NV5(US:NVEE)2022-11-05 22:10Financial Data and Key Metrics Changes - The company achieved gross revenues of $204 million, a 10% increase compared to $185.6 million in Q3 2021 [18] - Net income increased by 28% to $16.1 million from $12.6 million in the same quarter last year [18] - Adjusted EBITDA rose 4% to $36 million from $34.7 million year-over-year [19] - Adjusted EPS grew 20% to $1.50 per share from $1.25 per share in Q3 2021 [19] - Cash flows from operations increased by 65% to $26.1 million from $15.8 million in Q3 2021 [19] - The company's cash increased to $54.2 million from $48 million at the beginning of the year, while debt decreased to $84.2 million from $135.2 million [20] Business Line Data and Key Metrics Changes - Exceptional organic growth was noted in Geospatial Services and the building technology vertical [8] - Geospatial Services secured a record $99 million in new contracts, a significant increase from the previous record of $65 million [12] - The utility and commercial sector of Geospatial Services is expected to drive revenue growth through organic expansion [12] Market Data and Key Metrics Changes - The company reported a backlog of $761 million, representing over 80% of planned budget activity [15] - Federal and state government services grew by 36% compared to the same period in 2021 [12] Company Strategy and Development Direction - The company is focusing on sustainable growth through four pillars: enhancing technology, driving M&A activity, and adding scalability and synergies [13] - The company is actively pursuing M&A opportunities, having acquired KMK Technologies to strengthen its building technology vertical [9] - The company aims to maintain a strong balance sheet with minimal debt, allowing for opportunistic growth without reliance on leverage [86] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth driven by increased infrastructure spending and utility services [23] - The company reaffirmed its full-year 2022 guidance for gross revenues of $795 million to $815 million and adjusted EPS of $5.43 to $5.82 [24] - Management anticipates at least 5% organic growth for 2023, with potential contributions from acquisitions [26][39] Other Important Information - The company is experiencing a softening in its real estate transaction business due to rising interest rates [55] - Management highlighted the importance of analytics in Geospatial Services as a differentiator from competitors [30] Q&A Session Summary Question: What is the organic growth versus M&A split for 2022? - Management anticipates at least 5% organic growth, not including potential acquisitions [26] Question: Can you elaborate on the Geospatial business growth? - Management noted that integration with the core utility business and analytics capabilities are driving growth [30] Question: What is the outlook for federal and state activity in Geospatial? - Management indicated that delayed defense projects are starting to recover, contributing to growth [32] Question: How is the utility services business performing? - A recent $60 million LNG contract was highlighted, with increasing utility conversions to LNG expected [35] Question: What is the expected EBITDA growth in Q4? - Management expects to normalize margins in Q4 after a temporary impact in Q3 [49] Question: What areas of the portfolio are lagging? - The real estate transaction business is experiencing softening due to rising interest rates [55] Question: What is the acquisition landscape like? - Management noted a robust pipeline of acquisition opportunities, focusing on technology and enhancing existing platforms [79]