Q1 2025 NV5 Global Inc Earnings Call
Speaker Change: [music].
Unknown Executive: Thanks for watching! Good afternoon, everyone, and thank you for participating in today's conference call to discuss NV5's financial results for the first quarter 2025 ended March 29, 2025.
Good afternoon, everyone and thank you for participating in today's conference call to discuss N V. Five financial results for the first quarter 2000, and twenty-five ended March 29 2025.
Unknown Executive: Joining us today are Dickerson Wright, Executive Chairman of NV5. Ben Heraud, CEO of NV5 Edward Codispoti, CFO of NV5, and Richard Tong, Executive Vice President and General Counsel at NV5.
Joining us today are Dickerson Wright executive Chairman of N V five.
Dean Hirata C L. A N V five.
Edward Codispoti: Edward Codispoti.
Speaker Change: P S O N V five.
Speaker Change: And Richard Tong Executive Vice President and General Counsel at N V. Five.
Richard Tong: I would now like to turn the call over to Richard Tong. Thank you, Operator. Welcome, everyone, to NV5's first quarter 2025 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 risks and uncertainties. Factors that could actual results to differ materially from these statements are included in today's presentation slides and in our reports on file with the SEC. During this call, gap and non-gap financial measures will be discussed.
Richard Tong: I would now like to turn the call over to Richard Tong.
Speaker Change: Yeah.
Speaker Change: Thank you operator, welcome everyone to <unk> first quarter 2025 earnings call before we proceed I would like to notify all participants that today's presentation can be found on IR dot <unk> dot com and remind everyone that today's discussion contains forward looking statements about the company's future business and fine.
Speaker Change: Actual 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 reports on file with the SEC. During this call GAAP and non-GAAP financial measures will be discussed a reconciliation between the two.
Richard Tong: 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 first quarter 2025 comparisons are being made against the first quarter of 2024. In this presentation, NV5 has included certain non-gap financial measures as defined in Regulation G promulgated by the Securities and Exchange Act of 1934 as amended. 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's 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.
Speaker Change: Is available in today's earnings release, and all of the company's website at Www Dot <unk> Dot com. Please note that unless otherwise stated all references to first quarter 2025 comparisons are being made against the first quarter of 2024.
Speaker Change: In this presentation <unk> has included certain non-GAAP financial measures as defined in regulation G promulgated by 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 and it'd be five provides non-GAAP financial measures to supplement GAAP measures as they provide additional insight into <unk> results. However, non-GAAP measures have limitations as analytical tools and should not.
Speaker Change: Be considered in isolation.
Speaker Change: Not in accordance or a substitute for GAAP.
Richard Tong: 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.
Speaker Change: In addition, other companies may define non-GAAP measures differently, which limits the ability of investors to compare non-GAAP measures of <unk>.
Speaker Change: Those used by peer companies a webcast replay of this call and its accompanying presentation are available via the link provided in today's news release and on the investors section of the company's website. We will begin our call with comments from Dickerson Wright executive Chairman of <unk> before turning the call over to Ben Rod.
Unknown Executive: A webcast replay of this call and its accompanying presentation are available via the link provided in today's news release and on the investors section of the company's website.
Richard Tong: We will begin a call with comments from Dickerson Wright, Executive Chairman of NV5, before turning the call over to Ben Harad, CEO of NV5, for an update of NV5's operations.
<unk> five for an update of <unk> operations, Edward Codispoti <unk>, Chief Financial Officer will provide a review of first quarter 2025 results and Dickerson Wright will provide closing comments before we open the call for your questions.
Dickerson Wright: Edward Curtis-Bode, NV5's Chief Financial Officer, will provide a review of first quarter 2025 results, and Dickerson Wright will provide closing comments before we open the call for your questions. Dickerson, please go ahead. Thank you, Richard, and we also want to thank everyone for joining us.
Speaker Change: Please go ahead.
Speaker Change: Thank you Richard and we also want to thank everyone for joining us, let's turn to page three of the presentation that you have been furnished.
Dickerson Wright: Let's turn to page three of the presentation that you have been furnished. As you know, in times of economic uncertainty, some sectors tend to fare better than others. I'd like to say that NV5 is a safe port in a storm of uncertainty because our focus is, and always has been, to provide mandated services to support essential infrastructure .
Speaker Change: As you know in times of economic uncertainty some sectors tend to fare better than others.
Speaker Change: I'd like to say that 95 is a safe port in a storm of uncertainty because of our focus is and always has been to provide mandated services to support essential infrastructure.
Dickerson Wright: Not subject to tariff. NV5's business model has been designed to be untethered from economic conditions. We are consultants, providing engineering, testing and inspection and certification expertise to support essential utility, transportation, water and technology infrastructure. So when you hear about tariffs or doge or supply chain interruptions, please keep in mind that the services we provide are not discretionary. We are not subject to supply chains, or inventory, or construction materials. We are a consultant.
Speaker Change: Not subject to tariffs.
Speaker Change: <unk> business model has been designed to be untethered from economic conditions we.
Speaker Change: We are consultants, providing engineering testing and inspection and certification expertise to support the essential utility transportation water and technology infrastructure.
So when you hear about tariffs or does your supply chain interruption. Please keep in mind that the.
Speaker Change: The services, we provide are not discretionary.
Speaker Change: We are not subject to supply chains or inventory or.
Speaker Change: Structuring materials, we are consultants.
Dickerson Wright: supports essential infrastructure.
Speaker Change: We support essential infrastructure.
Ben Heraud: I'll now turn the call over to Ben Heraud, CEO of NV5, to provide an update of NV5's business in the first quarter and what we're expecting for the remainder of the year. Thanks Dickerson. Please turn to slide four of the presentation. We're off to a strong start to 2025, exceeding our budget in the first quarter and delivering 5% organic growth on gross revenue. We have grown in both revenues and profitability over the first quarter of 2024, with $234 million in gross revenues, $30 million in adjusted EBITDA, and $123 million in gross profits for Q1. Our strong growth was attributed to our infrastructure and buildings and technology.
Speaker Change: I'll now turn the call over to <unk> CEO of <unk> to provide an update of <unk> business in the first quarter and.
Speaker Change: And what we're expecting for the remainder of.
Speaker Change: The year.
Speaker Change: Thanks, Victor Tseng, Please turn to slide four of the presentation, we're off to a strong start to 2025 exceeding our budget in the first quarter and delivering 5% organic growth on gross revenues. We are growing in both revenues and profitability over the first quarter of 2024 with $234 million in gross revenues $30 million and adjusted EBITDA.
Speaker Change: And $123 million in gross profit for Q1.
Speaker Change: Our strong growth was attributed to our infrastructure and buildings and technology segments, which increased gross revenues in the quarter by 12% and still maintain the St respectively.
Ben Heraud: which increased gross revenues in the quarter by 12% and 17% respectively. Growth in the geospatial segment was slowed due to delays in federal contract awards, which is somewhat typical when new administrations enter the federal government. We anticipate accelerated growth in our geospatial group as we move through 2025.
Speaker Change: Growth in the Geospatial segment was slowed due to delays in federal contract awards, which is somewhat typical when you administrations into the federal government, we anticipate accelerated growth Geospatial group as we move through 2025.
Ben Heraud: We referenced a number of margin and cash flow initiatives in our last earnings call and we have successfully implemented these through this quarter. I'll provide more detail on these on later slides. With these initiatives in place, we are on track to achieve our set targets, which are listed on the right-hand side of the slide. 5 to 9% organic growth, margin expansion of 150 basis points, and free cash flow conversion of 60% of adjusted EBITDA in 2025. We have also set a cross-selling target for $40 million in revenues over the next 12 months.
Speaker Change: We referenced a number of margin and cash flow initiatives in our last earnings call and we have successfully implemented these through this quarter I will provide more detail on these on later slides.
Speaker Change: With these initiatives in place we are on track to achieve our <unk> targets, which are listed on the right hand side of the slide 5% to 9% organic growth margin expansion of 150 basis points and free cash flow conversion of 60% of adjusted EBITDA in 2025.
Speaker Change: We are also seeing the cross selling target for $40 million in revenues over the next 12 months. Thank.
Ben Heraud: In Q1, we completed three acquisitions, and we continue to pursue strategic acquisitions to densify our platform and accelerate organic growth.
Speaker Change: In Q1, we completed three acquisitions and we continue to pursue strategic acquisitions to densify, our platform and accelerate organic growth <unk> CFO will now provide some more detail about the financial performance of Bnb five in the first quarter as well as an update on our 2025 cash flow conversion initiative and strong balance sheet.
Edward Codispoti: Ed Codispoti, NV5 CFO, will now provide some more detail about the financial performance of NV5 in the first quarter, as well as an update on our 2025 Cash Flow Conversion Initiative and strong balance sheets. Thank you, Ben, and good afternoon, everyone. If you would please turn to slide six of the presentation, I'll review our 2025 first quarter financial results. Our gross revenues in the first quarter grew 10% to $234 million compared to $212.6 million in the first quarter of the prior year. These are record first quarter results for the company. Our gross profit was $123.2 million compared to $111.7 million in the prior year, an increase of 10%.
Speaker Change: Thank you Ben and good afternoon, everyone.
Speaker Change: Please turn to slide six of the presentation I'll review, our 2025 first quarter financial results.
Speaker Change: Our gross revenues in the first quarter grew 10% to $234 million.
Speaker Change: Compared to $212 6 million in the first quarter of the prior year.
Speaker Change: These are record first quarter results for the company.
Speaker Change: Our gross profit was $123 2 million compared to $111 7 million.
Speaker Change: In the prior year, an increase of 10%.
Edward Codispoti: Our net income was $428,000 in the first quarter of 2025 compared to $77,000 in the first quarter of last year, and our gap diluted earnings per share was one cent versus zero cents in the prior year period. Keep in mind that our GAAP results were impacted by increases of $1.4 million related to amortization of our intangible assets as a result of acquisitions. Our adjusted EBITDA increased 8% to $29.7 million from $27.6 million in the prior year first quarter, and our adjusted EPS increased 13% this quarter to $0.17 compared to $0.15 in the first quarter of 2024.
Speaker Change: Our net income was $428000 in the first quarter of 2025 compared to $77000 in the first quarter of last year and our GAAP diluted earnings per share was <unk> <unk> versus zero cents in the prior year period.
Speaker Change: In mind that our GAAP results were impacted by increases of $1 $4 million related to amortization of our intangible assets as a result of acquisitions, our adjusted EBITDA increased 8% to $29 7 million from $27 6 million in the prior year first quarter and our adjusted EPS.
Speaker Change: Increased 13% this quarter to <unk> 17, compared to <unk> 15 in the first quarter of 2024.
Edward Codispoti: Turning now to slide 7, as you can see, we have very strong cash flows from operations of $38.4 million. which represents a 96% increase over the first quarter of last year. Moreover, it represents a conversion of adjusted EBITDA of 129%. We continue to target an unlevered free cash flow conversion rate of 60% for the year and the results of this quarter put us on track to achieve that goal. At the same time, our net leverage has come down to 1.3 times from 1.4 times at the end of last year. We believe our strong balance sheet will enable us to continue to execute our business model as we focus on organic growth and strategic acquisition.
Speaker Change: Turning now to slide seven as you can see we had very strong cash flows from operations of $38 $4 million this quarter, which represents a 96% increase over the first quarter of last year.
Speaker Change: Moreover, it represents a conversion of adjusted EBITDA of 129%, we continue to target an unlevered free cash flow conversion rate of 60% for the year and the results of this quarter put us on track to achieve that goal.
Speaker Change: At the same time, our net leverage has come down to one three times from one four times at the end of last year.
We believe our strong balance sheet will enable us to continue to execute our business model as we focused on organic growth and strategic acquisitions.
Ben Heraud: I'll now turn it back over to Ben for a deeper dive into our operations. Thanks Ed. Please turn to slide 9. I want to draw your attention to the image on this slide. This is a LiDAR image of the city of Boston, which was captured by our geospatial group as part of a project that we performed in the city. Within this image you can see bridges, roads, water, buildings and power distribution. All of the assets that make up the built environment and that NV5 has deep expertise in. We are true consultants, providing insights that improve the performance of civil infrastructure and building systems during capital investments and throughout the operation of these facilities.
Dan: Now I'll turn it back over to Dan before a deeper dive into our operations.
Dan: Thanks, Ed Please turn to slide nine I want to draw your attention to the image on this slide this is a lidar image of the city of Boston, which was captured by our Geospatial group as part of a project that we performed in the city within this image you can see bridges roads water buildings and power distribution all of the assets that make up the boat and environment.
Dan: And that <unk> has deep expertise and we are true consultants, providing insights that improve the performance of civil infrastructure and building systems during capital investments and throughout the operation of these facilities.
Ben Heraud: Our services are required at every phase of these assets' lifecycle, from cradle to grave, from site selection through design, build and operations. Underpinning this is NV5's technology and intellectual property that enables our services to be scalable, efficient, highly accurate and recurring in nature. By integrating our geospatial capabilities with our engineering expertise, we are currently on a path to being disruptive in a number of areas within our field, and we have a few examples to show you on the next slide. Innovation and technology have been a core part of our DNA throughout the growth of NV5.
Dan: Our services are required in every phase of these assets lifecycle from cradle to grave from site selection through design build and operations underpinning. This is the <unk> technology and intellectual property that enables our services to be scalable efficient Audi accurate and recurring in nature, while integrating our geospatial capabilities with our engineering.
Dan: Expertise, we are currently on a path to being disruptive in a number of areas within our field and we have a few examples to show you on the next slide.
Dan: Innovation and technology have been a core part of our DNA throughout the growth of Bnb five with close collaboration between our geospatial and engineering teams. We have a number of solutions that we believe are unique to <unk> and will be disruptive to our industry.
Ben Heraud: With close collaboration between our geospatial and engineering teams, we have a number of solutions that we believe are unique to NV5 and will be disruptive to our industry. A more mature example of this is our building digitization offering, which leveraged geospatial technology, MEP and commissioning expertise, and building analytics to create powerful digital twins for our clients that have subscription-based revenue. We are set to grow this offering organically this year by around 20%.
Dan: Our more mature example of this is they are building digitization, offering, which leveraged geospatial technology, MEP and commissioning expertise and building analytics to create powerful digital twins for our clients that have subscription based revenue we seek to grow this offering organically this year by around 20%.
Ben Heraud: Bridge deck delamination represents a serious structural risk in bridges and requires regular inspection to identify any potential issues that might exist. The traditional method for detecting issues is done through chain dragging, where a chain is physically dragged across the bridge deck and hollow or muted sounds indicate delaminated areas. This requires a partial shutdown of the bridge and can take up to three days to complete. Leveraging our sensor technology and analytics, we have developed a method of detection the same accuracy by flying the bridge and are able to assess over 40 bridges in one day.
Dan: <unk> JP lamination represents a serious structural risks and bridges and requires regular inspection to identify any potential issues that might exist.
Dan: The traditional method for detecting issues is done through change ragging, where China's physically dragged across the bridge date and Hello, a muted sounds indicate eliminated areas. This requires a partial shutdown of the bridge and can take up to three days to complete.
Dan: Leveraging our sensor technology and analytics, we have developed a method of detection the same accuracy by flying the bridge and are able to access over 40 bridges in one day.
Ben Heraud: Finally, Landslide Detection is another application that now utilizes geospatial data for early detection. Synthetic Aperture Radar, or SAR data, can now be utilized to identify ground shifting in millimeter increments using satellite imagery. These minute shifts can provide an early indication of the risk for a landslide. This application is especially useful in an area like Southern California during heavy rain events or after fire events when there is particularly high risk of landslide activity. These are just three examples of the initiatives we are working on, and while we don't want to create a training centre for our competition, we felt it important to share with our investors some of the more innovative side of our business.
Dan: Finally landslide detection is another application that now utilizes geospatial data for early detection.
Dan: Aperture radar or <unk> data can now be utilized to identify ground shifting and millimeter increments using satellite imagery. These mind you shifts can provide an early indication of the rest of our landslide. This application is especially useful in an area like southern California during heavy rain events or after <unk>, when there was particularly high risk.
Dan: <unk> slight activity.
Speaker Change: These are just three examples of the initiatives, we are working on and while we don't want to create a training center for our competition felt it important to share with our investors some of the more innovative side of our business.
Ben Heraud: These are also great examples of moving our engineering and consulting work into the asset management space, driving recurring revenue and creating a more scalable, efficient and accurate offering, not tied to man hours. We will continue to develop disruptive applications for our technologies that provide more efficient, accurate and novel solutions to our clients' challenges.
Speaker Change: These are also great examples of moving our engineering and consulting work into the asset management space driving recurring revenue and creating a more scalable efficient and accurate offering not tied to man hours.
Speaker Change: We will continue to develop disruptive applications for our technologies that provide more efficient accurate and novel solutions to our clients' challenges.
Ben Heraud: On slide 11, we've included an update on the infrastructure segment, which had strong performance in Q1. The infrastructure business grew 12% in Q1 2025 versus the same period last year. The infrastructure segment supports utilities, transportation, and water infrastructure through resilient design, testing, inspection, and asset management services. Utilities and transportation infrastructure performance have been strong throughout our business and we're seeing particularly robust investments in the North East and South East. We've received many questions from investors related to infrastructure spending and investments in the infrastructure remain a priority across the country. These investments are for essential services that are not dependent on economic conditions, such as reliable electricity, safe drinking water, and dependable transportation.
Speaker Change: On Slide 11, we've included an update on the infrastructure segment, which had strong performance in Q1 the.
Speaker Change: The infrastructure business grew 12% in Q1 2025 versus the same period last year. The infrastructure segment supports utilities transportation and water infrastructure through resilient design testing inspection and asset management services.
Speaker Change: Utilities and transportation infrastructure performance have been strong throughout our business and were seeing particularly robust investments in the northeast and southeast.
Speaker Change: We've received many questions from investors related to infrastructure spending and investments in the infrastructure remain a priority across the country.
Speaker Change: These investments are essential services that are not dependent on economic conditions, such as reliable electricity safe drinking water and dependable transportation, but also I'd like to point out that our funding for our projects has already secured before a project begins infrastructure projects can be paused and restarted at a later time.
Ben Heraud: I'd also like to point out that our funding for our projects is already secured before a project begins. Infrastructure projects can't be paused and restarted at a later time. And the funding for these projects comes at many state and local sources, such as gas taxes for roadways, utility and water bills, and property taxes. So to answer the question, infrastructure funding is strong and we anticipate continued growth throughout the year.
Speaker Change: The funding for these projects comes at many state and local sources, such as gas, Texas for roadways utility and water bills and property taxes. So to answer the question infrastructure funding is strong and we anticipate continued growth throughout the year I'd like to bring in Alex Hockman, who laser infrastructure segment to get his take on the state of the infrastructure sector.
Alexander Hockman: I'd like to bring in Alex Hockman who leads our infrastructure segment to get his take on the state of the infrastructure sector. Alex, can you give us some insights on what you're seeing in the infrastructure funding and where you are seeing the growth opportunities in the sector? Yes, Ben, as you stated, we have a number of funding mechanisms that come through the federal government, through state and local governments, but there are others as well. We have, for example, special assessment. where a community may have a project that they want to fund and they're able to then develop a tax base or sell bonds in order to fund that particular project.
Speaker Change: Alex can you give us some insights on what youre seeing in the infrastructure funding and where youre seeing the growth opportunities in the sector.
Speaker Change: Yes.
Speaker Change: As you stated we have a number of funding mechanisms and come through the <unk>.
Speaker Change: Government through state and local governments, but there are others as well we have for example, a special assessment districts, where a community may have a project that they want to find and they're able to then develop it tax spacer or sell bonds in order to fund that particular project.
Alexander Hockman: Also, we have our civil plan check, as well as our building safety check. Those services are funded through permits. So there's a number of mechanisms which ultimately fund the projects that we provide services to, and we're not seeing any headwinds right now for our fundamental services.
Speaker Change: Also we have our civil planned check as well as our building safety.
Speaker Change: Those services are funded through permit fees show there is a number of mechanisms, which ultimately fund the projects that we provide services to <unk>.
Speaker Change: Not seeing any headwinds right now for our fundamental services in terms of excitement regarding growth I think one of the things that you've mentioned previously.
Alexander Hockman: In terms of excitement regarding growth, I think one of the things that you've mentioned previously is how we're incorporating our geospatial, our building technology, as well as our infrastructure, where we're offering a total solution to our clients in mandated circumstances. So I see a very exciting and growing 2020. That's great.
Speaker Change: As Howard incorporating our geospatial are building technology as well as our infrastructure, we're offering a total solution to our clients and mandated services. So I see a very exciting and growing 2025, that's great. Thank you very much Alex.
Ben Heraud: Thank you very much, Alec. On slide 12, our buildings and technology segment continues to deliver strong growth and profitability, with 17% growth in revenues in Q1'25 versus Q1'24. As we've discussed in the past, data centers continue to grow as a component of our sector mix, now making up 15% of our building's revenues. We continue to see growth in the data center sector, which is largely dedicated to cloud computing, hyper-scale data centers. Our data center clients are actually benefiting from the current economic conditions due to the low cost of energy for their facilities that are large consumers of allocation.
Speaker Change: On slide 12, our buildings and technology segment continues to deliver strong growth and profitability with 17% growth in revenues in Q1, 25% versus Q1 'twenty four.
Speaker Change: As we've discussed in the past data centers continue to grow as a component of <unk> now, making up 15% of our buildings revenues. We continue to see growth in the data center sector, which is largely dedicated to cloud computing Hyperscale data centers data center clients are actually benefiting from the current economic conditions due to the low cost of energy for the facilities there.
Speaker Change: The large consumers of electricity real estate due diligence is another part of the business that is performing very well due to the pent up demand for property transactions transactions by rates and other large property portfolio holders.
Andrew Chang: Real Estate Due Diligence is another part of the business that is performing very well due to the pent-up demand for property transactions by REITs and other large property portfolio holders. The recent addition of fire protection services has had a great deal of success already. We've had significant cross-sells to our clients who have traditionally come to NV5 for mechanical, electrical and plumbing services. Though most of our private sector work is performed in our building segment, we have the unique benefit of providing consulting and design services which are not subject to tariffs. Operating sectors that have high demand, such as data centres and healthcare facilities.
Speaker Change: The recent addition of bifurcation services has had a great deal of success already we've had significant cross sells to our clients who have traditionally come to MB five the mechanical electrical and plumbing services.
Speaker Change: Most of our private sector work is performed in our building segment, we have the unique benefit of providing consulting and design services, which are not subject to tariffs.
Speaker Change: Alright, and sectors that have high demand such as data centers and health care facilities. So the incremental cost increases at lesser of an impact on future projects tariff and trade policies that promote industrial growth in the U S are an opportunity for us as it would create additional opportunities for our buildings business domestically.
Andrew Chang: So incremental cost increases have less of an impact on future projects. Tariff and trade policies that promote industrial growth in the U.S. are an opportunity for us as it would create additional opportunities for our buildings, business, domestic...
Andrew Chang: I'd like to bring in Andrew Chang, who leads our buildings business, to get his perspective on some of the key areas of growth within our buildings sector. Andy, how will the current tariffs affect the buildings business in the short and long And that's a great question. While the current tariff situation has some inconsistent messaging, we are very well prepared. In the short term, our unique digital twin and digital building solutions have proven to affect construction costs and time by reducing material waste. The increased accuracy in material counts will reduce the impact of the tariffs on imported building materials.
Speaker Change: I'd like to bring in Andrew Chang, who leads our buildings business to give his perspective on some of the key areas of growth within our boating Cigna, Andy how will the current tariffs affect the buildings business in the short and long term.
Andrew Chang: And Thats a good question, while the current tariff situation has some inconsistent messaging, we are very well prepared.
Andrew Chang: In the short term our unique digital twin and digital building solutions have proven to the fifth.
Andrew Chang: <unk> cost and time bound by reducing material waste.
Andrew Chang: The increased accuracy and material counts will reduce the impact of the tariffs on imported building materials.
Andrew Chang: In the longer term, we anticipate growth in reshoring industrial and manufacturing. Our manufacturing engineering design teams are arguably the best in the country and well positioned being currently engaged with several very large manufacturers.
Andrew Chang: In the longer term, we anticipate growth in re shoring industrial and manufacturing sectors. Our manufacturing engineering design teams are arguably the best in the country and well positioned being currently engaged with several very large manufacturing firms.
Ben Heraud: Thanks Andy, I think it's great to get that perspective.
Andrew Chang: I think it's great to get that perspective now.
Ben Heraud: Now to 13 for an update on our geospatial signal. Utility and Asset Vegetation Management continues to be the fastest growing part of this segment and now makes up almost one-third of our geospatial revenues currently. I mentioned the recurring nature of asset management earlier, and we have a strong focus on growing our revenue in this area, and our geospatial services are a great enabler for this strategy. In terms of end markets, we are seeing high growth in utilities, transportation, and forestry and coastal infrastructure. Coastal infrastructure is subject to challenging conditions such as salt exposure, sea level rise and storms, and geospatial applications for asset management.
Speaker Change: Now to 13 for an update on our geospatial segment utility.
Speaker Change: Utility and vegetation management continues to be the fastest growing part of the segment and now makes up almost one third of our geospatial revenues currently.
Speaker Change: I mentioned, the recurring nature of acetate management earlier, and we have a strong focus on growing our revenue in this area and our geospatial services are a great enabler for this strategy.
Speaker Change: In terms of end markets, we are seeing high growth in utilities transportation and forestry and coastal infrastructure.
Speaker Change: <unk> infrastructure is subject to challenging conditions, such as salt exposure sea level rise and storms and geospatial applications for asset management assessment of shipping channels and port facilities will continue to grow.
Ben Heraud: Assessment of shipping channels and port facilities will continue to grow.
Ben Heraud: I'd also like to touch on our geospatial software performance which grew 11% in Q1'25 over Q1'24 at much improved margins. The significant development investments we have made in 2024 to ASA's software model are paying off now, and we anticipate continued growth in revenues and profitability from our geospatial software group.
Speaker Change: I would also I would like to touch on our GI Special software performance, which grew 11% in Q1 25 over Q1 24 at much improved margins.
Speaker Change: <unk> development investments, we have made in 2024 to a SaaS software model are paying off now and we anticipate continued growth in revenues and profitability from our geospatial software Greg of course, Dodge and federal spending is in the news a lot. These days and I will tell you that the impact <unk> has had on our business has been minimal we have seen some day.
Ben Heraud: Of course, DOGE and federal spending is in the news a lot these days, and I will tell you that the impact DOGE has had on our business has been minimal. We have seen some delays in awards due to the shifting around of people in the federal government who sign off on our contracts. However, we've had only one small contract cancellation. The minimum impact to our federal business can be attributed to the mandated nature of the services that we provide, which is related to natural and water resources and national security. In fact, DOJ presents an opportunity for us, as the administration is proposing a record budget for the Department of Defense, and there's a federal mandate to use consultants due to reduction of headcount in federal agencies and hiring for DOJ.
Speaker Change: And awards due to the shifting around of people and the federal government, who signed off on our contracts. However, we have had only one small contract cancellation the minimum impact to our funeral business can be attributed to the mandated nature of the services that we provide which is related to natural in water resources and national security.
Speaker Change: In fact, Deutsche presents an opportunity for us as the administration is proposing a record budget for the department of defense and as a federal mandate to consult to use consultants due to reduction of head count and federal agencies and hiring freezes.
Kurt Allen: I'd like to introduce Kurt Allen who oversees our geospatial business to get his insights on the federal sector. Kurt, DOJ has been a hot topic recently. What impacts have we seen from DOJ's activities? Can you elaborate on the opportunities that you see in the federal space?
Speaker Change: I'd like to introduce Kurt Allen, who oversees our geospatial business to get his insights on the federal sector.
Speaker Change: Sure <unk> has been a hot topic recently, what impact are we seeing from darden's activities and.
Speaker Change: And can you elaborate on the opportunities that you see in the federal space.
Kurt Allen: Thanks, Ben. Yeah, with respect to the NV5's federal contract situation, as you mentioned, we have had one contract cancellation with the Centers for Disease Control and Prevention. The small contract was valued at approximately $100,000. We think this action is a one-and-done situation, and we do not expect another negative contract action with any other agency. In fact, we're now seeing contracts being signed and money is moving through the bar. across many agencies and we believe that the worst is behind us. Our focus on mandated service and the value that these services provide to the public has insulated us greatly from the upheaval affecting other consulting companies.
Speaker Change: Yes.
Speaker Change: With respect to the <unk> federal contract situation. As you mentioned, we have had one contract cancellation with the centers for disease control and prevention. The small contract was valued at approximately $100000.
Speaker Change: We think this action as a one and done situation and we do not expect another negative contract action with any other agency in.
Speaker Change: In fact, we are now seeing contracts being signed and money is moving through the bureaucracy across many agencies and we believe that the worst is behind us.
Speaker Change: Our focus on mandated service and the value. These services provide to the public has insulated us greatly from the upheaval affecting other consulting companies. We've had contracted delays while approvals for our work continue to wind their way through the system, but we remain confident that the situation will improve over the rest of the year.
Kurt Allen: We've had contracting delays while approvals for our work continue to wind their way through the system, but we remain confident that the situation will improve over the rest of the year.
Kurt Allen: Thanks Kurt for providing that additional clarification and colour.
Kurt Allen: Thanks, Kurt for providing that additional clarification and color.
Ben Heraud: I'd like to now provide some information about a couple of our recent acquisitions on slide 14. As the company evolves, our focus is on organic growth. The intent of NV5's Mergers and Acquisitions program is to strengthen our value proposition to clients through complementary services that embed us in our clients' organizations and accelerate our organic growth. In the first quarter, we completed three acquisitions. We discussed the acquisition of Group Delta on our last earnings call in February, but we've since completed two others. Herman CX provides commissioning services for hyperscale data centers in the U.S. Commissioning is a mandated service that supports the safety and efficiency of data center infrastructure, including the delivery of power to the data center.
Kurt Allen: I'd like to now provide some information about a couple of our recent acquisitions on slide 14, as the company evolves. Our focuses on organic growth, we intend of MB five mergers and acquisitions program is to strengthen our value proposition to clients through complementary services that embed us in our clients' organizations and accelerate our organic growth.
Kurt Allen: In the first quarter, we completed three acquisitions, we discussed the acquisition of Groot Delta on our last earnings call in February, but we have since completed two others MMC.
Kurt Allen: <unk> provides commissioning services for Hyperscale data centers in the U S commissioning of the mandated services support the safety and efficiency of data center infrastructure, including the delivery of power to the data center.
Ben Heraud: This acquisition has given us access to new domestic datacenter clients and opened opportunities for cross-selling of our power delivery services to our datacenter clientele. CRS Survey is a land surveying and mapping company that provides both traditional and geospatial aerial surveys for roadway and bridges in North Carolina. This acquisition expands our service area to the north and east of Charlotte and has already grown our surveying services with the North Carolina Department of Transportation, our largest client in the state. Both Herman CX and CRS Survey are companies that NV5 has worked with in the past and both of them have already made contributions to the growth of our existing business through cross-selling.
Kurt Allen: This acquisition has given us access to new domestic data center clients and open opportunities for cross selling of our power delivery services to our data center clientele.
Speaker Change: CRA suite as a land surveying and mapping company that provides both traditional and geospatial aerial surveys for roadways and bridges in North Carolina.
Speaker Change: This acquisition expands our service area to the North and east of Charlotte and has already grown our surveying services with the North Carolina Department of transportation, our largest client in the state.
Speaker Change: <unk> and CRE survey accompany that <unk> worked within the past and both of them are already made contributions to the growth of our existing business through cross selling.
Ben Heraud: Slide 16 provides an update on the Margin Improvement Initiatives for 2025, which we announced on our last earnings call. As we discussed, we are driving margin improvement throughout the organisation, with the goal to increase our EBITDA margins by 150 basis points over the course of the year. In Q1, we implemented a number of measures to directly impact margins. We made significant reductions to indirect labour, both in shared services and our operations, and we consolidated offices where beneficial. In our geospatial group, we restructured the organization implementing efficiency measures for data collection and optimized for data storage processes.
Speaker Change: Slide 16 provides an update on the margin improvement initiatives for 2025, which we announced on our last earnings call. As we discussed we are driving margin improvement throughout the organization with the goal to increase our EBITDA margins by 150 basis points over the course of the year.
Speaker Change: In Q1, we implemented a number of measures to directly impact margins, we made significant reductions to indirect labor both in shared services and our operations and we consolidated offices, we are beneficial.
Speaker Change: In our geospatial, great. We restructured the organization implementing efficiency measures for data collection and optimized for data storage processes Geospatial analysis loses massive amounts of data and the savings from our new prices for data storage will provide significant savings in data storage costs.
Ben Heraud: Geospatial analysis uses massive amounts of data and the savings from our new process for data storage will provide significant savings in data storage costs. We are also rolling out a business development tool using artificial intelligence to speed up the preparation of proposals, while reducing the cost of sales through automation. This will also enable us to cast a wider net when going after larger RFPs and increased utilization. We anticipate benefiting from all of these margin improvement initiatives beginning in Q2 and increasing through the second half of the year.
Speaker Change: We are also rolling out a business development tool using artificial intelligence to speed up the preparation of proposals, while reducing the cost of sales through automation and this will also enable us to cast a wider net when going after larger rfps and increased utilization, we anticipate benefiting from all of these margin improvement initiatives, beginning in Q2 and increasing through the <unk>.
Speaker Change: Second half of the year.
Ben Heraud: Let's now turn to slide 17 to dive a little bit deeper into the efficiency and growth measures that were implemented for Geospatial. We made significant investments in 2024 for the Geospatial business that were related to optimising the Axiom Geospatial and Geospatial Software acquisitions we made in 2023. On past earnings calls, we have discussed the importance of migrating our geospatial software platform to a SARS-CoV-2 model. We finished the development of our SARS software in 2024. We also completed ERP and CRM systems integrations for our geospatial organization in 2024, while scaling our data collection assets to create efficient systems. These investments impacted margins in 2024, but they will benefit our growth and profitability in 2025 and beyond.
Speaker Change: Let's now turn to slide 17 to dive a little bit deeper into the efficiency and growth measures that were implemented for geospatial we.
Speaker Change: We made significant investments in 2024 for the GI specialty business that were related to optimizing the XM geospatial and geospatial software acquisitions, we made in 2023.
Speaker Change: On past earnings calls, we have discussed the importance of migrating our geospatial software platform to a SaaS model. We finished the development of SaaS software in 2024, we also completed ERP and CRM systems integrations for our Geospatial organization in 2024, while scaling our data collection assets to create efficiencies.
Speaker Change: These investments impacted margins in 2024, but they will benefit our growth and profitability in 'twenty five and beyond.
Ben Heraud: As we move into the first quarter of 2025, we implemented additional initiatives for the geospatial group. The software development team was refocused on our most popular applications. Sales organizations from the acquired companies were integrated into a single sales organization, and the geospatial segment adopted a new reporting structure based on market verticals to drive growth and accountability. The results of these investments and the reorganization of the geospatial group are expected to be positive for the top line and bottom line. The impact of geospatial software was immediate, with double-digit growth and profitability in Q1, and as we move throughout the year, we anticipate geospatial to deliver margin improvement and accelerated organic growth.
Speaker Change: As we move into the first quarter of 2025, we implemented additional initiatives for the Geospatial group. The software development team was refocused on our most popular applications.
Speaker Change: <unk> organizations from the acquired companies were integrated into a single sales organization and the Geospatial segment adopted a new reporting structure based on market verticals to drive growth and accountability.
Speaker Change: So these investments in the reorganization of the geospatial growth are expected to be positive for the topline and bottom line the impact of GI Special software was immediate with double digit growth and profitability in Q1, as we move throughout the year, we anticipate geospatial to deliver margin improvement and accelerated organic growth.
Ben Heraud: On slide 18, we've provided some information about our revamped cross-selling program. We have a history of successful cross-selling programs that have helped us to bring subcontracted work back into NV5 and driven organic growth throughout the business.
Speaker Change: On slide 18, we provided some information about our revamped cross selling program.
Speaker Change: We have a history of successful cross selling programs that have helped us to bring subcontracted work back into <unk> and driven organic growth throughout the business one of the challenges we face with our cross selling program was that we incentivized our people for signing contracts rather than as the revenue was generated our new program will reward employees as cross sell revenue is right.
Ben Heraud: One of the challenges we faced with our cross-selling program was that we incentivized our people for signing contracts rather than as the revenue was generated. Our new program will reward employees as cross-sell revenue is recognized, giving us a more accurate view of the impact of our cross-selling program. Our target for the first 12 months of the program, which runs from Q2 2025 through to Q1 2026, is $40 million in revenue, and we will report on the progress of our cross-selling program and subsequent earnings calls.
Speaker Change: <unk>, giving us a more accurate view of the impact of our cross selling program.
Speaker Change: Target for the first 12 months of the program, which runs from Q2 25 through to Q1 2026 is $40 million in revenue and we will report on the progress of our cross selling program in subsequent earnings calls.
Ben Heraud: On slide 19, you'll find our priorities for the remainder of 2025 to carry our Q1 momentum throughout the year. We enter Q2 with a strong backlog, and we are working diligently to build upon our sales success. We will push forward our organic growth goal of 5-9% in 2025 and continue to implement our initiatives to deliver margin expansion of 150 basis points and unlevered free cash flow conversion of 60% of EBITDA. Our new cross-selling program will drive sales and inclusion across our three segments and deliver a comprehensive, differentiating value proposition to our clients.
Speaker Change: On slide 19, you'll find our priorities for the remainder of 2025% to carry our Q1 momentum throughout the year.
Speaker Change: We entered Q2 with a strong backlog and we are working diligently to build upon our sales success, we will push forward our organic growth goal of 5% to 9% in 2025 and continue to implement our initiatives to deliver margin expansion of 150 basis points and Unlevered free cash flow conversion of 60% of EBITDA.
Speaker Change: New cross selling program will drive sales and inclusion across our three segments and deliver a comprehensive differentiating value proposition to our clients. Finally, we will continue to be opportunistic and identify strategic acquisition targets that dean supply our platform and provide opportunities to accelerate organic growth.
Ben Heraud: Finally, we will continue to be opportunistic in identifying strategic acquisition targets that densify our platform and provide opportunities to accelerate organic growth.
Ben Heraud: Based on our strong Q1 performance and the outlook for the rest of the year, we are reaffirming our guidance of $1,026,000,000 to $1,045,000,000 in gross revenues.
Speaker Change: Based on our strong Q1 performance and the outlook for the rest of the year, we are reaffirming our guidance of $1 $26 million to $1 $45 million in gross revenues <unk> to 60, <unk> GAAP earnings per share and $1 27 to $1 37 adjusted earnings per share for the full 2025 at this.
Ben Heraud: $0.52 to $0.62 gap earnings per share and $1.27 to $1.37 adjusted earnings per share for the full 2025.
Dickerson Wright: At this point, I will turn the call over to Dickerson to speak about NV5's DNA and closing. Thank you, Ben. Let's turn to slide 20. We have received many questions concerning our name, NV5, and it was our intent for NV5 to depict our business plan, which was purposely designed to differentiate NV5 and to perform above the industry standard in strong economic times and also in challenging economic Our vertical approach flattens the organization. thus the name V in NV5, allowing us to put our best people in front of the client to deliver value. Our diversified service offering allows us to act as a true consultant throughout the entire lifecycle of an asset or of a project.
Speaker Change: Point.
Speaker Change: Turning the call over to <unk> to speak about <unk>, DNI and closing comments.
Thank you Ben I'll, let's turn to <unk>.
Speaker Change: Mid 'twenty.
Speaker Change: We have received many questions concerning our name and <unk> five.
Speaker Change: And so it's our intent for <unk> to depict our business plan, which was purposely designed to differentiate and re fi and to perform above the industry standard in strong economic times and challenging and also in challenging economic times.
Speaker Change: Our vertical approach flattened the organization.
Speaker Change: And the name <unk>, allowing us to put our best people in front of the client to deliver value.
Speaker Change: Our diversified service offering allows us to act as a true consultant throughout the entire life cycle oven and asset or a project in.
Dickerson Wright: Embedding our consultants into our clients' organizations and fostering organic growth and continuity of earnings. We also focus on mandated services that are driven by population growth and a finite amount of resources to serve that growing population. Our services are not dependent on economic conditions or tariffs. but by the fact that clean water, reliable energy, safe transportation are essential services as our population The majority of our revenue comes from pre-funded projects for local, state, and federal government clients. Funding for our project comes from a number of sources, including property taxes, gas taxes, utility bills, as well as state and federal grants.
Speaker Change: Embedding our consultants into our clients' organizations and fostering organic growth and continuity of earnings.
Speaker Change: We also focus on mandated services that are driven by population growth.
Speaker Change: And a finite amount of resources to serve that growing population.
Speaker Change: Our services are not dependent on economic conditions or tariffs.
Speaker Change: But by the fact that clean water reliable energy safe transportation are essential services as.
Speaker Change: As our population increases.
Speaker Change: The majority of our revenue comes from pre funded projects for local state and federal government clients.
Speaker Change: Funding for our project comes from a number of sources, including property taxes gas taxes utility bills as well as state and federal grants.
Dickerson Wright: In some instances, our municipal clients actually pay us to assist obtaining these state and federal funds.
Speaker Change: In some instances our municipal clients actually pay us to assist with obtaining these state and federal funds mergers and acquisitions are a part of our growth strategy.
Dickerson Wright: Mergers and acquisitions are a part of our growth strategy. But the acquisitions are only made to support our existing services and accelerate our organic growth. We are active in identifying these M&A targets throughout our operations, rather than depending on brokers, and we use cash or stock based upon immediate demand. Our unique business model is in our DNA, and we will continue to adhere to these principles to drive growth of the NV5 organization and provide value to NV5 shareholders.
Speaker Change: But the acquisitions are only made to support our existing services and accelerate our organic growth.
Speaker Change: We're active in identifying these M&A targets throughout our operations rather than depending on brokers and we use cash or stock based upon immediate accretion.
Speaker Change: Our unique business model and our DNA and we will continue to adhere to these principles to drive growth of the <unk> organization and provide value to <unk> shareholders.
Speaker Change: Thank you Sir if you would like to ask a question at this time simply press star followed by the number one on your telephone keypad if.
Unknown Executive: If you would like to ask a question at this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and the number one.
Speaker Change: If you would like to withdraw your question again press star and the number one.
Christopher Moore: Our first question will come from the line of Chris Moore with CJS Securities. Please proceed. Hey, good afternoon, guys. Thanks for taking a couple questions. Yeah, maybe we could. Good afternoon.
Speaker Change: Our first question will come from the line of Chris Moore with CJS Securities. Please proceed.
Chris Moore: Hey, good afternoon, guys. Thanks for taking a couple of questions maybe.
Speaker Change: Good afternoon.
Dickerson Wright: Just maybe we start with with geospatial. I think it was a little slow coming out of the gate in Q1. Primarily new administration related, just wanted to get a sense in terms of what you're seeing early in Q2 and really for the year, is there a reasonable organic growth range that we should be thinking about for geospatial?
Speaker Change: Maybe we could start with geospatial I think it was a little slow coming out of the gate in Q1.
Speaker Change: Primarily new New administration related just wanted to get a sense in terms of what youre seeing early in Q2.
Speaker Change: And really for the year just.
Speaker Change: Is there a reasonable organic growth range that we should be thinking about for geospatial.
Dickerson Wright: Chris, let me start with answering that, and with specifics we may go to Kurt Allen, who heads our geospatial group, or to Ben, but... The very beginning, when you say we're off to a slower start, geospatial was very affected by our integration on certain acquisitions, and there were, particularly in the software side of things, it took time for us really make sure we had the efficiencies and certain people were laid off. And so you'll start to see, you started to see the effects of that in the latter part of the first quarter. And you'll begin to see more of that efficiency and profit.
Chris Moore: Okay Chris.
Chris Moore: Let me start with answering that with specifics we may go to Kurt Allen, who heads, our Geo special group or band, but.
Chris Moore: The very beginning when you say we're off to.
Chris Moore: A slower geospatial was very affected by our integration.
Chris Moore: Certain acquisitions and they were particularly in the software side of things It took time for us to.
Chris Moore: Really make sure we had the efficiencies in certain people were laid off and so youll start to see you started to see the effects of that in the latter part of the first quarter and youll begin to see more of that efficiency and profit.
Ben Heraud: So I would say it was mostly internalized, not so much market driven by a slowness. And there may be some specific delays and projects, but nothing related to any of the political landscape. So if there's any more specificity that you'd like to answer. Yeah, I mean, I think we're certainly seeing an improvement through the remainder of the year, based on the current numbers that we've got. And as we mentioned earlier on the call, you know, a lot of the mandated nature of the services that we're providing within that space, you know, sort of have us feeling positive about the business and the continued growth.
Chris Moore: I would say it was mostly internalize not so much on what market driven by by a slow in this end.
Chris Moore: There may be some specific delays in projects, but nothing related to any of the political landscape. So if theres any more specificity that you'd like to add.
Speaker Change: Yes, I mean, I think we're certainly seeing that improvement through the remainder of the year.
Chris Moore: Based on the current numbers that we've got in.
Chris Moore: As we mentioned earlier on the call a lot about the mandated nature of the services that we're providing within that space.
Chris Moore: So to have us feeling positive about about the business and the continued growth.
Chris Moore: Okay.
Christopher Moore: I got it. I appreciate that.
Chris Moore: Got it I appreciate that maybe just staying on geospatial.
Dickerson Wright: Maybe just staying on geospatial for a minute. The split, you know, in terms of federal is what, is it roughly 50% of geospatial at this point in time? Yeah, roughly 48%. And is that, I guess I'm just trying to understand longer term, is that a level that that you're comfortable with? Is it will federal likely be, you know, more or less moving forward? and it's saved three to five years out. Yeah, Chris, I think it I think right now we're we're fishing with the fish are and really we're seeing a lot of opportunities in the commercial space, especially with utilities.
Chris Moore: The split in terms of federal is what rough is it roughly 50% of the geospatial at this point in time.
Chris Moore: Yes, roughly 48%.
Chris Moore: And is that I guess I'm, just trying to understand longer term is that a level that youre comfortable with it we'll federal likely be.
Chris Moore: More or less moving forward.
Chris Moore: I'd say three to five years out.
Yes, Chris I think I think right now, we're we're fishing, where the fish are and really we're seeing a lot of opportunities in the commercial space, especially with utilities and so I would expect the amount of.
Ben Heraud: And so I would expect the amount of private sector work that we do to actually grow to a larger share where federal may be more flat relative to the total growth for the entire portion of the business. Yeah, just just adding that on the utility side of things, you know, we have our power delivery group within the infrastructure side of things. And we've got a recent initiative here where we're really cross selling within geospatial and and the power delivery groups to capture more market share of these clients that we're working with where there's not currently overlap.
Chris Moore: Private sector work that we do.
Chris Moore: To actually grow to a larger share.
Chris Moore: Where federal may be more flat relative.
Chris Moore: Relative to.
Chris Moore: The total growth for the entire portion of the business just adding that on the utility side of things we have in our power delivery group within the infrastructure side of things that we've got a recent initiative here, where we're really cross selling within geospatial and the power delivery groups to capture more.
Chris Moore: Market share of these clients that we're working with where it is not currently overlap.
Ben Heraud: So we're pretty excited about that.
Chris Moore: We're pretty excited about it.
Dickerson Wright: Chris, maybe I could just chime in here. I'm going to have some in the concluding comments, but... We heard here so much about a cutback in federal spending and government, but it Basically, our geospatial group works. with the defense industry. And if you know anything, this new administration is not, if anything, is increasing the commitment to the defense community. So I think our geospatial group will benefit from that, which is just the inverse of what's going on with other cutbacks in federal governments that are non-defense related. Got it. Very helpful. I'll jump back in line, guys.
Chris Moore: Chris maybe I could just chime.
Chris Moore: And here I am going to have some concluding comments, but.
Chris Moore: We hair care, so much about a cutback in federal spending and government but.
Chris Moore: Basically our geospatial group works with the defense industry and if anything this new administration has not if anything it's increasing.
Chris Moore: I meant to the defense community. So I think our geospatial group will benefit from that which was just the inverse of whats going on with.
Chris Moore: Other cutbacks in federal Government center non defense related.
Speaker Change: Got it very helpful. I'll jump back in line guys. Thank you.
Unknown Executive: Thank you.
Chris Moore: Okay.
Rob Brown: Your next question comes from the line of Rob Brown with Lake Street. Please proceed. Good afternoon. Hi, you talked about the data center business growing pretty nicely. And then you didn't didn't acquisition in that space as well. But just wanted to get a sense of the acquired business. What's what's a typical commissioning service contract in that business? How big is it? And what's sort of the opportunity in the commissioning Yeah, it's typically around, you know, in the $1 million to $2 million range is a typical contract size. But it's often done in phases, as you know, these data centers are huge, and they sort of, they look at them in these sectors that we do.
Speaker Change: Your next question comes from the line of Rob Brown with Lake Street. Please proceed.
Speaker Change: Good afternoon.
Speaker Change: Hi, Rob.
Speaker Change: Hi, you talked about the datacenter business growing pretty nicely and then you didn't didn't acquisition in that space as well, but just wanted to get a sense of the acquired business, what's what's the typical commit.
Speaker Change: Commissioning service contract in that business, how big is it and what's sort of the opportunity.
Speaker Change: Commissioning side.
Speaker Change: Yes, it's typically around.
Speaker Change: $1 million to $2 million range is a typical contract size.
Speaker Change: It is often done in phases as the data seen is a huge and they sort of dialogue with them in the sectors that we do so.
Ben Heraud: So that may represent part of one data center. And then, you know, they'll just, we continue to go as the data center grows.
Speaker Change: May represent part of one data center.
Speaker Change: And then they will just we continue to go as the data center growth.
Ben Heraud: Great, thank you.
Speaker Change: Okay, great. Thank you and then on the funding source.
Ben Heraud: And then on the funding sources, just a comment on that. The scope, our scope of work on data centers varies very much. Most of the majority of it is commissioning work, but we do many other things involving the data center. So sometimes that contract can Speaker 3 – Yeah, and I mean, for that, you know, speaking to that specific acquisition where the 1 plus 1 equals 3 is – they're approaching – you know, they brought a new hyper-scale of clients. You know, currently they're only approaching them with commissioning, where we can bring in power delivery, MEP, fire protection, and many other things.
Speaker Change: Yes, just a comment on that.
Speaker Change: The scope of our scope of work on Datacenters varies very much.
Speaker Change: Most of the majority of it is commissioning work, but we do many other things involving the data centers. So sometimes that contract can be smaller or much larger depending on what the scope of services that we're providing.
Speaker Change: Speaking to that specific acquisition that we're the one plus one equals three is there a pricing.
Speaker Change: I bought a new hyperscale clients currently that are in your pricing and with the commissioning where we can bring in power delivery MEP and fire protection. Many other things and Andy I don't know if you want to add a little bit of color. Yes. We're really excited we're grabbing a lot larger part of the data center business on all the projects. We're working on so we're starting to get engaged at the power level, but as we all know.
Andrew Chang: Andy, I don't know if you want to add a little bit of color there. Speaker 4 – Yes, we're really excited. We're grabbing a lot larger part of the data center business on all the projects we're working on. So, we're starting to get engaged at the power level, but as we all know, that's a big – That's a big lift at the moment, and then we get involved in, like Ben said, all the building services, we're getting civil engineering involved, structural, the mandated fire, and then we're going through the commissioning and staying in the life of the building.
Speaker Change: That's a big.
Speaker Change: That's a big lift at the moment and then we get involved and like Ben said, all the building services, we're getting sibilant civil engineering, well structural the mandated fire.
Speaker Change: And then we are going through the commissioning and staying in the life of the building.
Andrew Chang: Yeah, it's a very exciting time. Thank you.
Speaker Change: Yes, it's a very exciting time.
Speaker Change: Okay, great. Thank you and then and then on the funding sources I guess on the infrastructure side.
Ben Heraud: And then, and then on the funding sources, I guess, on the infrastructure side, I know it comes from a lot of pots. Do you have a sense of how much is sort of gas tax and state and local versus federal in that Well, it varies very much depending upon which state we're working in. So, for example, in California, quite a bit of the roadway transportation projects we're doing is funded by the gas tax, not so much in other areas, so it's very geographic. Cut. Okay. Thank you.
Speaker Change: I know it comes from a lot of parts.
Speaker Change: Sense of how much is sort of cash tax in state and local versus federal in that vertical.
Speaker Change: It very it varies very much depended upon which state we're working on share for example, in California quite a bit.
Speaker Change: Roadway transportation projects. We are doing is funded by the gas tax not so much in other areas. So it's very geographic specific.
Unknown Executive: I'll turn it over.
Speaker Change: Okay. Thank you I'll turn it over.
Andy Wittmann: Your next question comes from the line of Andy Wittmann with Baird. Your line is open. Thanks for taking my questions this afternoon. I guess I wanted to just talk about the profit margin expectations for the year. Obviously, you've stuck by the 150 basis points margin expansion goal over last year. Obviously, that's implying a pretty big ramp with the margin slightly lower here in the first quarter. So I guess I want to get your sense of the confidence here. And specifically, as I look at some of the items that you listed as the areas where you're focusing for your efficiency measures.
Speaker Change: Your next question comes from the line of Andy Wittmann with Baird. Your line is open.
Andy Wittmann: Great. Thanks for taking my questions. This afternoon, I guess I wanted to just talk about the.
Andy Wittmann: The profit margin expectations for the year, obviously by the 150 basis points margin expansion goal over last year.
Andy Wittmann: Obviously, that's implying a pretty big ramp with the margin slightly lower here in the first quarter. So I guess I wanted to get.
Andy Wittmann: And your sense of the confidence here and specifically as I look at some of the.
Andy Wittmann: Items that you listed as the areas, where you are focusing for your efficiency measures.
Andy Wittmann: Certainly, indirect labor, office consolidations, those are very easy to characterize and kind of underrate. You know exactly what those can deliver. But the other ones on here are a little bit more subjective.
Andy Wittmann: Certainly indirect labor office consolidations, those are very easy to characterize and kind of underwrite.
Andy Wittmann: Lastly, with those can deliver but the other ones on here.
Speaker Change: A little bit more subjective so I guess, maybe the question is for Ed or Ben could you talk about what percentage or the dollars that you've already realized or identified in terms of the it's very discrete things.
Edward Codispoti: So I guess maybe the question is for Ed or Ben. Could you talk about what percentage or the dollars that you've already realized or identified in terms of these very discreet things, just to help us understand how much? Left, you would have to deliver on these more subjective or squishier ones that are harder to really identify to get to your target level.
Andy Wittmann: To help us understand how much less.
Speaker Change: <unk> you would have to deliver.
Speaker Change: And these more subjective or squishy are ones that are that are harder to really identified to get to your target level.
Edward Codispoti: Hey Andy, it's Ed. Good to talk to you. The ramp-up really, as you said, will be a gradual ramp-up. As you see in the Q1 results, we were just pretty much flat with the first quarter of last year, just a hair under. And the initiatives that we've put in place that you just mentioned would really start to take effect in the second quarter, but more meaningfully, as we discussed last quarter in the second half of the year. There's certain... Drivers have already begun. So, for example, the software business restructuring, others, like office and lab consolidation will occur between now and Q3, but your point is a good one and the ramp up is how we're reflecting it.
Edward Codispoti: Hey, Andy it's Ed.
Andy Wittmann: Talk to you.
Andy Wittmann: The the ramp up really as you said will be a gradual ramp up as you see in the Q1 results were reduced.
Andy Wittmann: Pretty much flat with first quarter of last year, just a hair under and the initiatives that we've put in place that you just mentioned would really start to take effect in the second quarter, but more meaningfully as we discussed last quarter in the second half of the year.
Andy Wittmann: There are certain certain.
Andy Wittmann: Drivers have already begun so for example.
The software business restructuring.
Andy Wittmann: Others.
Andy Wittmann: But.
Andy Wittmann: Office and lab consolidation will occur between now and Q3, but.
Speaker Change: Your point is a good one and the ramp up as well.
Speaker Change: We're reflecting it.
Edward Codispoti: A slight bump in Q2 and then Q3 and Q4 would be more meaningful so that we hopefully end up 150 basis points over where we were last year, somewhere in the mid-16% range. Got it. Okay, yeah, just to maybe, Andy, just to add to that, sort of some specifics, I mean, out of the software business alone, we did a RIF of 25 staff, and that's sort of immediate, you know, through the quarter, it comes at a little bit of a cost, but that, you know, we'll see the benefit of that from now on, Got it.
Speaker Change: Slight bump in Q2, and then Q3 and Q4 would be more meaningful so that we hopefully end up 150 basis points over where we were last year somewhere in the mid 16% range.
Speaker Change: Got it.
Speaker Change: Okay, Yes.
Speaker Change: Maybe Andy just to add to that so there's some specific timing out of the software business a lot and we did a 25% and staff and that sort of immediate.
Speaker Change: So through the quarter it comes at a little bit of a cost, but we will see the benefit of that from now onwards.
Speaker Change: Got it.
Andy Wittmann: OK. I also noticed that. Your organic growth, so last quarter you were expecting 5-7% organic growth, and I noticed on your slide deck this time that you have it at 5-9% organic growth. So I was wondering which of the businesses that you have in the organic base has improved since last quarter to give you that confidence?
Speaker Change: Okay.
Speaker Change: I also noticed that.
Speaker Change: Your organic growth so last quarter, you were expecting 5% to 7% organic growth and I noticed on your slide deck. This time that you have at 5% to 9% organic growth.
Speaker Change: So I was wondering which of the businesses.
Speaker Change: That you have in the organic base has improved since last quarter or two.
Speaker Change: Give you that confidence.
Dickerson Wright: Well, Andy, this is Dick. Good to good to hear from you again. Let me give an overview. We measure our growth not by just aspirational, but what is the back So, we've seen significant growth in the backlog of our infrastructure business, we've seen significant growth in our technology business, specifically those with the data centers, and we expect to see further growth with the software business in support of our geospatial services, and I'll mention a little bit more in the concluding comments. But we measure our...so we're optimistic about the organic growth really based on the backlog that we have going forward.
Andy This is <expletive> good good to hear from you again, let me give an overview.
Speaker Change: We measure our growth not by just aspirational of what is the backlog. So we have seen significant growth in the backlog of our infrastructure business, we've seen significant growth.
Speaker Change: Our technology business, specifically those with the data centers and we expect to see further growth with the software business that in support of of our geospatial services and ill mention a little bit more in the concluding comments, but.
We measure our so we are optimistic about the organic growth.
Speaker Change: Really based on the backlog that we have going forward.
Dickerson Wright: Okay, last question for me. I guess, Dick, this one's probably for you. NV5 has never been a company to really do a lot of buyback, or I don't think any buyback, but the stock is obviously less expensive than it's been in the past. And it sounds like from your overall tone, that while M&A is still very much a part of your culture, and it always has been, it sounds like there's a little bit more focus on organic, maybe today or the last few quarters than there has been over the last few years. And so that brings into the question, like, as your balance sheet continues to cash flow better, what you're going to do with the cash?
Speaker Change: Okay.
Speaker Change: Just last question for me.
Speaker Change: Nick this one's probably for you.
Speaker Change: <unk> never been a company to really do a lot of buyback trying to Kenny buyback, but on the stock because obviously.
Speaker Change: Less expensive than it's been in the past.
Speaker Change: And it sounds like from your overall tone that while M&A is still very much a part of your culture and it always has been it sounds like there's a little bit more focused on organic maybe today or in the last few quarters and there has been over the last few years.
Speaker Change: It brings into the question like as your balance sheet continues to cash flow better, but youre going to do with the cash and I was just wondering.
Dickerson Wright: And I was just wondering if buyback is something that you've thought about or considered in terms of your capital allocation strategy on a go-forward basis? That's a very observant question. We've announced a $20 million buyback. And at the time that we can do that, and the time that we don't have some conflicts that would prevent that, we fully intend to buy that back. So on the acquisition zone, obviously, we look for the arbitrage of the price of our shares and what we're buying things at. But we have the flexibility, and we did this earlier on.
Speaker Change: If buyback is something that you've thought about or considered in terms of your capital allocation strategy on a go forward basis.
Speaker Change: That's a very observant question we've announced.
Speaker Change: $20 million buyback and at the time that we can do that in the time that we don't have some conflicts that would prevent that we fully intend to buy that back. So on the acquisition. So obviously, we look for the arbitrage of the <unk>.
Speaker Change: <unk> of our shares and what we're buying things that but we have the flexibility and we did this earlier on we will probably be using much more of that cash that you talked about and we have been we're not giving stock.
Dickerson Wright: We will probably be using much more of that cash that you talked about, and we have been. We're not giving stock in the acquisition. We may give restricted stock as a portion of that, but that has a cliff-vesting period of three years. But the actually stock or lettered stock, we replace that with cash. And so therefore, the acquisitions are immediately accretive because we have more income coming in without increasing the share count. Great. Thank you for the perspective. Have a good evening.
Speaker Change: And the acquisition, we may give restricted stock as a portion of that but that has a.
Speaker Change: A cliff vesting period of three years, but the actually stopped or lettered stock we replaced that with cash and so therefore, the acquisitions are immediately accretive because we have more income coming in without increasing the share count.
Speaker Change: Great. Thank you for the perspective and have a good evening.
Speaker Change: Thanks, Susan.
Sam Cusform: Your next question comes from the line of Sam Cusform with William Blair. Please proceed. Thanks for taking our questions. I want to ask a bit more on the topic of tariffs. I appreciate you don't directly have much exposure to supply chains, but I was curious how these tariffs might impact your clients' projects.
Speaker Change: Your next question comes from the line of Sam Pittsburgh with William Blair. Please proceed.
Sam Pittsburgh: Hey, thanks for taking our questions.
Sam Pittsburgh: I wanted to ask a bit more on the topic of tariffs I. Appreciate you don't directly have much exposure to new supply chain.
Sam Pittsburgh: I was curious how the tariffs might impact your clients' projects have any client shared the immediate need to slow down their own projects.
Dickerson Wright: Have any clients shared they may need to slow down their own projects or pause projects as a result of these tariffs and their impact, their ability to complete the pieces of the project that might come before you guys get involved?
Sam Pittsburgh: <unk> projects as a result of these tariffs and their impact their ability to complete the pieces of the project that might come before you guys get involved.
Dickerson Wright: Well, Sam, let me give a macro answer. And then for specificity, we can really best hear from each of the reporting segments and how they see things, but All of our work, a very small portion of it is international. All of our work is... Domestic, and it's based on materials, which are very limited because we're consultants. But the materials that we're using there are all usually materials that are not subject to tariffs, or they are domestic. So we have very, very limited exposure to tariffs. We're not worried about the supply chain. Those are not things that we see as a major, major impact on our business negatively.
Sam Pittsburgh: Well, Sam let me give a macro answer and then for specificity weekend really best here from each of the reporting segments and how they see things but.
Sam Pittsburgh: <unk>.
Speaker Change: All of our work a very small portion of it is international all of our work.
Sam Pittsburgh: Yes.
Sam Pittsburgh: Domestic and it's based on <unk>.
Sam Pittsburgh: Materials, which are very limited because we're consultants, but the materials that we're using there are are all usually materials that are <unk>.
Sam Pittsburgh: Not subject to tariffs or are they are domestic so are we.
Sam Pittsburgh: We have very very limited exposure to tariffs, we're not worried about the supply chain.
Sam Pittsburgh: Those are not things that we see as a major.
Sam Pittsburgh: Major impact on our business and negatively so it's not that we are importing things sub debt are subject to a tariff for the activity that we're doing but as I said I think may be banned or some of our segment sheets can report what they may be seeing.
Dickerson Wright: So it's not that we are importing things that are subject to a tariff for the activity that we're doing.
Ben Heraud: But as I said, I think maybe Ben or some of our segment chiefs can report to what they may be. Yeah, I mean, we haven't seen any immediate disruption from it, and it's obviously a very rapidly changing landscape, and we're watching it very closely.
Sam Pittsburgh: Yes, I mean, we haven't seen any immediate disruption from it's obviously, a very rapidly changing landscape and we're watching it very closely.
Andrew Chang: I don't know if, Andy, Kurt, and Alex, you want to add some color to that? Yeah. In the building side, we've actually seen more focus using the digital buildings to make sure that equipment count and material count is more accurate, right? So less delays in projects that have already been budgeted for. So we've seen increased focus on that, and then the construction schedules have not slowed down yet.
Speaker Change: Andy cared Nellix you want to add some color to that in the building side, we've actually seen more focus using the digital buildings to make sure that equipment count and material count is more accurate right. So let's delays in projects that have already been budgeted for.
Sam Pittsburgh: So we've seen an increased focus on that and then.
Sam Pittsburgh: Construction schedules have not have not slowed down yet.
Ben Heraud: I guess at Geospatial, the only products that we really kind of deal with is our software group, but that's an inherent good and not subject to tariff. In infrastructure, a lot of our projects already had buy American and we're just not seeing the impact of tariffs. Got it, got it. Very helpful, Cutler. Thanks guys.
Sam Pittsburgh: I guess, a geospatial the only products that we really kind of deal with it.
Sam Pittsburgh: Our software group.
Sam Pittsburgh: That's an inherent good and thats subject to tariff.
Sam Pittsburgh: In infrastructure a lot of our projects already had volume Erica in and we're just not seeing the impact of tariffs at this point.
Speaker Change: Got it got it very helpful color. Thanks, guys, maybe switching gears here a little bit.
Ben Heraud: Maybe switching gears here a little bit, maybe to ask about your utilities business and the fire hardening services you provide. I think last quarter was still pretty early following the California fire disaster. You share these types of events usually, you know, lead to a pickup in business over the near to midterm. Have you guys begun to see that pickup at all, or is it still too early in this process? It's still a bit too early to actually have the contracts in place, but we are seeing activity relative to Fireheart. We have a municipality. networks. We have our fees based on a percentage of the building permit.
Speaker Change: Maybe to ask quite a utilities business and the fire hardening services you provide I think last quarter was still pretty early following the California side has asked Sir you shared these types of events usually lead to a pickup in business over the near to midterm and you guys have begun to see that pickup at all or is it still too early in this process.
Speaker Change: It's still a bit too early to actually have the contracts in place, but we are seeing activity relative to fire hardening.
Speaker Change: We have a municipality.
Speaker Change: Initiatives, where.
Speaker Change: Los Angeles, which was really impacted by the fires.
Speaker Change: As you well know they've had now have 60 days for these local municipalities to get the permit process. They get building. So we feel a real weak our outsourcing business and our private provider business, where we actually.
Speaker Change: We have our fees based on the percentage of the building permit we see tremendous opportunity and activity with the <unk> as they start to rebuild on the bigger picture you mentioned, yes, we haven't seen any of the real construction uptick tremendously until we get the permit processes.
Ben Heraud: We see a tremendous opportunity and activity with the municipalities as they start to rebuild. On the bigger picture, you mentioned, yes, we haven't seen any of the real construction uptick tremendously until we get that permit processing where we will be very embedded and involved. and helping them to accelerate the building permit process. Got it.
Speaker Change: Where we are we will be very embedded and involved with the minister and the missile <unk> and.
Speaker Change: And helping them to accelerate the building the building permit process.
Unknown Executive: Appreciate it. Thanks, guys.
Speaker Change: Got it I appreciate it thanks guys.
Speaker Change: Okay.
Unknown Executive: At this time, this concludes our question and answer session.
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: I would now like to turn the call back over to Mr. Wright for closing remarks. Well, thank you, everybody, for joining the call today. And as you know, we are very pleased to report to our shareholders a successful quarter one, and we really have a positive outlook for the remainder of the year.
Speaker Change: Well, thank you everybody for the.
Speaker Change: For joining the call today and as you know we are very pleased to report to our shareholders.
Speaker Change: A successful quarter, one and we really have a positive outlook for the remainder of the year I use a word and I think that's really important for all of our our people and our segments reporting and Thats. The word adapt adapt to what the commercial circumstance or we don't have any impact.
Dickerson Wright: I use a word, and I think that's really important for all of our people and our segments reporting, and that's the word adapt. Adapt to what the commercial circumstances are. We don't have any impact now on tariffs. We don't know where DOJ is. Whatever that is, if we have the ability to adapt and be flexible, so give an example, our geospatial group, mainly a tremendous amount of their work has been with the federal government, and for now, fortunately, it's with the Department of Defense, and that administration seems to be, they are going to increase defense spending, so we will be, hopefully, we'll be impacted positively.
Speaker Change: Now on tariffs, we don't know where <unk> is but.
Speaker Change: Whatever that is if we have the ability to adapt and be flexible. So given an example, our geospatial group, mainly a tremendous amount of their work.
Speaker Change: Has it been with the federal government and for now Fortunately, it's with the department of Defense and that administration seems to be they are going to increase defense spending. So we will be hopefully will be impacted positively, but adapt we think it's important that now they look for other areas and we're starting to position ourselves with other.
Dickerson Wright: But ADAPT, we think it's important that now they look for other areas, and we're starting to position ourselves with other areas so they're not so dependent on specific services. And so their cross-selling, and Ben mentioned that, will be with utilities and commercial sectors where they now will have that whole segment of business. And so here's where ADAPT comes in. If the defense business continues, but also now they developed a further service with the commercial activity and the utilities, well, then their business will prosper. And this really is the same for all segments.
Speaker Change: Areas, so theyre not something.
Speaker Change: <unk> on on specific services and so they are cross selling and Ben mentioned that will be with utilities and commercial sectors, where they now.
Speaker Change: We'll have that whole segment of business and so here's where they have where the data comes in if they are if that.
Speaker Change: Defense business continues but also now they developed a further service with the commercial activity in the utilities will then their business will prosper and this really is the same for all segments. We we have too.
Dickerson Wright: We have to... know the environment we're in, and we have to adapt our services and our organization so that we are part of that. So that's really important.
Speaker Change: No the environment, we're in and we have to adapt our services and our organization so that we.
Speaker Change: We are part of that so.
Dickerson Wright: Where I was pleased, and I'd like to really point this out to our investors was You'll notice the cash flow conversion, close to 100% of what our EBITDA was, so we are in a strong cash position. I was also pleased to see that our leverage has dropped to 1.3, and we now have $53 million, over $53 million in cash on hand that we can use to grow and promote our organic growth, but also if we see opportunities that we can support and strengthen the platforms we have, we have the cash to do that, and we're not so worried about using stocks.
Speaker Change: That's really important.
Speaker Change: I was pleased I'd like to really point this out too.
Speaker Change: Our investors was.
Speaker Change: Youll notice the cash flow conversion close to 100% of what our EBITDA was so we are in a strong cash position. I was also pleased to see that our leverage has dropped to one three and we now have $53 million over $53 million in cash on hand that we can use to grow and promote.
Speaker Change: Our organic growth, but also if we see opportunities to that we can support and strengthen the platforms. We have we have the cash to do that and we're not so worried about using stock so.
Dickerson Wright: So those are very important things to look at in the quarter.
Speaker Change: Those are very important things to look at in the quarter our quarter really the other thing that I was very encouraged with I'd like to point this out to investors as well.
Dickerson Wright: Our quarter, really, the other thing that I was very encouraged with, and I like to point this out to investors, is We did some major acquisitions in the beginning of the quarter in our software area and learning that business, we ended up doing things that position us for further growth. We had a very good, profitable quarter that could have been better once we realized that Ben mentioned the amount of employees. We felt that the staffing of that, and as we learned better, that we had 40 people that we can now, that are no longer with us, and we'll see the benefit and the growth of the company in the second quarter as we realize even further benefits from that.
Speaker Change: We did some major acquisitions in the beginning of the quarter and our software area and learning that business we ended up.
Speaker Change: Doing things that position us for further growth, we had a very good profitable quarter that could have been better once we realize that Ben mentioned the amount of employees, we felt that with the staffing of that.
Speaker Change: And as we learned better that we have 40, we had 40 people that we can now there were no longer with us and we will see the benefit and the growth of the company in the second quarter as we realize even further benefits from that so we're encouraged with the outlook we are encouraged with.
Dickerson Wright: So we're encouraged with the outlook. We're encouraged with the year. Because of the political environments, we are reaffirming a strong guidance for the rest of the year, and so we're not projecting any slowdowns, and we feel very encouraged with the year going forward. So I want to thank everybody for your questions. Thank everybody for participating in the call today, and we will be available and working in anything that you may think of or want to address with us. Please feel free to do so. So anyway, thank you for the call, and we appreciate being able to report these positive results to you.
Speaker Change: With a year.
Speaker Change: Because of the political environments, we are reaffirming our strong guidance for.
Speaker Change: For the rest of the year and so we're not projecting any slowdowns and.
Speaker Change: We feel very encouraged with the year going forward. So I want to thank everybody for your questions. Thank everybody for participating.
Speaker Change: In the call today, and we will be available and working in and anything that you may think of I want to address with US. Please feel free to do so so anyway. Thank you for the call and we appreciate we appreciate being able to report these positive results to you.
Unknown Executive: Thank you.
Speaker Change: Thank you.
Unknown Executive: This does conclude today's conference call. You may now disconnect. Thanks for watching!
Speaker Change: Thank you. This does conclude today's conference call you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].