Q3 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 third quarter 2024 ended in July 29, 2024.
Joining us today are Dickerson Wright, Executive Chairman of NV5,
Edward Codispoti, CFO of NV5, Alex Hockman, CEO of NV5
Ben Heraud, CEO of NV5 Buildings and Technology
Speaker Change: Kurt Allen, Senior Vice President, Geospatial at NV5, and Richard Tong, Executive Vice President and General Counsel at NV5. I would now like to turn the call over to Richard Tong.
Richard Tong: Thank you, operator. Welcome, everyone, to NV5's third quarter 2024 earnings call. Before we proceed, I would like to notify all participants
Richard Tong: that today's presentation can be found on ir.nb5.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 risks and uncertainty.
Richard Tong: Factors that could cause actual results to differ materially from these statements are included in today's presentation slides and in our reports on file with the FTC.
Richard Tong: During this call, GAAP and non-GAAP financial measures will be discussed.
Richard Tong: A reconciliation between the two is available in today's earnings release and on the company's website at www.NB5.com. Please note that unless otherwise stated, all references to third quarter 2024 comparisons are being made against the third 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.
Richard Tong: 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.
Richard Tong: However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation and are not in accordance or a substitute for GAAP.
Richard Tong: 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. We will begin the call with comments from Dickerson Wright, Executive Chairman of Envy5, before turning the call over to Edward Codispoti, Chief Financial Officer.
Richard Tong: for a review of the third quarter 2024 results. Dickerson Wright will then provide closing comments before we open the call for your questions. Dickerson, please go ahead. Thank you, Richard. And we wish to thank everyone joining us for this call.
Dickerson Wright: Let's turn to page four of the presentation where we provide our record performance for quarter three of this year.
Dickerson Wright: You will see we had organic growth that increased by 6%. Our gross profit increased 13% and net income showed an increase of 31%.
Dickerson Wright: We also had an increase of 21% in adjusted EBITDA and delivered increased profitability with an 18% adjusted EBITDA margin in the quarter.
Dickerson Wright: Our backlog of $914 million gives us confidence that we will achieve our goal of $1 billion of revenue run rate by the end of this year.
Dickerson Wright: We will be providing a new target in 2025 that will create even more growth and opportunities.
Dickerson Wright: How did we achieve these record results and what does the future hold for us? As you know, our business consists of three segments supported by our six service verticals.
Those three segments are infrastructure, geospatial, and buildings and technology.
Dickerson Wright: Let's look into the progress and growth of these segments. Let's begin with Alex Hockman, who leads our infrastructure vertical. Alex.
Alex Hockman: Thank you, Dickerson. Please turn to slide 5 of the presentation. Infrastructure as a reporting segment generated $101 million in Q3, representing strong organic growth.
Alex Hockman: The three verticals that comprise this segment include our business units that provide engineering design and survey, which accounted for 52% of Q3 revenues.
Alex Hockman: utility services which were 28% and construction quality assurance services which were 20% of Q3 revenue.
Alex Hockman: Some highlights from each of the segments include North Carolina Department of Transportation wins the $10 million in backlog.
Alex Hockman: Population growth, our aging infrastructure, compounded by public insistence and sustainable infrastructure initiatives, are increasing demand for our engineering, project management, and surveying services.
Alex Hockman: Also, our niche specialties such as our multimodal transportation design group are winning projects directly with the Department of Transportation's and are also sought out by other design firms due to our reputation and expertise.
Alex Hockman: In our utility vertical, our segment that specializes in the strategic undergrounding of electrical lines, ensuring a more resilient electrical grid, won a record $33 million in project awards in Q3.
Alex Hockman: During last quarter's call I mentioned how our geospatial services are providing cross-selling opportunities with our transportation services.
Alex Hockman: The same is true for our utility services that utilizes the data captured from fixed and rotary winged aircraft in addition to unmanned aircraft systems.
Alex Hockman: The expertise of the group has resulted in increased demand, allowing us to have a dedicated UAS team to support our utility services.
Alex Hockman: These contracts also include cross-sector engineering, environmental, and construction quality assurance operations.
Alex Hockman: Also, our substation team is continuing to see increased demand for its services from data centers. We are pursuing opportunities nationally and abroad to support our clients effort for this critical infrastructure.
Alex Hockman: These projects are all examples of how our cross-selling and integrated service offerings give NV5 a competitive advantage and allow us to manage our processes with in-house expertise.
Alex Hockman: Our construction quality assurance vertical, which operates in a mandated service line, has had strong organic growth in 2024.
Alex Hockman: One of our labs that maintains a Nuclear Quality Assurance Certification, NQA-1, was awarded a $5.4 million contract of which $2.2 million has already been funded for projects to be completed over the next two years.
Alex Hockman: Our CQA operations have success contracting with end-users in addition to enhancing our services through infrastructure and utility contracts.
Alex Hockman: NB5's multidisciplinary and integrated service offerings for all market segments position our team for continued growth. Dickerson. Thank you Alex.
Alex Hockman: Next we will hear from Kurt Allen who will report on the geostatial segment of our business. Kurt, please go ahead. Thanks Dickerson.
Kurt Allen: 28% coming from utilities, and the remaining 14% coming from state and local government. Revenue in each of these client categories, in general, focuses on the four major areas I just mentioned.
being Infrastructure, Water, Natural Resources, and National Defense.
Kurt Allen: Having capabilities in all four of these areas at scale is unique in the geospatial market. It provides NV5 with a competitive advantage and allows us to remain sticky with our clients. In addition, we are more often seeing our building technologies and infrastructure reporting groups
bring us new work and vice versa.
Kurt Allen: and the geospatial expertise and capabilities are differentiator for our building technologies and infrastructures group. We continue to see demand in our transportation and utilities programs mostly focused on asset management initiatives including asset mapping and analytics.
Like vegetation encroachment and geospatially based asset management system implementations
Kurt Allen: We have experienced a nice rebound in our hydrospatial market from the end of last year and the beginning of this year to where we are now. Hydrospatial exceeded our bookings budget for the year, providing a nice backlog for Q4 and well into 2025.
Kurt Allen: This is a result of a change in both market strategies and organizational changes.
Kurt Allen: We have expanded our geographic aperture for opportunities and have included and supported commercial programs such as sub-4 cable crossing mapping. We have also transitioned our vessel management into the same operational model we use for aircraft logistics.
Kurt Allen: As a result of this, our vessel utilization has gone up.
Kurt Allen: Additionally, our unique forestry and water resources data collection, processing, and analytics capabilities continue to stimulate our natural resources related work, primarily in the western United States and Alaska.
Kurt Allen: We have had some nice winds this past quarter to help build our pipeline for the rest of the year and into 2025.
Kurt Allen: The $290 million multi-award Luna 8 contract award from the National Geospatial Intelligence Agency is a recognition of our ability to gather data and provide useful and insightful analytics at scale and at speed.
Kurt Allen: We were aware that the National Geospatial Intelligence Agency was going to transition to better leverage private sector deep learning capabilities. So we have made the software investments over the past year to position ourselves for this work, which is paying off.
Kurt Allen: We also were successfully awarded over $26 million in awards directly related to asset management in support of the U.S. power grid reliability.
In addition, the natural resources sector of the federal government.
Kurt Allen: Over $15 million of landscape-scale data acquisition and analytics were awarded and are underway.
Speaker Change: Our geospatial vision for 2025 and beyond includes building around our growing position in our traditional markets and leveraging our expanding technologic prowess to grow our position and influence these markets.
Speaker Change: through thought leadership. We see the asset life cycle management trends across transportation, water, and power delivery and the defense markets as an area of growth. We are expanding our geospatial presence.
Speaker Change: of our hydrospatial assets which are already bearing fruit. Finally, we expect to see significant opportunities as a result of the severe damage caused by the large hurricanes the Southeast has experienced this season.
Speaker Change: If the political commitments made at both the federal and state level become reality, we expect supplemental funding bills to have geospatial requirements that will be placed on our existing contract, in part, to support damage assessment and assist in mitigation efforts across large areas.
Speaker Change: Back to you Dickerson. Thank you Kurt. Our third segment is our building and technology service group. Ben Heraud will provide an update of our latest activity in this segment. Go ahead Ben.
Ben Heraud: Thank you, Dickerson. Would you please turn to slide seven of the presentation?
Ben Heraud: In the past quarters we have spoken a lot about our data center services and we continue to be very pleased with our growth in this space.
Ben Heraud: Our strategy to grow this business domestically by leveraging our strong international relationships with hyperscalers is paying off. We were recently awarded a commissioning project in the US with one of the biggest global hyperscalers and are confident that this will expand to other projects.
Ben Heraud: We also announced two key acquisitions in this space, and while they were small, they were very strategic. They bring new hyperscale data center clients and subject matter expertise, which will support the organic growth of our teams as we scale up to deliver on our pipeline of projects.
Ben Heraud: We continue to be leaders in this space in the Asia-Pacific region and our strong organic growth here is anticipated to continue.
Ben Heraud: Our technology and acoustics group had a record quarter in terms of organic growth, revenue and EBITDA. We continue to be the leader in the higher ed space for the service line and are actively growing in other sectors including healthcare, aviation and hospitality.
Ben Heraud: We are very excited about the development of our building digitization business, both in terms of its growth and also how it's driving business and efficiencies for other groups within MB5, along with recurring revenue.
Ben Heraud: In Q3 we were awarded several large projects with a lot of potential for additional services.
Ben Heraud: including a contract to scan 1,100 retail stores that has the potential to expand to 10,000 locations nationwide.
Ben Heraud: This project has an aggressive timeline and we're leveraging the expertise of our program management team to support its delivery. Looking ahead, we expect to double the revenue of this group in 2025.
Ben Heraud: Our international group continues its impressive organic growth trajectory, and while data centres do play a large part in this, it's not the only driver for our growth here.
Our strategy for growth is on several fronts.
Ben Heraud: Increase our market share in existing locations, expand geographically into high-growth regions, and make strategic acquisitions where they support this strategy.
Ben Heraud: A great example is the recent acquisition of ASG in Dubai, which provides structural engineering services.
Ben Heraud: They're now actively bringing this expertise to all our clients across all regions to further drive growth. Our Dubai operations continue to see a strong pipeline of megaprojects in the region where we are a significant player.
Ben Heraud: It's also worth noting some areas of the businesses that have had seen some headwinds this year.
Ben Heraud: Interest rates have impacted the number of larger CapEx projects moving ahead in some sectors and this has affected parts of our MEP business.
Ben Heraud: As with any challenge, we need to adapt to the market and have been deploying our resource into areas where we have seen the growth, including work we are doing in the data centres, pharmaceuticals and clean energy and decarbonisation space.
Ben Heraud: For example, our energy efficiency team was recently awarded a project with a chip manufacturer to develop a decarbonization roadmap, including assessing the return on investment for CapEx projects that will reduce operating costs and carbon emissions.
Ben Heraud: NB5 will design, commission and oversee the implementation of these projects, providing a turnkey solution for this client.
Speaker Change: It's worth noting that we do see strong proposal activity for larger CAPEX projects and we expect many projects that have been on hold will go ahead earlier in the new year. Back to you Dickerson.
Thanks, Ben.
Let's now listen to Ed Codispoti.
Ed Codispoti: Before I begin my review of the numbers, I will note that these results should be considered preliminary until we file our Form 10-Q. Additionally, I will note that these amounts also include adjustments to prior periods for out-of-period misstatements that affected previous periods as discussed in our press release.
Ed Codispoti: Our gross revenues in the third quarter grew 6% to a record $250.9 million compared to $237.5 million in the third quarter of the prior year.
Ed Codispoti: Our gross profit was $129.5 million compared to $114.3 million in the prior year, an increase of 13%.
Ed Codispoti: Therefore, our gross margins expanded 350 basis points from 48.1% in the third quarter of last year to 51.6% in the third quarter of this year.
Ed Codispoti: Our net income was $17.1 million in the third quarter of 2024, compared to $13.1 million in the third quarter of last year, a 31% increase.
Ed Codispoti: and our gap diluted earnings per share was 27 cents versus 21 cents in the prior year period, a 29% increase.
Ed Codispoti: Our adjusted EBITDA was a record $44.5 million versus $36.7 million in the prior year. This represented a margin expansion of 230 basis points as our margin increased to 17.7%.
Ed Codispoti: Our adjusted EPS was $0.44 compared to $0.36 in the prior year, a 22% increase.
Ed Codispoti: If you would now turn to slide 10, you will see we have cash flows from operations of $48.9 million in the third quarter. This was a record for the company and a 145% increase over the same period last year.
Our net leverage remains low at 1.3 times.
Speaker Change: I'll now turn it back over to Dickerson for some closing comments.
Thank you, Ed.
Speaker Change: Please turn to slide 12 where we will report on acquisition activities for the quarter.
Speaker Change: As our service platform continues to solidify we're able to look for acquisitions that will strengthen our offering and hopefully will create a higher value of entree.
Speaker Change: In the quarter, we acquired the California Water Resources Group from Weston Solutions.
Speaker Change: This acquisition allows us to expand our water resources services while providing greater synergies with our existing services.
Speaker Change: We know of the Water Resources Group having worked closely with them in the past.
Speaker Change: We also acquired MyBIMTeam, which is a subscription-based building digitization service provider that will also strengthen and expand our current service offering.
Speaker Change: I would also like to speak of our vision for NV5 on slide 13.
Speaker Change: We will be focused on continuing profit improvement, which will accelerate the growth of our existing platform.
Speaker Change: We will continue to expand our service offerings and stay nimble and opportunistic to support future growth.
Speaker Change: You will notice on the right side of the page we are budgeting for gross revenue approaching our goal of $1 billion while continuing earnings per share on a gapped and adjusted basis. Thank you.
Speaker Change: Thank you. We will now begin the question and answer session. At this time, I would like to remind everyone in order to ask a question, press star then the number 1 on your telephone keypad. We will pause for just a moment to compile the Q&A roster.
Speaker Change: The first question comes from the line of Chris Moore with CJS Securities, please go ahead.
Hey, good afternoon guys. Thanks for taking a few questions.
Speaker Change: and that we've outlined in the press release what the impact was which we don't believe is material and the 10-Q should be filed by Tuesday of next week if not sooner.
Speaker Change: Gotcha, I'm just trying to understand the mechanics, maybe a little more on mechanics of how how this this came up here versus you know say the K from from 23
Speaker Change: Right, we'll provide more information in the queue, but it basically it's just a timing thing, so the revenue, you know, it's
Speaker Change: It'll be recognized as it turns going forward, right? So it's just a matter of where
Speaker Change: the revenue was was reported within within prior periods and as I said in the press release you could see the breakdown of the impact on on gross revenues and and earnings which was not not material
Speaker Change: Gotcha. All right, I'll leave that one there. I'm not sure, did I miss the backlog number for Q3?
Dickerson, I'm not sure if I...
Dickerson Wright: I didn't say it, I'm sorry Chris, I don't think I said it, but it's in the deck.
Dickerson Wright: And it's in the backlog if you look on slide four.
on the top right-hand corner.
Speaker Change: You got it, 914. Yeah, I didn't point it out, I apologize.
Speaker Change: No, no, all good. I just missed it. Too many things going on. Has the mix changed much in terms of, you know, from the three segments?
Speaker Change: Well, fortunately, I say this, all of the segments are growing organically.
Speaker Change: We are seeing a higher growth in our international business and in our geospatial business, and those tend to be more stable or more subscription-based revenues. So we're pleased with the growth.
Speaker Change: in that area, and as our platform solidifies in these two segments, we are able to be much more competitive in many different geographies.
Speaker Change: Got it. I know there's a lot of people in line. I'll get back in line. I appreciate it, guys.
Thanks, Chris.
Speaker Change: The next question comes from the line of Rob Brown with Lakes Creek.
Please cut it out. Please go ahead.
The End
Speaker Change: Good afternoon. Hi, Rob. You talked about a little bit of, or a couple data center commissioning projects that you're working on, and I guess some opportunities for more. Could you give us some sense of what the opportunities are out there, maybe number of centers or maybe the kind of size of revenue opportunity?
Speaker Change: I think I'll let Ben address that because he's been his group the building technology services group has probably had although all segments are involved with of the company NB5 are
Ben Heraud: centers, much of his work internationally and domestically involves data centers.
uhhh
Ben Heraud: I can weigh in. We can't talk about the actual clients themselves, there's obviously a high degree of confidentiality, but in the U.S. we've expanded to four major players that we're now working with, so we're quite pleased with that.
Ben Heraud: You would have seen a recent press release where we talked about surpassing a gigawatt of data center load assist this year and so we're really pleased with the volume that we're doing and the growth that we're seeing there.
And just to add, Rob, the
Ben Heraud: Client base is all of the Western company hyperscalers we you know we specifically can't mention them by name But they are household names And we are very confident in the client base because they are with these well-established hyperscale hyperscaler clients
Yep.
Speaker Change: Yep, got it. Thank you. And then on the, I think you talked a little bit about some headwinds in the MEP side. Could you elaborate on that where you're seeing that, maybe geographies or.
Speaker Change: Yeah, I can talk to that, I mean the commercial space obviously has been impacted for a while now, but we have seen over the last year our life sciences clients in the North East just slowing down on some of the major projects.
Speaker Change: The good news is in a lot of cases we're putting these proposals out and we're not being told no.
Speaker Change: And I think a good sign is, and we can see it in the slide deck there, we were just recently awarded a ground-up casino here in the States.
Speaker Change: which is one of the largest ones we've had since we did the Fountain Blue project. So I think in a lot of cases the projects have been on hold and we do expect them to move ahead here early in the new year. But that's been some of the areas that we've seen impacted.
Okay, thank you. I'll turn it over.
Speaker Change: The next question comes from the line of Luke McFadden with William Blair. Please go ahead.
Thank you. Thank you.
Speaker Change: Hi this is Luke McFadden for Tim O'Rooney and thanks for taking our questions today. I guess maybe to start here you know with the Trump election win
Speaker Change: I was wondering if any of your businesses did particularly well under his first term and which of your business lines you'd expect to continue to perform well and thrive in this environment. And then just maybe on the flip side, if there are any that might be impacted by change in priorities from a Trump administration. Thanks.
Well, uh...
Speaker Change: That's a very good question Luke and I wish I could answer that with specificity but the macro picture is where it's a tale of two cities. We do a tremendous amount of work if there if the regulations and ease and some of the permitting as ease that's that allows us to begin projects.
Speaker Change: But we also have an awful lot of business due to higher regulation
Speaker Change: requirements of government agencies but how the overall effect will be you know I wish I could do what the market did yesterday and just
Speaker Change: and jump on that that change. But really it we try to have a
Speaker Change: capitalized on both sides of that, the regulatory and non-regulatory environment. But maybe the best answer for you is we let each of the segment heads
Alex Hockman: speak of how they feel that the political situation will change. And so, Alex, how do you feel about how the infrastructure will be affected by that?
Alex Hockman: I think there's still such a demand for the infrastructure improvements that we will still see the tailwinds that we've been experiencing. To the extent that interest rates come down we'll see a rebound in our
Alex Hockman: Thank you, and what you've heard me say and what in previous earnings calls is that
The
For infrastructure, the permitting process took so long.
Speaker Change: That was difficult to start many projects that could be awarded, but now we're hoping with the change of administration and maybe the permitting process will speed up. Maybe, Kurt, from the geospatial side, how do you see that? How do you see the change?
Kurt Allen: Yeah, I think we kind of view geospatial and the work that we do for the federal government in particular as bipartisan. And so both sides of the aisle.
You know
Kurt Allen: So if our legacy companies, during the first Trump administration, we saw a continuation of that through the Biden administration as well. So really, I don't see a change.
Speaker Change: And what we've said on previous recordings, Luke, is that on the geospatial side, at worst, some of those projects are moved to the right, but the projects always continue, and that's what we've experienced. So now maybe...
Ben Heraud: Ben, maybe you can comment on how you see any politics changing the building technology group.
Ben Heraud: Yeah, I think our clients and talking to our clients, they were just looking for certainty one way or another and I think a lot of projects have been on hold until this decision was made either way.
Ben Heraud: So I think sort of just adding on to what I said about the interest rates, a lot of the proposal activity that we've had out there we haven't been told no and I do expect that we'll start to be told yes in some cases and we'll actually see some of that work that's been on hold move ahead. So yeah, that's my view on it.
So that's the best that we can we can comment.
Luca concerning that concerning the political environment.
Speaker Change: No, that's that's great. And I really appreciate the color from everyone and then maybe just quickly maybe maybe another one here Just related to Dana Centers for perhaps Ben or anyone else You know You've talked about the need clients have for energy efficiency power delivery MEP design and commissioning as you grow this business towards that four hundred million dollar mark
Speaker Change: I'm, you know, just curious if there's any particular area within those categories or maybe, you know, perhaps one that I didn't mention where you'd particularly like to be focused. Just any color there would be great. Thanks so much for the help.
Speaker Change: Yeah, I mean, all services you mentioned are full steam ahead. I think the one of note where we'll see a lot more growth ahead, we actually just had an internal call, Alex and I and a few others today, is the power delivery side. Obviously getting power to these sites is a huge...
Speaker Change: issue and also opportunity for us on the engineering side. So, you know, our MEP group and commissioning will be working very closely with our power delivery team where we have a very strong
Speaker Change: you know technical expertise and our clients are sort of screaming out for that help so all services that's something that we don't have so much on the international side is that power delivery so we'll be looking to bring that to our clients out there also so yeah I think that our services are a very high demand in that space right now
Speaker Change: Well, that's certainly music to my ears, Ben, because we'd love to see the cross-selling between the segments and offices and various offices we have, and that is what we feel is really an advantage to having such a broad base of operations. Yes, quite unique, and our clients really enjoy that, being able to be turned key.
Speaker Change: The next question comes from the line of Jeff Martin with Roth Capital Partners. Please go ahead.
Thanks. Good afternoon.
Speaker Change: Ed, could you could you comment on the revision to guidance that wasn't only discussed in the prepared remarks?
Speaker Change: Sure. I mean, really, we, as you know, we had a, as you can tell from our numbers, we had a
Speaker Change: A very strong third quarter. As a matter of fact, we had a number of records. We had a record revenue, record gross profit.
Speaker Change: And so we, you know, we revised to accommodate for that, but really see, you know, a lot of tailwinds for the business and opportunities going forward.
Speaker Change: Unfortunately, we don't have the luxury of being in Newport Beach.
So the third quarter, we have...
Speaker Change: Weather delays and we have some winter things that we have to face. So we wanted to be a little bit We're conservative in on the projection or the guidance
Speaker Change: You're welcome to move the business to Newport Beach, although I think you've delimited geographically.
Speaker Change: I think it's worth pointing out that in your, you know,
Speaker Change: In your revision, this is on Axum Client, sixth sense of your revised guidance.
Speaker Change: accounts for the change, so roughly half the change, right? So I think that's what you're pointing out. That's correct, yeah. Okay, and then will you provide quarter-by-quarter ...
Speaker Change: Restatement, I guess that might come in the same queue and is there any concern this this may appear in other clients as well down the road? No no we don't have that concern we've looked at it thoroughly and and yeah the queue will have the detail on a quarter-by-quarter basis.
Okay.
and then...
Speaker Change: Just jumping back to some of the organic growth expectations you outlined in your July
Speaker Change: Investor Day presentation, which was very good, by the way. Just curious if you still feel
Speaker Change: That those are good targets going forward, and if anything has shifted, maybe point out which segments you see any change relative to the discussions we had a couple months back.
Speaker Change: that and what we're saying on these earning calls so we are confident in the organic growth that that is projected through these earnings calls and we really want to keep our people fired up to exceed those goals
Speaker Change: Yep. Yep. Okay. And then in geospatial, are you seeing the normal flow of...
Contracts and Contract Renewals
Speaker Change: I don't really think there's anything going on in the government budget landscape or political landscape that would...
Speaker Change: Yeah, I think right now we're in kind of the quiet period of our year with our federal clients. They just finished their fiscal year and we are on a continuing resolution that we are
Speaker Change: I'd say we're fairly confident that they will be done in the lame duck period, but we certainly can't
Speaker Change: can't Can't guarantee it, but the one the one area that I think I'm very confident about is we do have a strong backlog Whereas you know I think there was some some some
Speaker Change: commentary a year ago that we probably were not as strong in the backlog going into 25 as we are right right now. So I think I think we're pretty bullish.
and the other.
Thanks. I'll stop the slide here. Thanks.
Speaker Change: The next question comes from the line of Michael Feniger with Bank of America. Please go ahead.
Speaker Change: Hey everyone, this is Nandita Nair on for Mike. Thanks for taking my question. So I guess guys, just given that we're now officially in like a rate easing cycle, could you provide an update on real estate transactions? Any, you know, green shoots you're seeing there?
Thank you.
Speaker Change: Alex will be best to answer that question, but I want to make sure I understand it. Did you ask since the interest rates, you know, we just heard from the Federal Reserve today about lowering the interest rates again. Was that your question? Do we think we're seeing some increased activity because of that? Was that the question?
Speaker Change: Yeah, any green shoots you guys are seeing there in real estate transactions given the easing of rates?
Speaker Change: Yeah. So, with the ease-interference rates, we absolutely anticipate that we'll continue to see growth in our real estate transaction business. It's very dependent on two things, right? One is when loans are going to balloon.
Speaker Change: The other is the actual transaction that takes place and that...
Business absolutely increases as we have rates decrease.
Speaker Change: Yes, and anecdotally, we've seen some very strong operating results from both of our
Speaker Change: are real estate transactional groups, both the Global Realty and Bach and Clark. I don't watch it or...
Speaker Change: report directly to me, but I can really see there quite an improvement on both of those. So we are very encouraged with the direction that the real estate market is going.
Great. Appreciate the call. I'll turn it over.
Thank you.
Speaker Change: The next question comes from the line of Andy Whitman with Beard. Please go ahead.
Andy Whitman: Thanks for taking my questions. I guess just a couple of clarifications more than anything here. Does the restatement for the first half of the year, six cents for the first half of the year, does it change the way you forecasted the second half of the year? In other words,
Andy Whitman: Was there an impact for this in terms of the way you would have thought about the rest of the year? Is that a factor in the second half guidance?
Speaker Change: We factored it into the four-year guidance because at the end of the day that's we're gonna you know we're anticipated landing on that four-year guidance so we're we've factored that six cents in that revised guidance.
yeah I guess I not understand but did it change
Speaker Change: like your old guidance to the new guidance is some of the change due to the fact that there's a change in in the accounting where you would have addressed the accounting in the second half or is or is the is there is is that not a consideration?
Speaker Change: Well, it takes into account the adjustments in the first half, but when you think about Q4, we still anticipate a strong Q4. As I said earlier, we're just trying to be cautious.
and how we forecast that quarter.
Okay.
Speaker Change: And then I guess, I think I understand this, but I'm just gonna ask kind of the organic revenue question a little bit different way. Can you tell us what the gross revenue was from acquisitions that were closed in the last 12 months in the quarter?
Sure, give me one second, Andy.
Gov. Gov.
Thank you. Bye-bye.
and the other one.
Speaker Change: So, and this is the disclosure, Andy, that you're familiar with, right, in our, in our filing. So for the, when you think about what we've...
Speaker Change: What we've acquired so far in 2024, in the three months, those contributed $11.3 million.
And in the nine months, they contributed $22.2 million.
OK.
Speaker Change: appreciate that and then I'm just curious just in the in the in the guidance again here is there any contribution from acquisitions
Speaker Change: that have not been publicly announced or would you call it everything that's been announced is reflected in the fourth quarter? So this is everything that's been announced is reflected in that guidance.
Speaker Change: Yeah. Okay. I think those are all the clarifications that I had. Thank you for your help.
Thank you.
Thank you.
Speaker Change: At this time, this concludes our question and answer session. I would now like to turn the call back over to Mr. Wright for closing remarks.
Dickerson Wright: Thank you, thank you operator. As you can see we had a very strong quarter and we this leads to even more encouragement for our last quarter of the year. We are a conservative company, we like to
Dickerson Wright: do what we say, and therefore if you see a bit of conservatism, it's because we absolutely want to
under-promise and over-deliver.
In
Dickerson Wright: In the fourth quarter of 24, we anticipate strong contributions from all reporting segments. And we can see that the backlog, if you can see the backlog, has increased.
Dickerson Wright: and this is always a good sign for how we see things going forward. Let's talk a little bit about the type of revenue.
Dickerson Wright: Now we're really dependent and we're starting to see the subscription-based revenue, the continuous revenue as our software group
Dickerson Wright: continues to contribute. We're looking for SAS-based revenue and we're starting to receive that. So we're very encouraged for what we see as we conclude 24.
Dickerson Wright: Right now I just wanted to share that we are receiving the budgets from our all of our reporting segments for 2025 and right now we are very encouraged from what we're seeing from those budgets the budgets come ground up
by detail.
Dickerson Wright: and buy things that really do a lot of research and providing those.
Dickerson Wright: We are very encouraged for how we're going to finish the year, and we're even more encouraged on the growth that we anticipate in 2025. I think I'd like to mention one other thing that is not so much—be looking in the next
Dickerson Wright: few months be looking for the new guidance. As you know, we always tell everyone
Dickerson Wright: what we project in revenue as we go forward. We did it in 2016 at $300 million.
We did it in 2020 at $600 million.
Dickerson Wright: We did it now in the end of 24 to 1 billion, which we think we're right on that entering into 25. And so there'll be a new guidance that
Dickerson Wright: will that we're going to go for the following year so look forward for that and really it's an indicator for us that it's a robust growing company that we are very appreciative of everybody that contributes to it we have a very flat organization
Dickerson Wright: and all of us want to work very hard so that we can deliver what we promise to our investors. So I want to thank everyone for the time you gave us today and we look forward to speaking to you again as we conclude the fourth quarter. So thank you everyone.
and the
Speaker Change: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.