NV5(US:NVEE)2023-02-24 03:36Financial Data and Key Metrics Changes - The company reported a gross revenue increase of 11% to $786.8 million in 2022 from $706.7 million in 2021 [130] - Net income rose by 6% to $50 million in 2022 compared to $47.1 million in 2021 [130] - Adjusted EBITDA increased by 2% to $135.2 million in 2022 from $132.9 million in 2021 [130] - GAAP diluted earnings per share increased by 2% to $3.27 in 2022 from $3.22 in 2021, impacted by $5.6 million of acquisition-related costs [130] Business Line Data and Key Metrics Changes - The real estate transaction services experienced a significant drop due to increased interest rates, with a forecasted 7% decline in revenue for 2023 compared to 2022 [101][111] - The Geospatial services vertical showed strong growth, contributing to overall revenue despite challenges in other segments [126] - The company anticipates organic growth of 6% to 9% for 2023, supported by strong backlog and acquisitions [127] Market Data and Key Metrics Changes - The company noted a 14% degradation in the budget for interest rate-sensitive sectors, particularly affecting real estate and municipal services [25] - The backlog entering 2023 is approximately $800 million, reflecting work intended for the year [129] Company Strategy and Development Direction - The company is focusing on organic growth, mergers and acquisitions, and margin growth, setting revenue guidance for 2023 between $878 million and $950 million [3] - The acquisition of Axim and L3HARRIS is expected to enhance the company's Geospatial services and expand its market presence [82][128] - The company aims to support organic growth through initiatives in various sectors, including utility services and geotechnical expertise [45][47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2023, citing strong demand for infrastructure improvements and a growing population as key drivers [126][129] - The company is not heavily dependent on economic cycles, as most of its services support mandated infrastructure needs [64] - Management acknowledged challenges from rising interest rates but emphasized growth potential in other segments [126][128] Other Important Information - The company has a strong balance sheet with cash on hand of $38.5 million and net leverage down to 0.2x [105] - The company is actively pursuing additional acquisitions to strengthen its service offerings and market position [128] Q&A Session Summary Question: What is the guidance based on regarding the economic environment? - Management indicated that the guidance is based on current expectations and is not heavily dependent on economic cycles, focusing instead on infrastructure needs [64][87] Question: Can you elaborate on the interest rate impact on your business? - Management noted that interest rate increases have affected real estate transaction services and municipal services, leading to a forecasted decline in those areas [25][111] Question: What are the expectations for adjusted EBITDA growth? - Management expects adjusted EBITDA growth to align closely with revenue growth, anticipating a significant increase in profitability in 2023 [133]