basis points from 49.5% in the second quarter of last year to 52.2% in the second quarter of this year, largely driven by geospatial and our infrastructure segment. Our net leverage remains low at 1.5 times.

Edward Codispoti: Thank you, Dickerson, and good afternoon, everyone. If you would please turn to slide 21 of the presentation, I'll review our 2024 second quarter financial results. Our gross revenues in the second quarter grew 6% to $236.3 million compared to $222.6 million in the second quarter of the prior year. Our gross profit was $123.3 million compared to $110.3 million in the prior year, an increase of 12%. Gross margins expanded 270 basis points from 49.5% in the second quarter of last year to 52.2% in the second quarter of this year, largely driven by geospatial and our infrastructure segment.

Ed Codispoti: Thank you, Dickerson, and good afternoon, everyone.

Ed Codispoti: If you would please turn to slide 21 of the presentation, I'll review our 2024 second quarter financial results.

Ed Codispoti: Our gross revenues in the second quarter grew 6% to $236.3 million compared to $222.6 million in the second quarter of the prior year.

Ed Codispoti: Our gross profit was $123.3 million compared to $110.3 million in the prior year, an increase of 12%.

Ed Codispoti: Gross margins expanded 270 basis points from 49.5% in the second quarter of last year to 52.2% in the second quarter of this year, largely driven by geospatial and our infrastructure segment.

Edward Codispoti: When looking at our operating results, please keep in mind that in the second quarter of last year, we had a $6.5 billion reversal of contingent consideration related to acquisition. Additionally, in the second quarter of this year, we had non-recurring costs related to our VIZ acquisition. Our depreciation and amortization increased $2.7 million, and our interest expense increased $1 million quarter over quarter. As a result, our net income was $7.9 million, compared to $15.4 million in the second quarter of last year, and our GAAP diluted EPS was $0.50 versus $1 per share in the prior year period.

Ed Codispoti: When looking at our operating results, please keep in mind that in the second quarter of last year, we had a $6.5 million reversal of contingent consideration related to acquisitions.

Ed Codispoti: Additionally, in the second quarter of this year, we had non-recurring costs related to our VIZ acquisitions.

Ed Codispoti: Our depreciation and amortization increased $2.7 million and our interest expense increased $1 million quarter over quarter.

Speaker Change: As a result, our net income was $7.9 million compared to $15.4 million in the second quarter of last year, and our GAAP diluted EPS was $0.50 versus $1 per share in the prior year period.

Edward Codispoti: When you strip out this noise and look at results from an adjusted EBITDA perspective, we increased our results 10% over last year. Adjusted EBITDA was $38.5 million in the second quarter of this year versus $35 million in the same quarter last year. This represented a margin expansion of 60 basis points as our margin increased to 16.3%.

Speaker Change: When you strip out this noise and look at results from an adjusted EBITDA perspective, we increased our results 10% over last year.

Speaker Change: adjusted ebita was thirty-eight point five million dollars in the second quarter of this year versus thirty- five million dollars in the same quarter last year

Ed Codispoti: This represented a margin expansion of 60 basis points as our margin increased to 16.3%.

Dickerson Wright: Our adjusted EPS was $1.24 per share in this second quarter, compared to $1.29 per share in the same period last year. Please keep in mind that in the second quarter, we experienced a ramp-up in our business. If you recall, we had a very strong cash flow quarter in Q1, as we generated $19.6 million of cash from operations. In Q2, our cash flow is affected by working capital needs as revenue ramps up.

Ed Codispoti: Our adjusted EPS was $1.24 per share.

Ed Codispoti: In this second quarter, compared to $1.29 per share in the same period last year. Please keep in mind that in the second quarter we experienced a ramp up in our business.

Unknown Executive: Discuss NV5's financial results for the second quarter, 2024, and the July 29, 2024.

Richard Tong: Joining us today are Dickerson Wright, Executive Chairman of NV5, Edward Codispoti, CFO of NV5, Alex Hockman, CEO of NV5 Infrastructure, Ben Herod, CEO of NV5 Buildings and Technology, Dan Levine, President, Chief Special 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. Thank you, operator.

Ed Codispoti: If you recall, we had a very strong cash flow quarter in Q1 as we generated $19.6 million of cash from operations.

Speaker Change: In Q2, our cash flow was affected by working capital needs as revenue ramps up. We used $11.3 million of cash from operations in the second quarter. Therefore, year-to-date, we have generated cash from operations of $8.2 million.

Dickerson Wright: We used $11.3 million of cash from operations in the second quarter. Therefore, year-to-date, we have generated cash from operations of $8.2 million. 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. Thank you, Ed.

Ed Codispoti: Our net leverage remains low at 1.5 times.

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

Ed: Thank you, Ed. Please turn to slide 22 to discuss some of our merger and acquisition activity currently ongoing at NV5. We have reached an agreement to acquire two businesses in the utility operations and maintenance business and in the water resources sector.

Dickerson Wright: Thank you, Ed. Please turn to slide 22 to discuss some of our merger and acquisition activity currently ongoing at NV5. We have reached an agreement to acquire two businesses in the utility operations and maintenance business and in the water resources sector. The first company will expand our services to utilities, providing operations and maintenance nationwide, which is a recurring revenue business. This acquisition will enhance our staffing capabilities for utilities and energy delivery services.

Richard Tong: Welcome everyone to NV5's second quarter, 2024 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. These are based on management's current expectations and are subject to risk and uncertainties. Factors that could cause actual results to differ materially from these statements are included in today's presentation slides and in our report on file with the SEC.

Ed Codispoti: I'll now turn it back over to Dickerson.

Dickerson Wright: Thank you, Ed. Please turn to slide 22 to discuss some of our merger and acquisition activity currently ongoing at NV5.

Speaker Change: We have reached an agreement to acquire two businesses in the utility operations and maintenance business and in the water resources sector. The first company will expand our services to utilities, providing operations and maintenance nationwide, which is a recurring revenue business.

Richard Tong: During the call, gap and non-gap financial measures will be discussed. A reconciliation between the two is available in today's earnings release and on the company's website at www.nv5.com. Please note that unless otherwise stated all references to second quarter 2024 comparisons are being made against the second quarter of 2023. In this presentation, NV5 has included certain non-gap financial measures as defined in regulation G promigated under the Securities and Exchange Act of 1934 as amended.

Speaker Change: This acquisition will enhance our staffing capabilities for utilities and energy delivery services.

Dickerson Wright: The second company we have agreed to acquire is a California wastewater and water resources company that will strengthen our water services. The combined acquisitions result in approximately 400 additional technical personnel for our existing platform. Please turn to slide 23.

Ed Codispoti: The second company we have agreed to acquire is a California wastewater and water resources company that will strengthen our water services. The combined acquisitions will result in approximately 400 additional technical personnel to our existing platform.

Dickerson Wright: We have had a very successful first half of the year. However, the year is not over. We must continue to stay focused on the delivery of growth and profitability to our investors. As a result, we are raising our guidance for gross revenues to $944 million to $950 million for the full year of 2024. Our full-year guidance for GAAP EPS is $2.87 to $2.93. And for adjusted EPS, our full-year guidance is $5.13 to $5.20 per share.

Ed Codispoti: Please turn to slide 23. We have had a very successful first half of the year. However, the year is not over. We must continue to stay focused on the delivery of growth and profitability to our investors.

Richard Tong: The non-gap financial measures included in this presentation are adjusted earnings per share and adjusted EBITDA. NV5 provides non-gap financial measures to supplement gap measures as they provide additional insight into NV5 financial results. However, non-gap measures have limitations as analytical tools and should not be considered in isolation and are not in accordance or a substitute for gap. In addition, other companies may define non-gap measures differently, which limits the ability of investors to compare non-gap measures of NV5 to those used by peer companies.

Ed Codispoti: As a result, we are raising our guidance for gross revenues to $944 million to $950 million for the full year of 2024.

Speaker Change: Our full year guidance for GAP EPS is $2.87 to $2.93.

Dickerson Wright: And for adjusted EPS, our full year guidance is $5.13 to $5.20 per share.

Dickerson Wright: This is a direct result of our services that are not dependent on economic conditions but are dependent on global population growth, which we have, and increasing demands on our infrastructure. And this is evidenced by our increased backlog, including in our geospatial businesses. Thank you.

Speaker Change: This is a direct result of our services that are not dependent on economic conditions, but are dependent on global population growth, which we have, and increasing demands on our infrastructure.

Speaker Change: And this is evidenced by our increased backlog and including in our geospatial businesses. Thank you.

Richard Tong: A webcast replay of this call in its accompanying presentation are also available via the link provided in today's news release on the investor's section of the company's website. You may also find today's presentation, which will be referenced during this call on the investor's section of the company's website.

Operator: We'll now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue. Your first question comes from the line of Tim Mulrooney with William Blair. Your line is open.

Dickerson Wright: that

Operator: If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue.

Speaker Change: We'll now begin the question and answer session.

Speaker Change: If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue.

Dickerson Wright: We will begin the call with comments from Dickerson Wright, Executive Chairman of NV5, before turning the call over to Edward Kodasdoti, Chief Financial Officer, for review of the second quarter results.

Speaker Change: If you would like to withdraw your question, simply press star 1 again.

Dickerson Wright: Dickerson Wright will then provide closing comments before we open the call for your questions.

Dickerson Wright: Dickerson, please go ahead. Thank you, Richard, and we thank everyone joining us for this call today. Although we are very pleased to report a successful second quarter, which refuggets strong organic growth and profitability, the second quarter results further represented the positioning of NV5 to meet the expected increase demands for the second half of the year.

Dickerson Wright: Thank you for watching!

Speaker Change: your first question comes from the line of timmoroney with william blairer your l is open

Timothy Mulrooney: Yeah, good afternoon, everybody. Thanks for taking my question. Yeah, hey, Dickerson, appreciate the extra color on the two pending acquisitions. It's helpful. My question is, is your full-year guidance, the guidance raised, is that primarily related to the expected contribution from these year's pending acquisitions, or is it more related to an improved outlook on the organic side of the business?

Speaker Change: Yeah, good afternoon, everybody. Thanks for taking my questions.

Dickerson Wright: As many of you know and had attended, an investor day was held on July 25th, which emphasized our position for not only the second half of this year, but our goals for NV5 in the three years to come using technology to better deliver these services. Current market conditions confirm the NV5 positioning of being in a mandatory business. The global population growth has placed tremendous demands on infrastructure and energy production and delivery.

Speaker Change: Thank you.

Dickerson Wright: Yeah, hey, Dickerson, you know, appreciate the extra color on the two pending acquisitions. It's helpful. My question is, is your full year guide

Speaker Change: The guidance raised, is that primarily related to the expected contribution from these year pending acquisitions or is it more related to an improved outlook on the organic side of the business?

Dickerson Wright: Tim, it's the latter. We haven't included these acquisitions, nor do we include any of the acquisitions ongoing that we expect in our guidance. So, the guidance is just as we see, a very strong second half from operations, and operations we do not include in the budget or the guidance, pending acquisitions or acquisitions that have been completed, which these two have and will be added to the second year over and above the guidance that we gave. Okay.

Dickerson Wright: We have strengthened all aspects of NV5 infrastructure and energy production and delivery services. This is proven to be a very stable business model during all economic conditions. As an example of this, our backlog, which has increased to 877 million for the year, represents an increase of 5% over Q124 and 9% over the second quarter of last year. As you can see on slide three, we have presented a combined performance for NV5 in the second quarter of 2024.

Tim Moroney: Tim, it's the latter. We don't include these, haven't included these acronyms, nor do we include...

Speaker Change: Any of the acquisitions ongoing that we expect in our guidance. So the guidance is just as we see

Speaker Change: A very strong second half from operations, and operations we do not include in the budget or the guidance, pending acquisitions or acquisitions that have been completed, which these two have.

Dickerson Wright: and will be added to the second year over and above the guidance that we gave.

Timothy Mulrooney: Okay, thank you for clarifying, Dickerson. I think that that's important. And then, if I could throw one at Dan, you know, Dan, I thought your prepared remarks on the NV ecosystem and solutions you're building here were pretty interesting. I'm curious if you could dig a little deeper here for us just how big that business is today, what the margin profile looks like, and if you expect that to grow faster than the overall geospatial business, then you'd expect it to be a larger piece of business over time.

Dickerson Wright: These totals represent the accumulation of three segments of our business, infrastructure, geospatial and buildings and technology. These three segments are supported by our six service protocols, construction quality assurance, utility services, infrastructure, environmental health sciences, building and technology and geospatial. We report the second quarter performance of these protocols as well as annual and future goals for each of these segments. We will also convey the competitive advantage of how these protocols work with each other to deliver effective and meaningful results to our clients through a robust cross-selling program of all our offices.

Dan Levine: Okay, thank you for clarifying, Dickerson. I think that that's important and then if I could throw one at Dan. You know, Dan, I thought your prepared remarks on on the NV ecosystem and solutions you're building here is pretty interesting.

Unknown Caller: I'm curious if you could dig a little deeper here for us about just how big that business is today, what the margin profile looks like, and if you expect that to grow faster.

Dana: I'm curious if you could dig a little deeper here for us just how big that business is today, what the margin profile looks like, and if you expect that to grow faster.

Dan Levine: Than the overall geospatial business that you'd expect it to be a larger piece of business over time.

Dan Levine: Sure, thanks for the question. Right now, that part of the business is, I think, $40 million total for the year. The margins are starting to grow. They have historically been a little bit lower than we'd like, but they are definitely on the upturn and growing. And as it relates to how that is going to be a bigger or smaller component to the overall percentage of geospatial. We're actually starting to see the software and services components growing together as some of the software and services are actually leading to a lot of services abilities for the implementation of the software for our clients, and that's actually growing that part of the business as well.

Unknown Executive: Right now, that part of the business is, I think, $40 million total. It relates to how that is going to be a bigger or smaller component to the overall percentage of geospatial. We're actually starting to see the software and services components growing together as some of the software and services are actually leading to a lot of services abilities for the implementation of the software for our clients, and that's actually growing that part of the business as well.

Dan Levine: Yeah!

Speaker Change: Sure, thanks for the question.

Speaker Change: right now it's that part of the businesses but i think forty million dollars total

Alexander Hockman: The first segment we would like to discuss is our infrastructure segment, which will be presented by Alex Hockman, CEO of Infrastructure. We will not only discuss the second quarter results, but how we use technology to deliver these results and the cross-selling support that infrastructure he sees from our other verticals. Alex, thank you, Dickerson.

Dan Levine: for the year...

Speaker Change: The margins are starting to grow. They have been historically a little bit lower than we'd like, but they are definitely on the upturn and growing.

Speaker Change: Relates to how that

Speaker Change: There's going to be a bigger or smaller component to the overall percentage of geospatial. Actually starting to see the software and services components growing together as some of the software and services actually leading to a lot of services.

Alexander Hockman: Please turn to slide five. Infrastructure as a reporting segment generated $101 million in gross revenue in Q2. The three verticals that comprises segment include our business units that provide engineering design and surveying, which accounted for 51% of Q2 revenues. Utilities were 29%, and construction quality assurance services were 20% of Q2 revenue. Of note, revenues generated by our geospatial and technology reporting segments associated with infrastructure as an end-market are reported separately. In 2023, we established key initiatives to focus on targeted growth sectors shown in the lower left of this slide. I will briefly discuss each of these initiatives.

Dan Levine: And that's actually growing that part of the business as well.

Timothy Mulrooney: Okay, that's interesting. Very good. Thanks for taking my question.

Speaker Change: Okay, that's interesting. Very good. Thanks for taking my question.

Christopher Moore: Our next question comes from the line of Christopher Moore with CJS Securities. Your line is open. Hey, good afternoon, guys. Thanks for taking

Dan Levine: Our next question comes from the line of Christopher Moore with CJS Securities. Your line is open.

Christopher Moore: Hey, good afternoon guys. Thanks for taking a couple. Maybe just a quick follow-up. Good afternoon. A follow-up on the guide for Fiscal 20. Unknown Speaker At the midpoint there, roughly what is the organic growth that's implied at that 947 level?

Unknown Caller: Hey, good afternoon, guys. Thanks for taking the time.

Christopher Moore: Hey, good afternoon guys. Thanks for taking a couple. Maybe just a quick follow-up, good afternoon, a follow-up on the Guide for Fiscal 2020.

Alexander Hockman: If you turn to slide six, our sustainable infrastructure addresses many facets of the built world. One of the ways in which we are distinguishing our platform is to be leaders in adopting and enhancing technologies to refine the process from conceptual design through construction and operation phases. This has resulted in increased profitability.

Christopher Moore: At the midpoint there, roughly, what is the organic growth that's implied at that 947 level?

Unknown Executive: Well we always can expect 6-10%, you can see our year to date has been 7% organic growth, as I presented on the consolidated slide, but our anticipation is we'll continue at that 6-10% organic growth as we look for the second half of the year and also as we integrate these new acquisitions.

Dickerson Wright: Well, we always can expect 6% to 10%. You can see our year-to-date has been 7% organic growth, as I presented on the consolidated slide. But our anticipation is we'll continue at that 6% to 10% organic growth as we look for the second half of the year and also as we integrate these new acquisitions.

Speaker Change: Thank you.

Dan Levine: and Dan Levine.

Speaker Change: Well we always, and we can expect 6-10%, you can see our year to date has been 7% organic growth as I presented on the consolidated slide, but our anticipation is we'll continue at that 6-10% organic growth as we look for the second half of the year and also as we integrate these new acquisitions.

Alexander Hockman: Roof. These technologies include the use of scanning, modeling, and visualization tools that allow us to create 3D images of the Institute infrastructure and the proposed design which reduce construction costs and delays and allow for the stakeholders to readily understand proposed designs.

Christopher Moore: Got it, appreciate it. Backlog, sequentially, year over year, just trying to understand, you know, kind of how the mix is changing, evolving. Is it much different sequentially or year over year?

Alexander Hockman: Slide 7 provides a summary of our DOT initiatives which brings our technical people and solutions to all DOT clients to increase organic growth and profitability. Through this initiative, we are experiencing strong growth in DOTs in North Carolina, California, and New Jersey. Last quarter, I mentioned the acquisition of CHW and with the success of the integration and statewide opportunities, we plan to double the size of our Florida DOT and municipal engineering services by 2028.

Speaker Change: Got it, appreciate it. Backlog up sequentially year-over-year, just trying to understand, you know, kind of how the mix is changing, evolving. Is it much different sequentially or year-over-year?

Dickerson Wright: Chris, I'm not quite sure what you mean by sequentially, but we have really, and we emphasize this at Investor Day, we are really, really focused on how we can cross-sell within each of those three segments and technologies. And so we seem to see a greater increase in the geospatial and the building technology business, which deals with servers and energy. And then we also see our infrastructure growing because of the increased demand for energy delivery domestically.

Speaker Change: ah

Speaker Change: Chris, I'm not quite sure I understand what you mean by sequentially, but we have really, and we emphasize this at Investor Day, we are really, really focused on how we can cross sell within each of those three segments.

Speaker Change: and technology. And so we seem to see a greater increase in the

Alexander Hockman: One of the unique aspects of our DOT initiative is our ability to integrate our geospatial services to complement our engineering expertise. This differentiator allows us to offer services throughout the CAPEX and off-ex faces of an asset. Some recent key wins are a direct result of our DOT initiative, including $60 million in civil program management contracts for cultureans that have been secured this year. We also recently announced $10 million in North Carolina DOT contracts.

Speaker Change: Geospatial and the building technology business, which is dealing with servers and energy. And then we also see our infrastructure growing because of the increased demand on energy delivery domestically. So I would say technology is kind of filtered through all of those three main segments, and the real focus of our growth has been.

Dickerson Wright: So I would say technology is kind of filtered through all of those three main segments, and the real focus of our growth has been that we've seen, and we're expecting the second half to be coming from our technology-based geospatial and in our building technology services segment.

Speaker Change: That we've seen, we're expecting the second half to be coming from our technology based geospatial and in our

Unknown Executive: in our building technology services segment.

Alexander Hockman: Slide 8 identifies several growth drivers in our utility services business. Some key items to note is that $42 billion in grid modernization costs proposed by the 50 largest investor-owned utilities have received approval for regulatory agencies. Other drivers include the growth in renewables, which is forecasted double over the next 20 years, increased electricity demand, and the public demand for increased reliability and resiliency.

Dickerson Wright: Chris, if you look at a comparison versus a year ago, it's about a 9% increase in that backlog.

Chris: in our building technology services segment. Chris, if you look at a comparison versus a year ago, it's about a 9% increase in that backlog.

Unknown Caller: Right, got it, got it, okay.

Unknown Caller: Maybe just last one, the data center, you talked about it at Investor Day and again today, looking to go from 40 million run rate to 400 million in five years. From where you sit today, I know you don't have a perfect outlook, but does that growth ramp early? Is it, you know, relatively smooth? Is it, is it more the back half loaded? Just trying to understand, you know, kind of what you're seeing at this point.

Christopher Moore: Maybe just last one. The data center, you know, you talked about it at Investor Day and again today, looking to go from 40 million run rates to 400 million in five years. From where you sit today, I know you don't have a perfect, you know, outlook, but does that growth ramp up early? Is it, you know, relatively smooth? Is it more back half loaded? Just trying to understand, you know, kind of what you're seeing at this point.

Chris: Right. Got it. Got it. Okay.

Speaker Change: Maybe just last one, the data center, you know, you talked about it at Investor Day and again today, looking to, you know, go from 40 million run rate to 400 million in five years.

Alexander Hockman: These growth drivers create high demand for our utility services. On page 9, you'll see examples of undergrounding. This technique has been proven to be extremely effective in grid-hardening transmission lines. NV5 has been involved in designing over 700 miles of undergrounding, and through experience and innovation, the cost of undergrounding a mile of line has decreased over 50 percent since 2019. Further, our solutions and analysis result in opportunities for all of the infrastructure, and our unmatched year spatial capabilities.

Speaker Change: From where you sit today, I know you don't have a perfect outlook, but does that growth, does it ramp early?

Speaker Change: Is it relatively smooth? Is it more back half loaded? Just trying to understand what you're seeing at this point.

Ben Heraud: We're currently sitting at about 30% organic growth, so it would be a combination of, it's about 55% CAGR over that time period of the goal, so I think it would be a combination of acquisition and organic growth, but if we continue on our current trajectory and keep pulling additional services as we are, we'll get a large portion of that through organic growth and then the remainder through acquisitions, which we're looking at at the moment.

Unknown Executive: We're currently sitting at about 30% organic growth, so it would be a combination of, it's about 55% CAGR over that time period of the goal, so I think it would be a combination of acquisition and organic growth, but if we continue on our current trajectory and keep pulling additional services as we are, we'll get a large portion of that through organic growth and then the remainder through acquisitions, which we're looking at at the moment.

Speaker Change: Yeah, it's Ben here. I mean, we're currently sitting at about 30% organic growth, so, you know, it would be a combination, you know, it's about 55% CAGR over that time period of the goal, so...

Speaker Change: I think it will be a combination of acquisition and organic growth, but if we continue on our current trajectory and keep pulling additional services as we are, we'll get a large portion of that through the organic growth and then the remainder through acquisitions which we're looking at at the moment.

Alexander Hockman: With NV5's multidisciplinary and integrated service offering to the utility market, we are well positioned to grow with the increased demand and able to provide our services throughout the United States.

Ben Heraud: And from where you sit today on the organic growth side, is it skewed, I mean, is there a lot of that in the next year or two where there's a little bit heavier, or are you looking at that as kind of smoother over this five-year period?

Speaker Change: And from where you sit today on the organic growth side, is it skewed? I mean, is there a lot of that in the next?

Dickerson Wright: Dickerson? Thank you, Alex.

Unknown Caller: you know, a year or two where there's, it's a little bit heavier, or you're looking at that as kind of smoother over these five years.

Dan Levine: The second segment is our geospatial services. Dan Levine, the president of our geospatial segment, will discuss how this vertical provides key services to our clients, but it also delivers advanced technology to support our core business. Dan, please go ahead. Thanks, Dickerson. If you would please turn to slide 11. I'm going to spend a few minutes talking about the geospatial sector results for Q2, as well as some of the emerging trends in our markets and technologies we use and how these are creating competitive advantages for us across all sectors of NV5.

Speaker Change: you know year or two where there's it's a little bit heavier or you're looking at that is kind of smoother over this five years.

Unknown Executive: Yeah, I mean, I would see us continuing at the rate that we are, you know, sort of over that 30%, particularly in the US where we're starting out, we're in an earlier stage, so I'll expect a higher rate of growth there. The 30% I've been talking about is mostly about the international group. You know, we're expanding into new regions and bringing in new services, so yeah, a lot of this will come from organic growth, and depending on how early we can bring those acquisitions in will depend on how much they fit into it. I appreciate it.

Ben Heraud: Yeah, I mean, I would see us continuing at the rate that we are, you know, sort of over that 30%, particularly in the US where we're starting out, you know, we're in an earlier stage. I'll expect a higher rate of growth there. The 30% I've been talking about is mostly for the international group. You know, we're expanding into new regions and bringing in new services. So, yeah, a lot of this will come from organic growth, and depending on how early we can bring those acquisitions in will depend on how much they play into it. I appreciate it. I'll leave it be.

Speaker Change: Yeah, I mean, I would see us continuing at the rate that we are, you know, sort of over

Speaker Change: Starting out, we're in an earlier stage, so I expect a higher rate of growth there. The 30% I've been talking about is mostly on the international group.

Speaker Change: You know, we're expanding into new regions and bringing in new services, so yeah, a lot of this will come from the organic growth and depending on how early we can bring those acquisitions in will depend on how much they play into it.

Dan Levine: So Q2 gross revenue totaled 72 million driven in large part by continued strength in the utilities market. We have a strong and growing backlog in the utility sector with several large wins in the quarter, including two totaling over 13 million from both the Southeast and SoCal regions and a larger contract pending from the Northeast region. Additionally, our aircraft and sensor utilization continuing to set records for us in flight times and miles flown.

Christopher Moore: Got it. I appreciate it. I'll leave it there. Thanks guys.

Speaker Change: Got it. I appreciate it. I'll leave it there. Thanks, guys.

Andrew Wittmann: The next question comes from the line of Andrew Wittmann with Robert Baird. Your line is open.

Speaker Change: Next question comes from the line of Andrew Wittmann with Robert Baird. Your line is open.

Andrew Wittmann: Great. Good evening, afternoon, guys. I just had a question, I guess, on the acquisitions that you mentioned that haven't closed yet. I understand that because they haven't closed yet, you're not going to maybe talk too much specifically about each one individually, but collectively, can you talk about what the purchase price for those acquisitions is, and maybe what the annual expected revenue contribution for those two acquisitions would be on a combined basis

Andrew Wittmann: Great. Good evening, afternoon, guys. I just had a question, I guess, on the acquisitions that you mentioned that haven't closed yet. I understand that because they haven't closed yet, you're not going to maybe talk too much specifically on each one individually, but collectively, can you talk about what the purchase price for those acquisitions is and maybe what the annual expected revenue contribution for those two acquisitions would be on a combined basis?

Dan Levine: These are revenue drivers for both our data acquisition and our data analytic services. I had mentioned in the Q1 earnings call that we expected to start seeing contracts flowing from the federal government towards the end of Q2 and into Q3 as a result of the continuing resolution being resolved in late March. This is exactly what we've experienced in May and June and ongoing through today with over 35 million dollars in federal contract awards from just four agencies in both defense and civilian sectors.

Dickerson Wright: Just a couple of things, not to be too technical here, we don't really, closing is a term we haven't been using lately. The two that I've mentioned were absolutely, we've reached an agreement. We've agreed on valuation; we've reached an agreement on many different things that include both of those. We're under a non-disclosure agreement right now, so I cannot, I'm not in a position to tell you the valuation or what we paid for these things, but you can use whatever math you want and you can see that we try to be as transparent as possible by saying that there are roughly 400 people that will join the company between these two

Dickerson Wright: Just a couple of things, not to be too technical here, we don't really, closing is a term we haven't been using lately. The two that I've mentioned were absolutely, we've reached an agreement. We've agreed on valuation; we've reached an agreement on many different things that include both of those. We're under a non-disclosure agreement right now, so I'm not in a position to tell you the valuation or what we paid for these things, but you can use whatever math you want and you can see that we try to be as transparent as possible by saying that there are roughly 400 people that will join the company.

Speaker Change: Just a couple of things, not to be too technical here. We don't really, closing is a term we haven't been using.

Dan Levine: Finally, during May and June, we were able to book over 8 million dollars in contracts for our higher spatial business creating a positive turn in that sector for us. If you please turn to slide 12. The geospatial business is a core of technology driven business and one of the things about technologies that has constantly changing. This keeps us sticky with our existing clients as they always want the next best thing. As the largest geospatial services business in the market, we have inherent advantages and the five geospatial has a large and diverse portfolio requiring and supporting the development of expertise and new and advancing technologies.

Speaker Change: Lately, the two that I've mentioned were absolutely

Speaker Change: We've reached an agreement. We've reached an agreement on valuation. We've reached an agreement on many different things that include both of those. We're under a non-disclosure agreement right now, so I'm not in a position to tell you the valuation or what we paid for these. But, you know, you can use whatever math you want, and you can see that we try to be as transparent as possible by saying that there's...

Speaker Change: Roughly 400 people that will join the company.

Andrew Wittmann: Okay. We'll wait for that to clear and then check back next quarter maybe. Maybe, Ed, just to understand the quarter better, you mentioned there were some one-time costs from the VIZ integration, and I was just wondering, the quantum of that, how much was that in your bridges for your adjusted results? Is that added back, or is that included as a cost penalty? I'm sorry. I just didn't understand how you treated that.

Unknown Caller: Okay, we'll wait for that to clear, and then maybe we can check back next quarter maybe. Maybe, Ed, just to understand the quarter better, you mentioned there were some one-time costs from the VIZ integration, and I was just wondering, the quantum of that, how much was that in your bridges for your adjusted results? Is that added back, or is that included as a cost penalty? I'm sorry, I just didn't understand how

Speaker Change: between these two acquisitions.

Dan Levine: This allows us to maintain our earliest after position in the spaces we are active and and provides access to new markets that benefit through leveraging our technologies. These technology advantages are on the form of land sea and air sensors and the ability to combine the multiple sensor types into a single collection system. Additionally, our commercial software with over a half a million users worldwide is built on 18 patents. These and the thousands of bespoke solutions we use internally for data production and analysis and externally by creating specific enduring solutions for our customers.

Speaker Change: Okay, we'll wait for that to clear and then check back next quarter maybe. Maybe, Ed, just to understand the quarter better, you mentioned there were some one-time costs from the VIZ integration, and I was just wondering,

Speaker Change: What, I don't, the quantum of that, how much, how much was that in, in your bridges for your adjusted results? Is that added back or is that included as a cost penalty? I'm sorry, I just didn't understand how you created that.

Ed: Hi Andy. No, those expenses are not added back, the ones that I was referring to. So when you think about it, when you look at G&A... The acquisitions that we've added to the business.

Edward Codispoti: Hi Andy. No, those expenses are not added back, the ones that I was referring to. So when you look at G&A... In the second quarter of last year versus this year, as I mentioned on the call, you had about a $6.7 million reversal in Q2 of last year, right? And then in this year, you had about $800,000 or so in integration IT-type related costs. And half of those are non-recurring.

Speaker Change: Hi, Andy. No, those expenses are not added back, the ones that I was referring to. So when you think, when you look at G&A...

Edward Codispoti: Going forward, that was just to prop them up and get them integrated. We also had about $300,000 more in acquisition-related costs, transactional, in one quarter over the other. That, in particular, is added back, but that was just a $300,000 delta. And then the rest of the increase in G&A is just because of the acquisitions that we've added to the business.

Dan Levine: Keep us ahead of our competition as well. Please turn to slide 13. Not only does that help the geospatial business directly, but the technologies and expertise we developed for that business applies directly to our infrastructure and building technologies businesses. We are experiencing an increasing level across selling and project work through leveraging geospatial technologies across the sectors. Examples include using our scanned bin equipment and expertise to support that building technologies is doing for data centers and bringing that into airports and other facilities.

Speaker Change: In the second quarter of last year versus this year, as I mentioned on the call, you had about a $6.7 million reversal in Q2 of last year, right? And then in this year, you had...

Speaker Change: It's roughly about $800,000 or so in integration IT-type related costs, and half of those are non-recurring. Going forward, that was just to prop them up and get them integrated.

Speaker Change: We also had about $300,000 more of acquisition-related costs, transactional, in one quarter over the other. That, in particular, is added back, but that was just a $300,000 delta. And then the rest of the increase in G&A is just because of the...

Dan Levine: We are actively supporting the power team and infrastructure with data for asset management assessments. And we are seeing several areas in both transportation and water where geospatial technologies are able to expand our client base and the work we do in these sectors. This phenomenon goes both ways. As the deep domain expertise in the power, water and transportation areas of the business is directly supporting geospatial teams ability to win work where we were not even attempted to win in the past.

Andrew Wittmann: Okay, that's clear. Thank you for that. And then I guess maybe this one's for you too, Ed.

Unknown Caller: Okay, that's clear. Thank you for that. And then I guess maybe this one's for you too, Ed.

Speaker Change: The acquisitions that we've added to the business. Okay, that's clear. Thank you for that. And then I guess maybe this one's for you too, Ed.

Andrew Wittmann: You talked about the quarter being a cash burner, and you talked about the year-to-day progress. I was just wondering, as I was looking at the various accounts in your working capital, it looks like the unbilled is the biggest area. Is that a result of the percentage of completion accounting that you're doing on LNG projects? It just looks like the biggest use of cash in the quarter, so I was hoping to understand that account in particular.

Speaker Change: You talked about the quarter being a cash burner and you talked about the year-to-day progress. I was just wondering, as I was looking at the various accounts in your working capital, it looks like the unbilled is the area. Is that a result of the percentage of completion counting that you're doing on LNG projects? It just looks like the biggest use of cash in the quarter, so I was hoping to understand that account in particular.

Dan Levine: If you please turn to slide 14. I wanted to speak for a moment specifically about our software capabilities. The NV ecosystem is a recognized leading software package that provides scientific image processing capabilities to our customers. Traditionally, that has been used by scientists in academia and large research agencies. Our software was embedded on the Hubble Telescope, for example. It is also becoming a key component to some of the medical imaging analysis automation.

Ed: You talked about the quarter being a cash burner, and you talked about the year-to-day progress. I'm just wondering, as I was looking at the various accounts in your working capital, it looks like the unbilled is the biggest area. Is that a result of the percentage of completion accounting that you're doing on LNG projects? It just looks like the biggest use of cash in the quarter, so I was hoping to understand that account in particular.

Edward Codispoti: Sure, and a lot of it is driven by the unbilled, so that observation is correct. However, it's really mostly the business in general that's ramping up, but in particular geospatial, because they had that lull when you think back to Q4 and Q1 because of the continuing resolution. As that came back in the second quarter, now you have to resume work, and it takes a little bit of time to convert that to cash, right, because you have to go from unbilled to AR and then collections. And so really that's what's driving it, but it's really just a function of the ramp-up in the business.

Ed: Sure, and a lot of it is driven by the unbilled, so that observation is correct. However, it's really mostly the business in general that's ramping up, but in particular geospatial, because they had that lull when you think back to Q4 and Q1 because of the continuing resolution. As that came back in the second quarter, now you have to resume work, and it takes a little bit of time to convert that to cash, right, because you have to go from unbilled to AR and then collections. And so really that's what's driving it, but it's really just a function of the ramp-up in the business.

Speaker Change: Sure, and a lot of it is driven by the unbilled, so that observation is correct. However, it's really...

Dan Levine: X-Rape and MRIs are being read by computer algorithms largely driven by our software. Our software as a service platform is enhancing our traditional capabilities, allowing non-scientists to perform similar analyses, but to do it over and over again. This capability is being used by large oil companies worldwide to audit detect issues with their assets for transportation applications, assessing sub-bots. Sub-sidance along roads and railways, and finally, the DOD and intelligent communities are using this more and more as a force multiplier for detecting and assessing activities in parts of the world, experiencing rising tensions. We're traditionally performed by banks of analysts.

Speaker Change: Most of the business in general that's ramping up, but in particular, geospatial, because they have that law when you think back to Q4 and Q1 because of the continuing resolution as that came back in the second quarter, now you have to resume work and it takes a little bit of time to convert that to cash, right, because you have to go from unbilled to AR and then collections.

Speaker Change: And so really that's what's driving it, but it's really just a function of the ramp-up in the business.

Unknown Caller: Okay, that makes a lot of sense. Thank you. That's all my questions for the evening. I hope you have a good night. Thanks. Our next question comes from the line of Rob Brown with Lake Street Capital Markets. Your line is open.

Andrew Wittmann: Okay, that makes a lot of sense. Thank you. That's all my questions for the evening. I hope you have a good night. Thanks.

Speaker Change: That makes a lot of sense. Thank you. That's all my questions for the evening. I hope you have a good night. Thanks.

Robert Brown: Thank you. Our next question comes from the line of Rob Brown with Lake Street Capital Markets.

Robert Brown: Our next question comes from the line of Rob Brown with Lake Street Capital Markets. Your line is open.

Andy: Thank you. Thanks Andy.

Dan Levine: The NV software platform is a unique differentiator for NV5, back to you, Dickerson. Thank you, Dan.

Speaker Change: Our next question comes from the line of Rob Brown with Lake Street Capital Markets. Your line is open.

Ben Herod: Our third segment is our Buildings and Technology segment. This segment has seen significant organic growth domestically and internationally. The demand for energy delivery and efficiency is increasing.

Rob Brown: Good afternoon. I just wanted to follow up a little bit on the utility O&M business that you...

Rob Brown: that you purchased. You know, is that a kind of a market opportunity that this gets you into that you can expand from and maybe just color in the thinking of?

Ben Herod: Ben Herod, a CEO of Buildings and Technology, who leads this group, will speak about our second quarter results and how we are using technology and analytics to meet this ever-increasing demand. Ben, please go ahead. Thank you, Dickerson. Let's turn to slide 16. Our Buildings and Technology segment delivered 64 million in the second quarter of 2024, which represents 18% growth over the second quarter of 2023. Some of the areas that are driving this growth are data centers, clean energy and building digitization.

Bill: Well, I'll speak about the macro picture and what we're looking for and how we're positioning ourselves. The O&M business is one segment that we were not delivering to our utility clients. It tends to be a lot more sticky because the people that are on those projects tend to stay, so it's more of a reoccurring model. But it gets us visibility into an area that we hadn't done before. But maybe Alex, who will probably be absorbing most of the O&M in the infrastructure sector of the utilities business, I'll let him speak to some of that. Yeah, no, it's a very good point, Bill.

Dickerson Wright: Well, I'll speak about the macro picture and what we're looking for and how we're positioning ourselves. The O&M business is one segment that we were not delivering to our utility clients. It tends to be a lot more sticky because the people that are on those projects tend to stay, so it's more of a reoccurring model, but it gets us visibility into an area that we hadn't done before. But maybe Alex, who will probably be absorbing most of the O&M in the infrastructure sector of the utilities business, I'll let him speak to some of that. Yeah, no, it's a very good point.

Speaker Change: on that vertical there.

Speaker Change: Mark.

Speaker Change: Well, I'll speak in a macro picture on what we're looking for and how we're positioning us. The O&M business is one segment that we were not

Speaker Change: Delivering to our utility clients. It tends to be a lot more sticky because the people that are on that on those projects tend to stay so it's more of a reoccurring it.

Ben Herod: Please turn to slide 17. To show our strong commitment towards the continued growth of our services associated with data centers, we have set a five-year target of 400 million in revenue, which is 10 times our current volume. We will achieve this by continuing to grow with our largest base of hyperscale clients, leveraging our strong expertise to win new clients and expanding the services we provide within the sector. We have won over 25 million in mission critical and data center awards in the first half of 2024, and the pipeline for new opportunities continues to be strong in our data center business.

Speaker Change: Model.

Alex Hockman: But it gets us visibility into an area that we hadn't done before. But maybe Alex, who will be probably absorbing most of the O&M in the infrastructure sector of the utilities business, I'll let him speak too.

Alex Hockman: Yeah, that's a very good point. But one thing I just want to be clear on: we have not purchased it yet. We have an agreement to purchase it, so don't think that it's already part of the NV5 family. It is; the acquisition is not closed. But, as Dickerson mentioned, it is a new area for us within the utility market. We see it as an area that, as was mentioned, it's very sticky in that our folks are full-time working in the utility operations. So, as the plant asset has many, many years of operation, we're able to staff it throughout the duration of the plant being operated, and Jessica.

Alex: Yeah, no, it's a very good point. But one thing I just want to be clear on: we have not purchased it yet. We have an agreement to purchase it, so don't think that it's already part of the NV5 family. The acquisition is not closed, but as Dickerson mentioned, it is a new area for us within the utility market. We see it as an area that, as was mentioned, is very sticky in that our folks are full-time working in the utility operation. So as the plant asset has many, many years of operation, we're able to staff it throughout the duration of the plant being operated, and Jessica.

Alex Hockman: to some of that. Yeah, no, it's a very good point, but one thing I just want to be clear on, we have not purchased it yet. We have an agreement to purchase.

Speaker Change: Don't.

Alex Hockman: I think that it's already part of the NB5 family, the acquisition is not closed. But, as Dickerson mentioned,

Dickerson Wright: It is a new area for us within the utility market. We see it as an area that...

Ben Herod: We have also seen strong growth in our digital twin services with data centers, which we deliver in concert with our geospatial business. A key factor to limiting the growth of the data center market and the domestic market is the availability of power and according to recent studies, over 30% of data centers capacity is unused due to a lack of sufficient energy. NB5 is uniquely positioned to address this issue and are currently leveraging multiple service lines to help our clients unlock this unused capacity, including energy efficiency, power delivery, MEP design and commissioning.

Dickerson Wright: as we' mentioned it's very sticky in that our folks are full time working in the utility operations

Speaker Change: so as the plned asset has many many years of operation we will to staf it throughout the duration of the plantpbeing operated

Dickerson Wright: And just to add to that, Rob, just maybe to add to that, we would not have announced it in this quarter if we had not reached a real definitive agreement. I think it's on both of those, it's just that there are all types of certain approvals and processes that we're going through now, but we have no expectation of those not joining the NV5 team very shortly. And just to clarify, so that's why you haven't put it in your guidance and when they when they formally.

Dickerson Wright: And just to add to that, Rob, just maybe to add to that, we would not have announced it in this quarter if we had not reached a real definitive agreement. I think it's on both of those, it's just that there are all types of certain approvals and processes that we're going through now, but we have no expectation of those not joining the NV5 team very shortly. And just to clarify, so that's why you haven't put it in your guidance and when they form.

Speaker Change: and just robious and maybe to add to that we would not have announced that in this quarter if we had not reached a real definitive agreement i think it's on both of those that's just that there's all types of certain approval and processes that we're going through now but we have

Ben Herod: On slide 18, another challenge facing this sector are complexities that AI servers are bringing to the operation of these facilities. Large and unexpected spikes in load cause heat load issues. NB5 is at the forefront of solving these problems with our clients utilizing cutting-edge technology and expertise. With the use of software, this service is highly profitable, scalable and recurring. On slide 19, our building digitization service is a great example of how we are leveraging technology to engage multiple NB5 services to support our clients.

Speaker Change: No expectation of those not joining the NV5 team very shortly.

Speaker Change: okay clarify so that that's why you haven'tput it in your your guanceand when

Dickerson Wright: We never really use M&A as our guidance. We want our operations people to deliver the budget that they do. If an acquisition has been with us, then that may be included in the guidance, but no future acquisitions or no acquisitions that we are giving or what we've given in the guidance right now are included at all in the guidance we've given. And we never really know. We have a number of ongoing acquisitions. We never know what specific month they're going to close in on or what we can add, and so we'd rather be a little bit conservative in that regard.

Speaker Change: when they formally closed.

Speaker Change: We never really use M&A as our guidance, we want our operations people to deliver the budget that they do. If an acquisition has been with us...

Speaker Change: then that may or may be included in the guidance but no future acquisitions or no acquisitions that

Ben Herod: Excellence, working with our geospatial and surveying teams, we're able to create highly functional digital twins to improve a building's operation, reduce energy costs and carbon emissions. This service is deployed for the entire life cycle of a facility and puts us in a very strong position to bring all NV5 services to our clients over a long time period.

Speaker Change: That we are giving or what we've given in the guidance right now is included at all in the guides we've given. And we never really know. We have a number of ongoing acquisitions. We never know what specific month they're going to close in or what we can add. And so we'd rather be a little bit conservative in that regard.

Ben Herod: Thank you, Ben. Let's see how we've done humility in Q2 of 2024 when we put all three segments that you've just listened to together and what we can then anticipate for the balance of the year.

Speaker Change: Okay, great. Thank you. I'll turn it over.

Robert Brown: Our next question comes from the line of Jeff Martin with Roth Capital Partners. Your line is open.

Operator: Our next question comes from the line of Jeff Martin with Roth Capital Partners. Your line is open.

Speaker Change: Our next question comes from the line of Jeff Martin with Roth Capital Partners. Your line is open.

Edward Codispoti: Let's listen to Ed Codispoti, our chief financial officer as he addresses our financial results. Thank you, Dickerson, and good afternoon, everyone. If you would please turn to slide 21 of the presentation, I'll review our 2024 second quarter financial results. Our gross revenues in the second quarter grew 6% to $236.3 million compared to $222.6 million in the second quarter of the prior year. Our gross profit was $123.3 million compared to $110.3 million in the prior year, an increase of 12%. Gross margins expanded 270 basis points from 49.5% in the second quarter of last year to 52.2% in the second quarter of this year, largely driven by geospatial and our infrastructure segments.

Jeffrey Martin: We haven't talked about real estate transactions in a while, given the rate environment appears to be turning in a friendly direction here soon. I'm curious if you could give us an update on real estate transactions.

Jeff Martin: Thank you. Thank you.

Jeff Martin: Talked about real estate transactions in a while. Given the rate environment appears to be trending in a friendly direction here soon, curious if you could give us an update on real estate transactions.

Dickerson Wright: Okay, I'll mention just an overview, and then that segment is in our infrastructure group. They've had a very strong quarter, they're really coming back, and certainly any relief and interest rates always help their business, but we have to represent roughly 60 million annually in that there are two in regard to the real estate transactional business, but they are really on an uptick now, and we think that they're improving. I think both segments are at budget or above that a budget in the real estate transaction group, but maybe Alec can be specific on that.

Speaker Change: okay i'll mention adjust an overview and then that segment is in our infrastructure group

Speaker Change: they've had a very strong

Jeff Martin: quarter they're really coming back and certainly any relief and interest rates always helps their business but

Speaker Change: We have two...

Speaker Change: represent roughly $60 million annually in regard to the real estate transactional business, but they are really on an uptick now.

Speaker Change: we think that they're improving i think both segments are at budget or above that budget in the real estate transaction group but maybe allocants balalcing be specifically on on that

Dickerson Wright: When looking at our operating results, please keep in mind that in the second quarter of last year, we had a $6.5 million reversal of contingent consideration related to acquisitions. Additionally, in the second quarter of this year, we had non-recurrent costs related to our Viz acquisition. Our depreciation and amortization increased $2.7 million and our interest expense increased $1 million quarter over quarter. As a result, our net income was $7.9 million compared to $15.4 million in the second quarter of last year, and our gap diluted EPS was $0.50 versus $1 per share in the prior year period.

Alex Hockman: Yeah, so again, as you've mentioned, we're going to see a significant uptick once the rates, interest rates come down. That business is very much dependent on two different types of business. One is where there's refinance. And the other is when there's actually a real estate transaction that takes place. So we're still seeing very good business by virtue of the fact that there are a lot of refinances taking place. But we'll see that very nice uptick once we get to the point where interest rates become much more attractive for a real estate transaction.

Speaker Change: Yes, so again, as you've mentioned, we're going to see a significant uptick once the rates, interest rates come down. That business is very much dependent.

Speaker Change: On two different types of business, one is where there is refinance, and the other is when there is actually a real estate transaction that takes place.

Speaker Change: So we're still seeing a very good business by virtue of the fact that there's a lot of refinances take place But we'll see that very nice uptick once we get to the point where interest rates become much more attractive for a real estate transaction

Jeffrey Martin: And then one for Ed here. Ed, do you have handy the revenue contributions from acquired companies during the second quarter and the first half of the year? Do you have that handy?

Speaker Change: it's helpful and then one for ad here and do you have handy the revenue contributions from acquired companies

Dickerson Wright: When you strip out this noise and look at results from an adjusted EBITDA perspective, we increased our results 10% over last year. Adjusted EBITDA was $38.5 million in the second quarter of this year versus $35 million in the same quarter last year. This represented a margin expansion of 60 basis points as our margin increased to 16.3%. Our adjusted EPS was $1.24 per share in this second quarter compared to $1.29 per share in the same period last year.

Edward Codispoti: For the second quarter, the 2024 acquisitions contributed $10.5 million, and for the six months, $15.9 million.

Speaker Change: during the second quarter and the first half of the year. Do you have that handy?

Speaker Change: For the second quarter, the 2024 acquisitions contributed $10.5 million, and for the six months, $15.9 million.

Unknown Executive: and for the six months, $15.9 million.

Jeffrey Martin: Okay, and then if I could squeeze one more in real quick. Thoughts on EBITDA margin expectations over the balance year. Sounds like mix is helping here with geospatial booking, you know, some nice contract wins recently in federal back on track. It seems like geospatial may, Help, help the margin mix towards the back half of the year. Here's a good comment on that.

Speaker Change: Okay, and then if I could squeeze one more in real quick.

Speaker Change: Thoughts on EBITDA margin expectations over the balance year. Sounds like mix is helping here with geospatial booking, you know, some nice contract wins recently in federal back on track. It seems like geospatial may.

Edward Codispoti: Please keep in mind that in the second quarter, we experienced a ramp up in our business. If you recall, we had a very strong cash flow quarter in Q1 as we generated $19.6 million of cash from operations. In Q2, our cash flow was affected by working capital needs as revenue ramps up. We used $11.3 million of cash from operations in the second quarter.

Unknown Caller: help help the margin mix towards the back half of the year. Here's a good comment on that.

Speaker Change: Help the margin mix towards the back half of the year. Here's a good comment on that.

Edward Codispoti: I think that's accurate; we would expect Geospatial because we expect them to have a stronger second half; we would expect them to lift consolidated margins for the full year. I would I would estimate that we'd come close to 17%. I think just when you consider how we're tracking right now, that would be a good estimate.

Speaker Change: I think that's that's accurate we would expect geospatial because we expect them to have a stronger second half we would expect them to lift consolidated margins for the full year I would I would estimate that we'd come close to 17% I think just when you

Edward Codispoti: Network. Therefore, you today, we have generated cash from operations of $8.2 million. Our net leverage remains low at 1.5 times. We feel confident in the strength of our balance sheet and believe it positions us well for future growth.

Jeffrey Martin: And Jeff, just... what pleases me is all three of those key segments have improved over the same period of time last year. So we're seeing good organic growth in our infrastructure business. Of course, geospatial is really contributing now that this has a continuing resolution issue resolved. And the explosion that we're seeing in data center work, particularly internationally, so all three have really contributed. So I'm actually pleased with all three segments of the business over the same period last year.

Speaker Change: Consider how we're tracking right now, that would be a good estimate.

Unknown Executive: What pleases me is all three of those key segments have improved over the same period of time last year. So we're seeing good organic growth in our infrastructure business. Of course, geospatial is really contributing now that this has a continuing resolution issue resolved. And the explosion that we're seeing in data center work, particularly internationally, so all three have really contributed. So I'm actually pleased with all three segments of the business over the same period last year.

Speaker Change: towhat pleases me is all three of those key segments have improved over

Dickerson Wright: I'll now turn it back over to Dickerson. Thank you, Ed.

Dickerson Wright: Please turn to slide 22 to discuss some of our merger and acquisition activity currently ongoing at NV5.

Speaker Change: over the same period of time last year, so we're seeing good organic growth in our infrastructure business. Of course, geospatial is really contributing now that this

Dickerson Wright: We have reached an agreement to acquire two businesses in the utility operations and maintenance business and in the water resources sector. The first company will expand our services to utilities, providing operations and maintenance nationwide, which is a recurring revenue business. This acquisition will enhance our staffing capabilities for utilities and energy delivery services. The second company we have agreed to acquire is a California wastewater and water resources company that will strengthen our water services to combine acquisitions where we've all been approximately 400 additional technical personnel to our existing platform.

Speaker Change: have the continuing resolution issue resolved. And the explosion that we're seeing in data center work, particularly internationally, so all three have really contributed. So I'm actually pleased with all three segments of the business over the same period last year.

Jeffrey Martin: Certainly good to hear. Thank you. I appreciate it.

Unknown Caller: Certainly good to hear. Thank you. I appreciate it.

Speaker Change: Certainly good to hear. Thank you. Appreciate it.

Marc Riddick: The next question comes from the line of Marc Riddick, Utsidori.

Speaker Change: Next question comes from the line of Marc Riddick with Sidoti. Your line is open.

Marc Riddick: Good evening. Good evening. I want to touch on, with the growth plans that you have here, I was wondering if you could talk a little bit about, I think you sort of hinted at this on the investor day, but I was wondering if you could talk a little bit about, yeah, as we're approaching reaching the $1 billion goals, maybe you could talk about maybe any updated thoughts you may have as to the setting of that next marker, if you will, and the timeframe that we might get that.

Speaker Change: Have a good evening.

Marc Riddick: Good evening. Good evening. To touch on with the growth plans that you have here, I was wondering if you could talk a little bit about it. I think you sort of hinted at this on the investor day, but I was wondering if you could talk a little bit about... Yeah. Okay. Great.

Dickerson Wright: Please turn to slide 23. We have had a very successful first half of the year. However, the year is not over.

Edward Codispoti: We must continue to stay focused on the delivery of growth and profitability to our investors. As a result, we are raising our guidance for gross revenues to $944 million to $950 million for the full year of 2024. Our full year guidance for GAP EPS is $2.87 to $2.93. And for adjusted EPS, our full year guidance is $5.13 to $5.20 per share. This is a direct result of our services that are not dependent on economic conditions, but are dependent on global population growth, which we have and increasing demands on our infrastructure. And this is evidenced by our increased backlog and including in our geospatial businesses.

Speaker Change: Yeah, as we're approaching reaching the $1 billion goals, maybe you could talk about maybe any updated thoughts you may have as to the setting of that next marker, if you will, and the time frame that we might get that.

Unknown Executive: Thank you.

Unknown Executive: Very good question, Marc. You know, two key things. Obviously, and what we've said to our people and to our investors is that Investor Day was aspirational. That's our goal, so that's what we need, that we want to do, and it's certainly different than this call, where we're specific about the results that we're doing, and this is what we've actually accomplished. As far as the $1 billion, we will make the $1 billion. We said that we'll be at the $1 billion mark by entering 2025 or the end of 2024. That will be done,

Dickerson Wright: Very good question, Marc. You know, two key things. Obviously, and what we said to our people and to our investors, was that Investor Day was aspirational. That's our goal, so that's what we need, that we want to do, and it's certainly different than this call, where we're specific about the results that we're doing, and this is what we've actually accomplished. As far as the $1 billion, we will make the $1 billion. We said that we'll be at the $1 billion mark by entering 2025 or the end of 2024. That will be done,

Speaker Change: very good question mark two key things obviously and what we

Speaker Change: said to our people and to our investors is the investor day was aspirational. That's our goal, so that's what we need.

Speaker Change: that we want to do, and it's certainly different than this call where we're specific on the results that we're doing, and this is what we've actually accomplished.

Speaker Change: as far as the one billion we will do the one billion we said that we'will be one billion by entering two thousand and twentyfive or the end of two thousand and twenty four that will be done

Unknown Caller: And, you know, we feel very strongly that that is, and of course, it's on the run rate. So it will be $1 billion going into the budget for 2025. So as far as what our next goal is, this comes from the ground up. It isn't, you know, it's not me or the people on this call saying what they're going to do, but it's actually coming from all of our operations.

Dickerson Wright: And, you know, we feel very strongly that that is, and of course, it's on the run rate. So it will be $1 billion going into the budget for 2025. So as far as what our next goal is, this comes from the ground up. It isn't, you know, it's not me or the people on this call saying what they're going to do, but it's actually coming from all of our operations.

Unknown Executive: We'll now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to enjoy your question, simply press star one again.

Speaker Change: and you know we have very we feel very strongly that that is and of course it's on the run rate so it will be a 1 billion going into the budget for 2025.

Unknown Executive: If you were called upon to ask your question and are listening via speakerphone and your device, please pick up your handset to ensure that your phone is not unmute when asking your question. Again, press star one to join the queue.

Speaker Change: So, as far as what our next goal is...

Speaker Change: These come from ground up, it isn't, you know, it's not me or the people on this call saying what...

Dickerson Wright: So we are now just looking at the information that we've gathered, and we will be announcing shortly what our new goal is for 2028. But we're waiting to see what comes from our operations and how they see the business. So, you know, we expect significant growth, but that milestone, we haven't released it yet because we're still kind of collecting.

Unknown Caller: So we are now just looking at the information that we've gathered, and we will be announcing shortly what our new goal is for 2028. But we're waiting to see what comes from our operations and how they see the business. So, you know, we expect significant growth, but that milestone, we haven't released it yet because we're still kind of collecting.

Speaker Change: What they're going to do, but it's actually coming from all of our operations. So, we are now just looking at the information that we've gathered, and we will be announcing shortly what our new goal is for 2028. But we're waiting to see what comes from our operations and how they see the business.

Timothy Mulrooney: Your first question comes from the line of Tim Mulroney with William Blair. Your line is open. Good afternoon, everybody. Thanks for taking my question. Yeah, hey, Dickerson, you know, appreciate the extra color on the two pending acquisitions helpful. My question is, is your full-year guide, you know, guidance raised? Is that primarily related to the expected contribution from these year pending acquisitions? Or is it more related to an improved outlook on the, on the organic side of the.., of the business.

Speaker Change: You know, we expect significant growth, but that milestone, we haven't released it yet because we're still kind of collating the information.

Marc Riddick: Okay, great. Thanks for that. And then just a quick follow-up. I was wondering if you've seen much in the way of regional differentiation as far as spending patterns are concerned, or are there any particular call-outs like that, verticals that we should be thinking about that maybe are surging a little stronger than others at the moment?

Unknown Caller: Okay, great. Thanks for that. And then, just a quick follow-up. I was wondering if you've seen much in the way of regional differentiation as far as spending patterns are concerned? Or are there any particular call-outs like that, verticals that we should be thinking about that maybe are surging a little stronger than others at the moment?

Unknown Caller: Okay, great. Thanks for that. And then just a quick follow-up. I was wondering if you've seen much in the way of regional differentiation as far as spending patterns, or is there any particular call-outs like that, verticals that we should be thinking about that maybe are surging a little stronger than others at the moment? Thanks.

Unknown Executive: Thank you. Well, great. Thank you. Yeah, you're really touching on some of the concluding comments that I make, but I'm sorry. No, no, no, no, no, no, no, no, no, no, no, no, no, I'm happy to say it now, and then I get a chance to

Dickerson Wright: Thanks. Well, great. Thank you. Yeah, you're really touching on some of the concluding comments that I make, but no, no, no, no, no, I'm happy to say it now and I get a chance.

Dickerson Wright: Tim, it's the latter. We don't include these act, we haven't included these acquisitions nor do we include any of the acquisitions ongoing that we expect in our guidance. So the guidance is just as we see a very strong second half from operations and operations we do not include in the budget or the guidance pending acquisitions or acquisitions that have been completed, which these two have and will be added to the second year over and above the guidance that we gave.

Speaker Change: Well, great. Thank you.

Timothy Mulrooney: Okay, thank you for clarifying, Dickerson, I think that's important.

Speaker Change: ' really tell you're talchking on from of you concluding comments up that i make but no no no no i'mhappy right now that i got a chance to rehese it and then they again later but we have always positioned our company to be a mandated business you know it's not so much dependent on economic

Speaker Change: So, if they need a big infrastructure project in Iowa, it's not depending on whether the Iowa budget or...

Speaker Change: itis due 's it' these so things that are needed people need to drink clean water people need to go bridges and so we've always wanted to be in mandated at businesses so this is ourved very well

Dickerson Wright: If we're going to regionalize things, I'd rather mention the differences that we're seeing between domestic and internationally. Using the data center and their demand for energy, in the U.S., most of the energy is coming from the Public Utility Commission, and usually they are very careful. We don't see any tremendous new power plants being built, so delivery is important. They actually have moratoriums in some areas because of the need for power that they can't deliver.

Unknown Executive: If we're going to regionalize things, I'd rather mention the differences that we're seeing between domestic and internationally. Using the data center and their demand for energy, in the U.S., most of the energy is coming from the Public Utility Commission, and usually they are very careful. We don't see any tremendous new power plants being built, so delivery is important. They actually have moratoriums in some areas because of the need for power that they can't deliver.

Dan Levine: And then if I could throw on a Dan, Dan, I thought you prepared remarks on the ND ecosystem and solutions you're building here, it's pretty interesting. I'm curious if you could dig a little deeper here for us just how big that business is today with a margin profile looks like, and if you expect that to grow faster than the overall geospatial business that you'd expect it to be a larger piece of that business over time.

Speaker Change: If we're going to regionalize things, I'd rather mention the differentiator that we're

Speaker Change: between domestic and internationally. Using the data center and their demand for energy, in the U.S., most of the energy is coming from the Public Utility Commission, and usually they are very careful. They're not, you know, we don't see any tremendous...

Speaker Change: The power plant is being built, so delivery is important, and they actually have moratoriums on some areas.

Dan Levine: Yeah, sure, thanks for the question. Right now, so that part of the business is I think $40 million total for the year. And the margins are starting to grow. They have been historically a little bit lower than we'd like, but they are definitely on the upturn and growing. And as it relates to how that is going to be a bigger, bigger, smaller component to the overall percentage of geospatial, actually starting to see the software and services components growing together as some of the software services actually leading to a lot of services, abilities for implementation of the software for our clients. And that's actually growing that part of the business as well. Okay, that's interesting. Very good.

Timothy Mulrooney: Thanks for taking my question.

Unknown Executive: However, internationally, especially as Ben mentioned on the call, the hyperscalers, they just cannot keep up with the demand for data centers and the use of energy, and they're not relying on a public grid to do this. Those hyperscalers are free to develop power and do power as they see fit. So we see more of a growth in the international market than right now that is taking place domestically.

Dickerson Wright: However, internationally, especially as Ben mentioned on the call, the hyperscalers, they just cannot keep up with the demand for data centers and the use of energy, and they're not relying on a public grid to do this. Those hyperscalers are free to develop power and do power as they see fit. So we see more of a growth in the international market than right now that is taking place domestically.

Speaker Change: because of the need for power that they can't deliver. However, internationally, especially Ben mentioned on the call the hyperscalers, they just cannot keep up with the demand for data centers and the use of energy, and they don't have...

Speaker Change: They're not relying on a public grid to do this. Those hyperscalers are free to develop power and do power as they see. So we see more of a growth in the international market.

Speaker Change: Then, right now, that is taking place domestically.

Marc Riddick: Thank you; I appreciate it.

Unknown Caller: Thank you; I appreciate it.

Speaker Change: Thank you, I appreciate it.

Operator: Our next question comes from the line of Michael Feniger with Bank of America. Your line is open.

Michael Feniger: Our next question comes from the line of Michael Feniger with Bank of America. Your line is open.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Michael Feniger with Bank of America. Your line is open.

Michael Feniger: Yes, hi, thanks for taking my questions. Just, Ed, I'm just curious on the outlook. You mentioned the 17% EBITDA margin. Just, we kind of think of the gross revenue and the EPS range. Any help we should kind of be, framework we should be thinking for where EBITDA kind of settles for the year based on that guidance?

Michael Feniger: Yes, hi, thanks for taking my questions. Just, Ed, I'm just curious on the outlook. You mentioned the 17% EBITDA margin. Just, we kind of think of the gross revenue and the EPS range. Any help we should kind of be, framework we should be thinking for where EBITDA kind of settles for the year based on that guidance?

Michael Feniger: Yes, hi. Thanks for taking my questions. Just, Ed, I'm just curious on the outlook.

Christopher Moore: Our next question comes from the line of Christopher Moore with CGS Securities. Your line is open. Hey, good afternoon, guys. Thanks for taking a couple. Maybe just a quick follow-up afternoon. A follow-up on the guide for fiscal 20 for worthy. You know, at the midpoint there, roughly what is the organic growth that's implied at that 947 level? Well, we always, and we can expect 6 to 10 percent. You can see our year-to-date is been 7 percent organic growth as I presented on the consolidated slide.

Michael Feniger: You mentioned like the 17% EBITDA margin just we kind of think of the gross revenue and the EPS range any help we should kind of be framework should be thinking for where EBITDA kind of settles for the year based on that guidance.

Edward Codispoti: We have a goal of 160. Of course, that could vary, and we don't give guidance on adjusted EBITDA, but I think that's a reasonable number to shoot for.

Ed: We have a goal of 160. Of course, that could vary, and we don't give guidance on adjusted EBITDA, but I think that's a reasonable number to shoot for.

Speaker Change: We have a goal of 160. I mean, that could, of course, that could vary, but, and we don't give guidance on unadjusted emitter, but that's, I think that's a reasonable number to shoot for.

Michael Feniger: Okay, really helpful. And then, just on geospatial, I'm curious, obviously, it seems like you guys fly the mixed impact and how that builds for the rest of the year. Just in terms of backlog and bookings for geospatial, anything we should keep in mind about the election is, does that have an impact when it comes to geospatial and how it works for the federal government? Just curious how to kind of think about that as we're in an election year.

Unknown Caller: Okay, really helpful. And then just on geospatial, I'm curious, obviously, it seems like you guys fly the mixed impact and how that builds for the rest of the year. Just in terms of backlog and bookings for geospatial, anything we should keep in mind about the election is, does that have an impact when it comes to geospatial and how it works for the federal government? Just curious how to kind of think about that as we're in an election year.

Speaker Change: Okay, really helpful. And then, just on geospatial, I'm curious, obviously, it seems like you guys fly to mixed impact and how that builds for the rest of the year. Just in terms of backlog and bookings.

Christopher Moore: But our anticipation is we'll continue at that 6 to 10 percent organic growth as we look for the second half of the year and also as we integrate these new acquisitions. Backlog sequentially year-over-year. Just trying to understand, you know, kind of how the mix is changing above. Is it much different sequentially or year over year?

Speaker Change: Anything we should keep in mind about the election, does that have an impact when it comes to geospatial and how it works for the federal government? Just curious how to think about that as we're in an election year.

Unknown Executive: I'll start, and maybe anyone is free to join in, particularly Dan, if you have something, but NV5, we are agnostic as opposed to which way politics is going, but that goes back to what I said earlier. We just want to go for the needs that are required by the whole nation, whether it's whatever political party happens to develop. So we tend to not be as involved in what the political environment is going to be. We will have to adjust if there are higher or lower taxes. But as far as the actual work is concerned, we don't see a tremendous difference, no matter which part.

Dickerson Wright: I'll start and maybe anyone is free to join in, particularly Dan, if you have something, but NV5, we are agnostic as opposed to which way politics is going, but that goes back to what I said earlier. We just want to go for the needs that are required by the whole nation, whether it's whatever political party happens to develop. So we tend to not be as involved in what the political environment is going to be. We will have to adjust if there are higher or lower taxes. But as far as the actual work, we don't see a tremendous difference, no matter which side you're on.

Unknown Executive: I'll start, and maybe anyone is free to join in, particularly Dan, if you have something.

NV5: NV5, we are agnostic as opposed to which way politically it is going, but that positions back to what I said earlier. We just want to go in.

Dickerson Wright: Chris, I'm not quite sure I understand what you mean by sequentially, but you know we've really, and we emphasize this at Investor Day, we are really, really focused on on how we can cross sell within each of those three segments and technology. And so we seem to see a greater increase in the geospatial and building technology business, which is dealing with the service and energy. And then we also see our infrastructure growing because of the increased demand on energy delivery and domestically.

Speaker Change: The needs that are required by the whole nation, whether it's whatever political party happens to develop, to take to be in power. So we tend to just...

Unknown Executive: be as involved in what the political environment is going to be.

Unknown Executive: go

Speaker Change: Taxes higher or lower, but as far as the actual work, we don't see a tremendous difference no matter which party is in power.

Dan Levine: Great. I can jump in for a little bit.

Dickerson Wright: So I would say technology is kind of filtered through all of those three main segments. And the real focus about growth has been that we've seen and we're expecting the second half to be coming from our technology base. Geospatial and in our building technology services segment. Chris, and if you look at a comparison versus a year ago, it's about a 9% increase in that backlog. Right. Got it. Okay. Maybe less one.

Speaker Change: Great. I can jump in a little bit. I'm sorry. Yeah, we shouldn't see any impact at all this year.

Unknown Executive: in our business, and usually, any change in administration takes a couple years to transition, and it ends up being... Responsive to Administration Changes.

Michael Feniger: I'm sorry. Yeah, we shouldn't see any impact at all this year in our business. And usually, any change in administration takes a couple years to transition. And it ends up being We still have the same amount of work; it just comes from different places because we're technology and a solution implementer, so we're pretty... resilient to administration changes.

Speaker Change: In our business and usually any change in administration takes a couple years to transition and and it ends up being We still have the same amount of work. It just comes from different places because we're technology and solution implementer. So we're pretty

Dickerson Wright: And just to understand, I'm curious with the M&A picking back up and you guys flagging, are multiples that you're seeing out there in these conversations? Are they starting to go higher than maybe they were a few years ago? Are they still in the same areas? I'm just curious if we could touch on that. Thanks, everyone. Well, yeah, I think that they are attending. You have to be a little bit more

Unknown Caller: And just to understand, I'm curious with the M&A picking back up and you guys flagging, are the multiples that you're seeing out there in these conversations starting to go higher than maybe they were a few years ago? Are they still around the same areas? I'm just curious if we could touch on that. Thanks, everyone.

Speaker Change: Resilient to administration changes

Unknown Caller: Good to know. And just to understand, I'm curious with the M&A picking back up and you guys flagging, are multiples that you're seeing out there in these conversations, are they starting to go higher than maybe they were a few years ago? Are they still around the same areas? I'm just curious if we could touch on that. Thanks, everyone.

Dickerson Wright: The data center, you know, you talked about it at Investor Day and again today, looking to, you know, go from 40 million run rate to 400 million in five years. From where you sit today, I know, you know, I have a perfect outlook, but does that grow? Does it ramp early? Is it relatively smooth? Is it more back half loaded? Just trying to understand, you know, kind of what you're seeing at this point?

Dickerson Wright: Yeah, I think that they are tending to rise, particularly as private equity gets more involved in this space. But you know, we have the luxury of being publicly traded and using our, you know, our stock is appreciated very nicely. And sometimes we will be using some of our stock in the acquisitions, and that tends to get to multiples above the traditional six times, as high as 10, 10 times. So, we have seen an increase in the multiples as more and more people, either brokers or private equity firms, get involved.

Unknown Caller: Well...

Speaker Change: Yeah, I think that they are attending, you have to be a little bit more creative, they're tending to rise, particularly as private equity gets more involved.

Speaker Change: in this space but you know we have the luxury of being publicly traded and and using our, you know, our stock is appreciated very nicely and sometimes we will be using some of our stock in the acquisitions and that tends to get to multiple above the traditional

Dickerson Wright: Yeah, it's been here. I mean, we're currently sitting at about 30% organic growth. So, you know, it would be a combination. You know, it's about 55% Kager over that over that time period of the goal. So I think it would be a combination of acquisition and organic growth. But if we continue on our current trajectory and keep calling additional services as we are, we'll get a large portion of that through the organic growth.

Dickerson Wright: And then the remainder through acquisitions, which we're looking at at the moment. And from where you sit today on the organic growth side, is it, is this cute? I mean, is there a lot of that in the next, you know, year or two, where there's a little bit heavier or you're looking at that as kind of smoother over this five years? Yeah, I mean, I would see continuing at the rate that we are, you know, sort of over that 30% particularly on the US where we're starting out.

Speaker Change: 6 times, as high as 10 times, but we have seen an increase in the multiples as more and more people.

Unknown Executive: either brokers or private equity gets involved.

Unknown Executive: either brokers or the private equity gets involved.

Speaker Change: Thank you.

Operator: Again, if you would like to ask a question, press star, then the number 1 on your telephone keypad.

Michael Feniger: Again, if you would like to ask a question, press star, then the number 1 on your telephone keypad. We do have another question came in from Keith Rosenbloom with Cruiser Capital. Your line is open.

Operator: and Dan Levine. Thank you.

Operator: Again, if you would like to ask a question, press star, then the number 1 on your telephone keypad.

Operator: We do have another question came in from Keith Rosenbloom with Cruiser Capital. Your line is open.

Keith Rosenbloom: Bye, guys. Bye, Keith.

Unknown Caller: Bye, guys. Thank you. Hey, I wanted to clarify one question earlier, I think from Chris Moore. That shows a 10% revenue growth rate year over year, is that right? So, I was just making sure I was doing that right.

Keith Rosenbloom: Hey, I wanted to clarify one question earlier, I think from Chris Moore. If I look at your revenue guidance at the midpoint at $9.47, that shows a 10% revenue growth rate year over year, is that right? We think the second half is going to be very strong; I have not, I'm sure that probably the second half is above ten percent. That is ten percent on the total. I'd heard a different number, and I just think mathematically it's ten percent revenue growth. Um, so I was just making sure I was doing that right.

Dickerson Wright: You know, we're an earlier stage. I'll speak the higher rate of growth there. There's a 30% I've been talking about mostly on the international group. You know, we're expanding into new regions and bringing in new services. So, yeah, a lot of this will come for the organic growth and depend on how early we can bring those acquisitions and what will depend on how much they play into it. Yeah, I appreciate it.

Keith: Bye, guys. Bye, Keith.

Christopher Moore: I'll leave it there.

Speaker Change: Hey, I you know, I wanted to clarify one question earlier, I think from Chris Moore. If I look at your revenue guidance at the midpoint at 947, that shows a 10% revenue growth rate year over year. Is that right?

Unknown Executive: Thanks, guys.

Speaker Change: We think the second half is going to be very strong.

Speaker Change: I am not, I'm sure that probably the second F is above the 10%. That is 10%. That is 10% on the total. I just think mathematically, yeah, I'd heard a different number and I just think mathematically it's...

Andrew Whitman: Next question comes from the line of Andrew Whitman with Robert Beer. Your line is open. Great.

Dickerson Wright: Um, I wanted to ask a question about the data center target. You know, you've got all these really exciting irons in the fire, it seems like in terms of revenue growth. And I'm curious as to what this, and I appreciate that it's a target. But in terms of the next couple of years and the acceleration of revenue, will this particular line of business contribute to margin enhancement?

Andrew Whitman: Good evening, afternoon, guys. I just had a question. I guess on the acquisitions that you mentioned that haven't closed yet. I understand that, because they haven't closed yet, you're not going to maybe talk too much specifically on each one individually, but collectively, can you talk about what the purchase price for those acquisitions is and maybe what the annual expected revenue contribution for those two acquisitions on a combined basis? Just a couple of things are not to be too technical here.

Speaker Change: It's 10% revenue growth.

Unknown Caller: I wanted to ask a question about the data center target. You've got all these really exciting irons in the fire, it seems like, in terms of revenue growth. And I'm curious as to what this... and I appreciate that it's a target, but in terms of the next couple of years and the acceleration of revenue, will this particular line of business contribute to margin enhancement?

Unknown Caller: So I was just making sure I was doing that right. I wanted to ask a question about the data center target. You've got all these really exciting irons in the fire, it seems like, in terms of revenue growth. And I'm curious as to what this...

Unknown Caller: And I appreciate that it's a target, but in terms of, you know, the next couple of years and the acceleration of revenue, will this particular line of business contribute to margin enhancement?

Andrew Whitman: We don't really closing is a term we haven't been using lately. The two that I've mentioned were absolutely, we've reached an agreement. We've agreed on valuation, we've reached an agreement on many different things that include both of those. We're under a non-disclosure agreement right now, so I cannot, I'm not in a position to tell you the valuation or what we've paid for these because of that. But you can use whatever math you want and you can see that we try to be as transparent as possible by saying that. We've got there's roughly 400 people that will join the company. Be doing these to acquisition.

Dickerson Wright: Yes, I think the organic growth we're targeting to, we see that aspirational goal of 400 million in revenue for the data centers or anything related to that technology group. And that will be a combination of organic growth and acquisitions. And we have a few acquisitions in the pipeline right now for the data center business, and we need to take advantage of what we've been doing internationally. Keith, we are very well established in some locations in the east that our competitors just aren't.

Speaker Change: yes i think the organic growth we're targeting to to we see that aspirational goal of four hundred million in revenue for the data centers or anything related to that technology group

Speaker Change: And that will be a combination of organic growth and through acquisitions.

Unknown Caller: In the pipeline right now for the data center business and we need to take advantage of what we've been doing internationally. Keith, we are very well established in some locations.

Dickerson Wright: I mean, we have a very good, strong network. And so I think the growth that you see in data centers will be more internationally for now because of energy demands domestically. But we think that we can get to that aspirational goal of 400 over a 10-year period, but it's got to be a combination of organic growth and acquisitions.

Edward Codispoti: We'll wait for that to clear and then check back next quarter maybe. Just to understand the quarter better, you mentioned there was some one time cost from the Viz integration and I was just wondering what the quantum of that, how much was that in your bridges for your adjusted results? Is that added back or is that included as a cost penalty? I'm sorry, I just didn't understand how you upgraded that. Hi Andy, no, those expenses are not added back the ones that I was referring to.

Speaker Change: In the East that our competitors just are not. I mean, we have a very good, strong network. And so I think the growth that you see in data centers will be more internationally for now because of energy demands domestically. But we think that we can get to that.

Speaker Change: aspirational goal of 400 over a ten-year period but it's got to be a combination of organic growth and acquisitions.

Dickerson Wright: Keith, just to go back to that previous question, the 10% is total growth, right, in terms of growth revenue reduction if you take the midpoint. The growth rate that we alluded to earlier was an organic number, which was below.

Speaker Change: kekeepy i so just go back to that previous question the ten percent is total growth right in terms of growth revenue projection to be take the midpoint the growth rate that we alluded to earlier was an organic number which was which was below that right was seven or seven

Edward Codispoti: So when you look at GNA in the second quarter of last year versus this year, as I mentioned on the call, you had about a $6.7 million reversal in Q2 of last year, right? And then in this year, you had about, it's roughly about 800,000 or so in integration IT type related costs. And half of those are non-recurring going forward. That was just a problem up and get them integrated. We also had about $300,000 more of acquisition related cost transactional in one quarter or over the other. That in particular is added back, but that was just a $300,000 delta. And then the rest of the increase in GNA is just because of the acquisitions that we've added to the business.

Keith Rosenbloom: https://www.kenhub.com It's a point to make. I was looking at the 2022 Investor Day. And there you guys pretty confidently said your target was going to be a billion dollars of run rate revenue leaving the fourth quarter of 2024. So looks like you're on point for your 2022 guidelines, and hopefully this year's Investor Day targets it there as well. So well, thank you, Keith, for noticing that. That's correct. I think I remember spending some time seeing you there on Investor Day, and that is why we are where we are. What you surmise is correct. We are well on that target for the billion dollar run rate.

Edward Codispoti: Okay, that's clear. Thank you for that.

Speaker Change: excited okay and then just last was just lasted as a

Unknown Caller: And there you guys pretty confidently said your target was going to be a billion dollars of run rate revenue leaving the fourth quarter of 2024. So looks like you're on point for your 2022 guidelines, and hopefully this year's Investor Day targets it there as well. So well, thank you, Keith, for noticing that. That's correct.

Speaker Change: it's a point to make i was looking at the two thousand and twenty two investor day

Unknown Caller: And there you guys pretty confidently said your target was going to be a billion dollars.

Unknown Caller: of Run Rate Revenue leaving the fourth quarter of 2024.

Unknown Caller: Looks like you're on point for your 2022 guidelines and hopefully this year's.

Unknown Caller: Investor Day targets it there as well. Well, thank you, Keith, for noticing that. That's correct. I think I remember seeing you there at Investor Day. And that is... We are...

Dickerson Wright: I think I remember spending some time seeing you there on Investor Day, and that is, yeah, we are. We are. We are. We are. Yep, yep, you called it out on May 22. Thanks Dickerson, thanks Alex, thanks guys.

Edward Codispoti: And then I guess maybe this one's for you to add. Just you talked about the quarter being cash burn and you talked about the year-to-day progress. I was just wondering as I was looking at the various accounts in your working capital, it looks like the unbuild is the area. Is that a result of the percentage of completion accounting that you're doing on LNG projects? It just looks like the biggest use of cash in the quarter source hoping to understand that account in particular.

Speaker Change: What you survice is correct.

Keith Rosenbloom: Yep, yep. You called it out on May 22. Thanks Dickerson. Thanks Alex. Thanks guys. Talk to you soon. Okay. Thank you, Keith.

Dickerson Wright: we are well on that target for the billion dollar runr yeah yeah you called it out in may have twenty two thanks stickerson thanks ok thanks guys touchesington ok thank you ke thank you

Unknown Caller: Okay, thank you, Keith.

Dickerson Wright: There are no further questions at this time. Mr. Wright, I turn the call back over to you.

Speaker Change: There are no further questions at this time. Mr. Wright, I turn the call back over to you.

Dickerson Wright: Well, thank you. I think that's our last question. I just had some concluding comments, and then I thought we would speak to each of our segment leaders to see how they see the second half of the year. So if you saw or listened to what we're saying today, we really feel comfortable with the positioning of NV5 so that we're not so dependent on economic conditions. The need for improved infrastructure, the building of roads, bridges, water, waste water, and energy delivery is really fueled by the population growth of the U.S. and the population growth of the planet, so we are doing things that are needed or mandated, and so we're not as dependent on specific economic conditions.

Dickerson Wright: Well, thank you. I think that's our last question. I just had some concluding comments, and then I thought we would speak to each of our segment leaders to see how they see the second half of the year. So if you saw or listened to what we're saying today, we really feel comfortable with the positioning of NV5 so that we're not so dependent on economic conditions. The need for improved infrastructure, the building of roads, bridges, water, waste water, and energy delivery is really fueled by the population growth of the U.S. and the population growth of the planet, so we are doing things that are needed or mandated, and so we're not as dependent on specific economic conditions.

Dickerson Wright: Well, thank you. I think that's our last of the questions. I just had some concluding comments.

Edward Codispoti: Sure. And yet it is, a lot of it is driven by the unbuild so that observation is correct. However, it's really mostly that the business in general that's ramping up but in particular geospatial. Because they had that law when you think back to Q4 and Q1 because of the continuing resolution as that came back in the second quarter. Now you have to resume work and it takes a little bit of time to convert that to cash, right?

Dickerson Wright: And then I thought we would speak to each of our segment leaders to see how they see the second half of the year. So the Transcribed by https://otter.ai

Dickerson Wright: If you saw or listened to what we're saying today, we really feel comfortable on the positioning of NV5 so that we're not so dependent on economic conditions.

Dickerson Wright: The need for improved infrastructure, the building of roads, bridges, water, waste water, and energy delivery is really fueled by the population growth.

Edward Codispoti: Because you have to go from unbuild to AR and then collections. And so really that's what's driving it but it's really just a function of the ramp up in the business. That makes a lot of sense.

Dickerson Wright: of the U.S. and the population growth of the planet. So, we are doing things that are needed or mandated, and so we're not as dependent on specific economic conditions.

Andrew Whitman: Thank you. That's all my questions for you. I hope you have a good night. Thanks. Thank you. Thanks, Andy.

Dickerson Wright: So we're very encouraged by and enthusiastic about this increased demand for our services, and we think that the end of the second half of 24 will be very strong, and we look forward to further growth as we have seen for the future.

Dickerson Wright: So we're very encouraged by and enthusiastic about this increased demand for our services, and we think that the end of the second half of 24 will be very strong, and we look forward to further growth in the future. We are really emphasizing how technology gives us that edge. So it will be significant in the delivery of all segments of our services, all of the verticals. Technology will play a key role that gives us a specific advantage that does two things.

Rob Brown: Our next question comes from the line of Rob Brown with Lake Street capital markets. Your line is open. Good afternoon. I asked one of the folks a little bit on the utility on M business that you. But you purchased. You know, is that a, is that a kind of a market opportunity that this gets you into that you can expand from and they just call on the thinking of that vertical there of market.

Dickerson Wright: So, we're very encouraged by and enthusiastic about this increased demand for our services. And we think that the back, the end of the second half of 24 will be very strong. And we look forward to further growth as we've seen for the future.

Speaker Change: we are really emphasizing how technology gets a subedge so we be it will be

Speaker Change: can in the delivery of all segments of our services, all of the verticals, technology will play a key role that gives us a specific advantage that does two things. We're able to measure and do things with the wider geographies.

Dickerson Wright: Well, I'll speak in a macro picture of what we're looking for and how we're positioning us. The only end business is one segment that we were not. Delivering to our utility clients. It tends to be a lot more sticky because the people that are on that on those projects tend to stay. So it's more of a reoccurring model, but it gets us a disability into an area that we hadn't done before.

Dickerson Wright: We're able to measure and do things over wider geographies, and we can deliver our information to our clients in a faster way than we've been able to do traditionally. And this gives us an edge over our competitors. So you have seen that we feel very strong about the year. So we've increased the guidance that you've seen. And that was on slide 23.

Speaker Change: And we can deliver our information to our clients in a faster way than we've been able to do traditionally. And this gives us an edge over our competitors.

Dickerson Wright: So?

Dickerson Wright: You have seen that we feel very strong about...

Speaker Change: So we've increased the guidance that you've seen, and that was on slide deck 23. And this is going to be coming as a technology will be a driver of this, and it's going to be a combination of our organic growth.

Dickerson Wright: But maybe Alex who will be probably absorbing most of the O&M and in the infrastructure sector of the utilities business. I'll let him speak to some of that. Yeah, no, it's a very good point. But one thing I just want to be clear on. We have not purchased it yet. We have an agreement to purchase. So don't think that it's already part of the NB5 family. It is the acquisition is not closed.

Dickerson Wright: And this is going to come as technology will be a driver of this. And it's going to be a combination of organic growth and what we're doing in M&A activity. So I want to thank everyone for listening today, and before we go into the specific comments I have, let's just ask how our leaders feel about their sector. So Alex, how do you feel about the second half of the year for the infrastructure group segment?

Speaker Change: and what we're doing in M&A activity. So I want to thank everyone for listening today. And before we go into the specific, including comments I have, let's just ask...

Dickerson Wright: But as Dickerson mentioned, it is a new area for us within the utility market. We see it as an area that, as was mentioned, it's very sticky and that our folks are full time working in the utility operations. So as the plant asset has many, many years of operation, we're able to staff it throughout the duration of the plant being operated. And just to Rob, just to maybe add to that, we would not have announced it in this quarter if we had not reached a real definitive agreement. I think it's on both of those. It's just that there's all types of certain approval and processes that we're going through now. But we have no expectation of those not joining the NB5 team very shortly.

Alex: how are our leaders feel about their sector so alex how do you feel about the second half of the year for the infrastructure group segment thanks that we have several indicators that support our continued growth of the platform

Alex Hockman: Thanks, Dick. We have several indicators that support our continued growth of the platform. We're seeing strong demand for our differentiated approach to providing interdisciplinary and integrated services, and our cross-line opportunities are increasing. Our backlog is also increasing. And importantly, our backlog numbers do not

Speaker Change: We're seeing strong demand for our differentiated approach in providing interdisciplinary and integrated services, and our cross-linked opportunities are increasing.

Unknown Executive: Our backlog is also increasing, and importantly, our backlog numbers do not include the master services agreements that we have won since we do not include those amounts until we have an executed work order. As such, we have visibility for growth well beyond the next 12 months.

Unknown Executive: Our backlog is also increasing, and importantly, our backlog numbers do not include the master services agreements that we have won, since we do not include those amounts until we have an executed work order. As such, we have visibility for growth well beyond the next 12 months.

Dan: Thank you, Alex. Dan, you received a lot of questions and interest on what we're doing with the geospatial, so we'll ask specifically, how do you see the second half of the year for the geospatial group and the activities that you're doing?

Speaker Change: Yeah, I see a lot of positive activity going on in the market in particular. One of the interesting phenomenons we're seeing is this adoption of a digital transformation strategy, and transportation and power in specific, they're calling it digital delivery.

Dickerson Wright: Okay, and just to clarify, so that that's why you haven't put it in your your guidance in when they when they formally close and that way. Yeah, well, we never really use M&A as our guides. We want our operations people to deliver the budget that they do. If an acquisition has been with us, then that may or may be included in the guidance, but no future acquisitions or no acquisitions that that we are giving or what we've given in the guidance.

Speaker Change: And this is connecting the data chain and system chain that are used in planning, design and construction through to operations and asset management. And we're good at all of that. And being able to put that together in the market is really exciting.

Unknown Executive: And then the other phenomenon we've seen and really growing right now is the digital twin solutions.

Dickerson Wright: Right now, it's included at all in the guides we've given. And we never really know we have a number of ongoing acquisitions. We never know what's the civic month they're going to close in or what we can add. And so we'd rather be a little bit conservative in that regard. Okay, great.

Speaker Change: Data Center work we're doing and the digital twinning there. We're seeing that at scale. We want a contract for Salem, Oregon for more of an outdoor solution. And that kind of activity is accelerating, so we're really excited about that.

Ben: Thanks, Dan. Ben, you know, you're doing an awful lot of work in the building technology segment, so maybe an overview of how you see this second half of 2024 and after that.

Jeff Martin: Thank you. Our next question comes from the line of Jeff Martin with Roth Capital Partners. Your line is open.

Jeff Martin: Talked about real estate transactions in a while. Given the rate environment appears to be turning in a friendly direction here soon. Curious if you could give us an update on real estate transactions? Okay, I'll mention a just an overview and then that segment is in our infrastructure group. They've had a very strong quarter. They're really coming back and certainly any relief and interest rates always helps their their business, but we have two, we have roughly 60 million annually in this to in regard to the real estate transactional business, but they're really on an uptick now, and we think that they're improving.

Speaker Change: yes things i'm really excited about the current and the future growth we're seeingi think both in buildings and technology but also the crossworking that we're doing with the infrastructure group and ge spatial

Unknown Executive: You know, we've talked a lot about data centers, I just wanted to touch on some areas where we...

Speaker Change: We've invested quite a bit of time and effort in announcing the results of that. Earlier in the year, we expanded into Japan and Indonesia, and that was to meet the needs of some of our existing clients, and then them asking us to be there.

Speaker Change: And that's really now starting to pay dividends. Some other areas that I think are going very, very well, our clean energy and decarbonization group, we've really started to secure larger contracts with government agencies, school boards and utilities.

Unknown Executive: So really pleased with the work that we've got going there and the downstream work that that brings with infrastructure.

Jeff Martin: I think both segments are at budget or above that budget in the real estate transaction group, but maybe allocates to be specifically on on that. Yeah, so again, as you've mentioned, what we're going to see a significant uptick once the rates interest rates come down. That business is very much dependent on two different types of business. One is where there's refinance, and the other is when there is actually a real estate transaction that takes place.

Speaker Change: And lastly, the building digitization things that we've been doing, you know, with Geospatial, we really formed that group late last year and have been growing it organically, and it's really starting to take off. Just in the last two weeks alone, working with Geospatial, we've secured over $2 million worth of contracts in the aviation space, so really, really happy with the progress there too.

Jeff Martin: So we're still seeing a very good business by virtue of the fact that there's a lot of refinances take place, but we'll see that very nice uptick once we get to the point where interest rates become much more attractive for real estate transaction. Okay, that's helpful.

Speaker Change: Well, thank you everyone. I'm glad to see that our leaders shared the enthusiasm. We're looking forward to a very solid performance in the second half of the year, and we have the luxury of doing the acquisitions now that really

Speaker Change: Strengthen each of these segments and each of the verticals as they contribute to the segment So I want to thank everybody for listening in today to our call and we look forward to Speaking to you again in the third quarter. So thank you very much

Edward Codispoti: And then one for ad here, do you have handy the revenue contributions from acquired companies during the second quarter and the first half of the year? Yeah, that handy. It's just sure for the for the second quarter, the 2024 acquisitions contributed 10.5 million, and for the six months 15.9 million.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Edward Codispoti: Okay, and then if I could squeeze one more in real quick. Thoughts on EBITDA margin expectations over the balance year sounds like mix is helping here with geospatial booking, you know, some nice contract wins recently and federal back on track. It seems like geospatial may help help the margin mix towards the back half of the year.

Edward Codispoti: Here's Speaker Cohen on that. Yeah, I think that's that's accurate. We would expect geospatial because we expect them to have a stronger second half. We would expect them to lift consolidated margins. For the full year, I would I would estimate that we'd come close to 17%. I think just when you consider how we're tracking right now, that would be a good estimate.

Dickerson Wright: And Jeff, just to what pleases me is all three of those key segments have improved over the same period of time last year. So we're seeing good organic growth in our infrastructure business. Of course, geospatial is really contributing now that this has a continuing resolution issue resolved. And the explosion that we're seeing in data center work particularly internationally is also all three have really contributed. So I'm actually pleased with all three segments of the business over over the same period last year.

Unknown Executive: Certainly good to hear. Thank you, appreciate it.

Marc Riddick: Next question comes from the line of Marc Riddick with Cidori. Your line is open. Thank you. Good evening. Good evening, to touch on with the growth points that you have here. I was wondering if you could talk a little bit about it. I think it's sort of hinted at this on the investor day, but I was wondering if you could talk a little bit about, yeah, as we're approaching the reaching the $1 billion goals. Maybe you could talk about maybe any updated thoughts you may have as to the setting of the next marker, if you will, and the time frame that we might get that.

Dickerson Wright: Very good question, Marc. Two key things. Obviously, what we said to our people and to our investors is the investor day was aspirational. That's our goals. That's what we need that we want to do. And it's certainly different than this call where we're specific on the results that we're doing. And this is what we've actually accomplished. As far as the $1 billion, we will do the $1 billion. We said that we'll be $1 billion by entering 2025 or the end of 2024.

Dickerson Wright: That will be done. And we feel very strongly that that is. And of course, it's on the run rate. So it will be $1 billion going into the budget for 2025. So as far as what our next goal is, these come from rounds up. It's not me or the people on this call saying what they're going to do, but it's actually coming from all of our operations.

Dickerson Wright: So we're now just looking at the information that we've gathered, and we will be announcing shortly what our new goal is for 2028. But we're waiting to see what comes from our operations and how they see the business. So, you know, we expect significant growth. But that milestone we haven't released it yet, because we're still kind of collating the information. Okay, great. Thanks for that. And then I just a quick follow up.

Dickerson Wright: I was wondering if you've seen much in the way of regional differentiation as far as spending patterns, or is there any particular callouts like that that were articles that we should be thinking about that maybe are searching a little stronger than others at the moment. Thanks. Great. Thank you. You're touching on some of the concluding comments that I make. But no, no, no.

Dickerson Wright: I'm happy to say now that I got a chance to rehearse it and then maybe I'll say it again later, but we have always positioned our company to be in a mandated business. You know, it's not so much dependent on economic conditions. So if they need a big infrastructure project and Iowa, it's not depending on whether the Iowa budget is due. It's these are things that are needed. People need to drink clean water. People need to go over bridges. And so we've always wanted to be in mandated businesses. So this has served very well.

Dickerson Wright: It's within a regionalized thing, so I'd rather mention the differentiated that we're seeing in between domestic and internationally. Using the data center and the demand for energy in the US, most of the energy is coming from the Public Utility Commission and usually they are very careful. They're not, you know, we don't see any tremendous new power plants being built, so the liver is important. And they are actually having more torrents on some areas because of the need for power that they can't deliver.

Dickerson Wright: However, internationally, especially Ben mentioned on the call of a hyperscalers, they just cannot keep up with the demand for data centers and the use of energy and they don't have, they're not relying on a public grid to do this. Those hyperscalers are free to develop power and do power as they see. So we see a true more of the growth in the international market. Then right now that's that is taken place domestically. Thank you.

Marc Riddick: I appreciate it.

Michael Fedger: Our next question comes from the line of Michael Fedger with Bank of America. He'll lines open. Yes, hi, thanks for taking my questions. Just Ed, I'm just curious on the outlook. If you mentioned like the 17% even a margin, just we kind of think of the gross revenue and the EPS range, any help we should kind of be framework, we should be thinking for where even I kind of settles for the year based on that guidance. We have a goal of 160, I mean, that could, of course, that could vary, but and we don't give guidance on on adjusted, but that's I think that's a reasonable number to shoot for.

Dickerson Wright: Okay, really helpful. And then just on geospatial, I'm curious obviously things like you guys fly the mix impact and how that builds for the rest of the year. Just in terms of backlog and bookings for geospatial, maybe we should keep in mind about the election. Is does that have an impact when it comes to geospatial and how it works the federal government just curious how to kind of come figure that that as we're in election here.

Dickerson Wright: I'll start and maybe anyone is free to join in, particularly Dan, if you have something, but. And we have agnostic as opposed to where which way politically the it is going, but that positions back to what I said earlier. We just want to go in the needs that are required by the whole nation, whether it's whatever political party happens to, happens to develop. So we could to take to be in power.

Dickerson Wright: So we tend to just not be as involved in what the political environment is going to be. You know, we will have to adjust if there's taxes higher or lower or but as far as the actual work, we don't see a tremendous difference, no matter which party is in power.

Dan Levine: Great. Yeah, I can jump in a little bit. I'm sorry. Yeah, we shouldn't see any impact at all this year, in our business, and usually any change in administration takes a couple of years to transition. And it ends up being, we still have the same amount of work. It just comes from different places because we're technology and solution implementer. So we're pretty resilient to administration changes. Right.

Dan Levine: Good to know.

Dickerson Wright: And just to mention, I'm curious with the M&A picking back up and you guys blogging is our multiple that you're seeing out there in this conversation. Are they starting to go higher than maybe they were a few years ago? Are they still around the same same areas?

Dickerson Wright: I'm just curious to reach a touch on that. Thanks everyone.

Dickerson Wright: Well, yeah, I think that they are attending.

Dickerson Wright: You have to be a little bit more creative. They're attending to rise, particularly as private equity gets more involved in this space. But you know, we have the luxury of being publicly traded and using our stock is appreciated very nicely. And sometimes we will be using some of our stock in the acquisitions. And that tends to get the multiple above the traditional six times as high as 10 times. So that we have seen an increase in the in the multiples as more and more people either either brokers or the private equity gets involved.

Unknown Executive: Thank you.

Unknown Executive: Again, if you would like to ask a question, press far the number one ear and telephone keypad.

Keith Rosenbloom: We do have another question came in from Keith Rosenloom with cruiser capital. Your line is open. Hi guys. I want to clarify one question earlier, I think from Chris Moore. If I look at your revenue guidance at the midpoint at 947, that shows a 10% revenue growth rate year over year. Is that right? Last year was the one we think the second half is going to be very strong. I have not.

Keith Rosenbloom: I am not that I'm sure that probably the second half is above the 10%. I heard a different number and I just think mathematically it's 10% revenue growth. So I was just making sure I was doing that right.

Dickerson Wright: I wanted to ask a question about the data center target. You know, you've got all these really exciting irons in the fire, it seems like in terms of revenue growth. And I'm curious as to what this and I appreciate that it's a target. But in terms of, you know, the next couple of years and the acceleration of revenue. Will this particular line of business contribute to margin enhancement? Yes. I think the organic growth, we're trying to get to, we see that aspirational goal of 400 million in revenue for the data centers or anything related to that technology group.

Dickerson Wright: And that will be a combination of organic growth and through acquisitions. And we have a few acquisitions in the pipeline right now for the data center business. And we need to take advantage of what we've been doing internationally. Keith, we are very well established in some locations, in the East that our competitors just are not. I mean, we have a very good strong network. And so I think the growth that you see in data centers will be more internationally for now because of energy demands domestically. But we think that we can get to that aspirational goal of 400 over a 10 year period, but it's got to be a combination of organic growth and acquisitions.

Edward Codispoti: Keith, I just go back to that previous question. The 10% is total growth, right? In terms of growth revenue, protection to be take the midpoint. The growth rate that we alluded to earlier was an organic number, which was, which was below that. Right with seven or so. Exactly. Okay.

Keith Rosenbloom: And then just last, just last as a point to make, I was looking at the 2022 investor day. And there you guys pretty confidently said your target was going to be a billion dollars of run rate revenue, leaving the fourth quarter of 2024. So it looks like you're on point for your 2022 guidelines. And hopefully this year's investor day targets it there as well. Well, thank you, Keith for noticing that. That's correct.

Keith Rosenbloom: I think I remember spending some seeing you there and investor day. And that is. Yeah, we are at we're on you. What you said is correct. We we are well on that target for the billion dollar run rate. Yep, you called it out in May of 22. Thanks, Dickerson. Thanks. Thanks guys. Talk to you soon.

Keith Rosenbloom: Okay. Thank you.

Unknown Executive: There are no further questions at this time.

Dickerson Wright: Mr. Wright, it's on the call back over to you. Well, thank you.

Dickerson Wright: I think that's our last of the questions. I just had some concluding comments. And then I thought we would speak to each other about segment leaders to see how they see the second half of the year. So if you saw or listened to what we're saying today, we really feel comfortable on the position of MNB5 and so that we're not so dependent on economic conditions. The need for improved infrastructure, the building of roads, bridges, water, waste water and energy globally is really fueled by the population growth of the U.S, and the population growth of the planet.

Dickerson Wright: So we are doing things that are needed or mandated. And so we're not as dependent on specific economic conditions. So we're very encouraged by and enthusiastic about this increased demand for our services. And we think that the backs the end of the second half of 24 will be very strong. And we look forward to further growth as we've seen for the future. We are really emphasizing how technology gets a savage. So it will be significant in the delivery of all segments of our services.

Dickerson Wright: All of the verticals, technology will play a key role that gives us a specific advantage that those two things. We're able to measure and do things with our water geographies. And we can deliver our information to our clients in a faster way than we've had to able to traditionally. And this gives us an edge of our competitors. So you have seen that we feel very strong about the year so we've increased the guidance that you've seen and that was on 5.23 and this is going to be coming as a technology will be a drive of this and it's going to be a combination of that organic growth and what we're doing in M&A activity.

Dickerson Wright: So I want to thank everyone for listening today and before we go into the specific including comments I have.

Alexander Hockman: Let's just add ask how our leaders feel about their sector. So Alex, how do you feel about the second half of the year for the infrastructure group segment? Thanks, Dick. We have several indicators that support our continued growth of the platform. We're seeing strong demand for our differentiated approach and providing interdisciplinary and integrated services and our cross-selling opportunities are increasing. Our backlog is also increasing and importantly our backlog number is do not include the master services agreements that we have won since we don't do not include those amounts until we have an executed workload.

Alexander Hockman: As such, we have visibly for growth well beyond the next 12 months. Thank you, Alex.

Dan Levine: Dan, you received a lot of questions and interests on what we're doing with the geospatial.

Dan Levine: So we'll ask specifically how do you see the second half of the year for the geospatial group and the activities that you're doing? Yeah, I see a lot of positive activity going on in the market in particular. One of the interesting phenomena we're seeing is it's adoption of a digital transformation strategy and transportation and power in specific. They're calling it digital delivery and this is connecting that the data chain and system chain that are used in planning and designing construction through to operations and asset management and we're good at all of that and being able to put that together in the market is really exciting.

Dan Levine: And then the other phenomenon we've seen and really growing right now is the digital twin solutions. Ben talked about the data center work we're doing in the digital twining there. We're seeing that at scale. We want to contract for Salem, Oregon for more of an outdoor solution and that kind of activity is accelerating. So we're really excited about that.

Ben Herod: Thanks, Dan. Ben, you know, you're doing an awful lot of work with the in the building technology segment.

Ben Herod: So maybe an overview of how you see this second half of 2024 and and after that. Yeah, thanks. I'm really excited about the current and the future growth we're seeing. I think both in buildings and technology, but also the cross working that we're doing with with the infrastructure group and geospatial. You know, we've talked a lot about data centers, just wanted to touch on some areas where we sort of invested quite a bit of time and effort and are now seeing the results of that we earlier in the year we expanded into Japan and Indonesia.

Ben Herod: And that was to meet the needs of some of our existing clients and then they're asking us to be there and that's really now starting to pay dividends. Some other areas that I think are going very, very well, your clean energy and decarbonization group. We've really started to secure larger contracts with government agency school boards and utilities. So really pleased with the work that we've got going there in the downstream work that that brings with infrastructure.

Ben Herod: And lastly, the building digitization things that we've been doing with geospatial. We really formed that group late last year and have been growing it organically and it's really starting to take off. Just in the last two weeks alone working with geospatial, we've secured over $2 million worth of contracts in the aviation space. So really, really happy with the progress there too.

Dickerson Wright: Well, thank you everyone. I'm glad to see that our leaders should show the enthusiasm. We're looking forward to a very solid performance in the second half of the year. And we have a luxury of doing the acquisitions now that really strengthen each of these segments and each of the verticals as they contribute to the segment.

Dickerson Wright: So I want to thank everybody for listening in today to our choir and we look forward to speaking to you again in the third quarter.

So thank you very much.