Acuren Corporation

Hello and welcome to the Actor Incorporation first quarter earnings and merger announcement call. At this time all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dan Scott, Investor Relations with ICR. Thank you. You may begin.

Good morning, everyone, and thank you for joining the call today. Given the news this morning of the signed definitive merger agreement with NV5, today's call will include a first quarter 2025 earnings update as well as a presentation of the transaction from Acurin and NV5's leadership. Joining me on the call today are Tel Paizi, Acurin's president and CEO, Kristen Schultes, Acurin's chief financial officer, and Robbie Franklin and Sir Martin Franklin, Acurin's co-chairman. We also have on the line with us Dickerson Wright, the founder and executive chairman of NV5, along with Ben Haroud, the CEO of NV5. Before we begin, I would like to remind you that certain statements in the company's earnings press release announcement and on this call are forward-looking statements which are based on expectations, intentions, and projections regarding the company's future performance, anticipated events or trends, and other matters that are not historical facts. These statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. In our press release and filings with the SEC, we detailed material risks that may cause our future results to differ from our expectations. Our statements are as of today, May 15, 2025, and we undertake no obligation to update any forward-looking statements we may make except as required by law. As a reminder, we have posted a presentation detailing our first quarter financial performance on the investor relations page of our website, as well as the presentation of the transaction with NV5. Our comments today will also include non-GAAP financial measures and other key operating metrics. The required reconciliations of non-GAAP financial metrics can be found in our press release and on our presentation. It's now my pleasure to turn the call over to Tao.

Thank you, Dan, and good morning, everyone, and thank you for your interest in our company. Welcome to Acuion's first quarter earnings call and deal announcement presentation. We will begin the call with a review of our earnings before transitioning to a discussion of the transaction with NV5. As you may have seen yesterday, we are excited to begin trading on the New York Stock Exchange this coming Monday, May 19. It's a proud moment for our entire team to bring the Acuion story to an even wider audience. I am pleased to report that the year has started off in line with our expectations and that the team delivered healthy results in what is traditionally our slowest quarter of the year. I want to start by sharing our perspective on the current market environment and Acuion's performance. There are four key takeaways I want to emphasize today. First, we've delivered 7% organic growth in the first quarter, performing ahead of our expectations despite macroeconomic volatility coupled with tariff uncertainty. Second, our business continues to grow and deliver meaningful results in our recurring revenue base, supplemented by share gains through service line expansion and the addition of new sites. Third, we're maintaining disciplined pricing strategies, carefully selecting opportunities that align with our objectives. And fourth, our results for the quarter, which historically is our slowest, being the first quarter, were in line with our expectations and keep us on track to deliver on our full year guidance. Our Q1 performance was achieved amid cautious economic conditions, influenced primarily by political uncertainty in Canada and back and forth tariff rhetoric in the United States. However, I want to emphasize that our customers continue to operate their facilities, driving demand for our essential asset integrity services, which continue uninterrupted. Let me highlight two of our core service offerings within our non-destructive testing activities, run and maintain work and call out work. Our run and maintain services, which we estimate represent over 40% of our business, delivered strong growth this quarter, particularly in Canada. This category contributes greatly to the foundation of our stable revenue and earnings profile. It also underscores our reliability and positions us well to be a preferred vendor for higher margin assignments. It's one of the ways we prove that we are the right team for the job with a proven track record of executing and delivering for our customers. As we look at macroeconomic volatility and its impact on the end markets we serve, run and maintain work remains robust. Our call out services, which address urgent customer needs and command the pricing premium with stronger margins, performed as expected this quarter. These services can show some variability as compared to run and maintain work, but they do remain core, a core component of our balanced portfolio. We do note that certain customers have deferred some sustaining maintenance capital investments to future periods, primarily affecting scope and timing of scheduled outages and turnarounds. The result is a shift to the right of some higher margin work and some downsizing of the scope of those services. What has not changed is our market leading position, strong connection with customers and ability to grow wallet share and our overall outlook for 2025. Regarding any indirect, or sorry, regarding any direct impact from tariffs, Accurance operational exposure is expected to be minimal. With local labour as our primary cost input and our relatively low exposure to materials and non-labour expenses, we believe we are largely insulated from direct tariff impact and near-term tariff volatility. We are a relatively safe harbour in an unpredictable yet seemingly calming tariff storm. The critical infrastructure assets we service through North America's energy and industrial sectors will continue to be requiring our expertise to help extend the operational lives well beyond original design parameters. At Accurance, our commitment to a higher level of reliability resonates strongly with customers who depend on us to protect and extend their critical assets life cycles. Through our differentiated service offerings, exceptional customer focus and efficient operating model, we believe we deliver significant value to shareholders. Before turning to our financial results, I want to express my gratitude to our dedicated team members across North America and the UK who consistently deliver exceptional service while maintaining our unwavering commitment to safety. With that overview, I'll now hand the call over to Kristin to discuss our financial performance in greater detail.

Thank you, Tal, and good morning, everyone. Let's take a look at Accurance first quarter results. Revenue came in at $234 million, up from $223 million a year ago. That 5% increase came in ahead of our expectations despite a roughly 200 basis point FX headwind. Organic growth was even stronger at .2% fueled by deeper service line penetration with our recurring customers and continued market share gains. Adjusted growth profit, which excludes depreciation and cost of revenue, was $59 million compared to $64.9 million in the prior year period. The reduction in adjusted growth margin was primarily due to the following factors. The first and largest driver was a high contribution from our run and maintain site work. This revenue type was up over 20% during the quarter. Run and maintain work is sticky and highly recurring in nature and also carried a lower margin profile than the company's overall mix. Second, we experienced a temporary dip in technician utilization due to investments in growth and new customer training requirements to support the addition of new customer sites. And finally, we faced a challenging mix comparison to the prior year first quarter, which had a greater contribution from nonrecurring project work, which carried a higher margin versus our consolidated average. Adjusted EBITDA for the first quarter was $25.9 million compared to $35.5 million in the prior year period. This resulted in an adjusted EBITDA margin of 11% for the quarter compared to .9% in the prior year period. The decrease was driven by the factors addressed earlier regarding adjusted gross profit as well as the previously disclosed increase in public company costs. As Tal noted, based on current exchange rates and macro market conditions, we are reaffirming our outlook for the full year 2025. We continue to expect current year revenue growth to be in the low to mid single digit range. Also, we continue to expect relatively flat adjusted EBITDA year over year. The incremental benefit of our higher revenue is expected to be offset by additional costs to support our public company infrastructure, which we expect to swiftly absorb as we continue to scale beyond this fiscal year. And with that, I will turn the call over to Robbie Franklin, our co-chairman, to walk through today's exciting announcement of the acquisition of NV5.

Thank you, Kristin, and good morning, everyone. We are delighted to announce that we have signed a definitive agreement to combine our business with NV5. Joining us for this announcement are NV5's founder and executive chairman Dickerson Wright, as well as NV5 CEO Ben Haroud, who will walk through some highlights of their business and the vision we share of these two companies coming together. The combination of NV5 and Akron will create an industry leading TIC and engineering platform, offering adjacent services to each of our respective customer bases, unlocking new geographies and markets and customers. Together, we'll be able to provide greater solutions to the full lifecycle of our customers' assets. We are confident that these two businesses will be stronger together than they are apart. We expect accelerated top-line growth, significant operational efficiencies, and a greater services platform on which to build through an expanded total addressable market and M&A pipeline. While we expect to take a near-term increase in leverage through this merger, we are committed to de-levering our balance sheet to sub-3x net leverage in the near future, in line with our stated long-term targets. We believe this transaction will be immediately accretive to Akron shareholders. For NV5 shareholders, our offer represents a substantial premium and allowed shareholder participation in the value creation from this merger in the years to come. I am also excited that Dickerson and Ben will join Akron's board of directors upon closing of the combination. As an overview of the transaction, Akron will acquire NV5 for approximately $23 per share, consisting of $10 per share in cash and $13 per share in Akron Common Equity, representing an enterprise value of approximately $1.7 billion, which is around 10.3 times 2025 consensus adjusted EBITDA, or 9.2 times including our stated synergies. You may find more information on the structure of the transaction and the calculation of the number of Akron shares to be issued at closing in the presentation and press release we have filed. NV5 shareholders will own approximately 40% of the combined business, which based on past results of both companies will have approximately $2 billion of revenue and more than $350 million of adjusted EBITDA, including synergies. I would also note that this is a public company merger and includes a 60-day go-shop period for NV5, as well as required approval by stockholders of both companies. We have received a fully committed financing package from Jefferies, with terms similar to that of our existing credit facility. Assuming that the transaction proceeds as agreed in the definitive agreement, we expect the merger will close in the second half of 2025. We believe NV5 is a great fit for Akron and is consistent with the themes that we target across all of our investments. Most importantly, we believe in the company and the team that Dickerson has assembled. The culture of NV5 aligns well with Akron's and we are excited by the opportunities to better serve our customers through a common shared solutions platform. Leveraging what NV5 does best in technology-enabled engineering highly compliments our testing and inspection services. Together, we believe we can grow faster, generate higher margins and cash flow than either business could achieve on a standalone basis. To give you a summary of NV5, I'd like to hand the call over to Dickerson and Venn.

Thank you, Robbie. This is an exciting day for the NV5 leadership team, our over 4,000 NV5 employees and also our investors. We built NV5 with a unique business model to deliver mandated tech-enabled services to support essential infrastructure conformity through a flat organization that puts our best people in front of our clients. This interface between clients and our industry-leading technical experts has allowed us to develop long-term relationships that provide added value solutions to our clients' challenges. This model has allowed us to deliver increasing organic growth and returns for our investors while creating an entrepreneurial culture and career opportunities for all of our employees. As a provider of consulting services, we have developed a firm that has embedded NV5 into our clients' organizations. Merging with Actorin has expanded our service offerings that we can now deliver to our clients. To tell you a little more about NV5's capabilities and drivers for our services, I'd like to now turn the call over to Ben Harald, the CEO of NV5. Ben?

Thank you, Dickerson. I just wanted to spend a little time providing an overview of NV5 and our services. NV5 supports our clients with integrated solutions to enhance the reliability and performance of assets for the built environment, delivered through three segments, infrastructure, buildings and technology, and geospatial. Infrastructure is our largest segment, supporting utilities, municipal governments and departments of transportation across the US. NV5's engineers and technical experts deliver engineering, testing and inspection services to support the reliability, safety and resilience of infrastructure throughout the asset lifecycle. The condition of the nation's aging infrastructure is driving strong investment in transportation, utility and water assets. Reliable infrastructure is a necessity, and spending on infrastructure safety and reliability is not dependent on economic conditions. Investments in essential infrastructure improvements, particularly on the state and local level, continue to drive opportunities for this important NV5 segment. Buildings and technology is another area of focus for NV5. We deliver design and commissioning services to improve the performance and efficiency throughout the lifecycle of a building. Our buildings and technology services improve the efficiency, safety and overall function of building assets. NV5 employs technologies such as monitoring-based commissioning, digital twins and building information modeling to deliver novel solutions for facility requirements. We focus on high growth, high barrier to entry facilities such as data centers, education, healthcare and aviation. These markets have very specific design and commissioning specifications and are mission critical in nature, driving growth in revenue and margins. Our third segment is geospatial solutions. We support sectors with a high demand for geospatial remote sensing data such as national security, natural resources, water resources and utility transmission, delivering lidar and advanced imagery data analytics to support utility asset and resource management as well as defense applications. The demand for geospatial data and strategic asset and resource management decisions continues to grow, and we continue to build on our leadership position in the geospatial data market. The adoption of geospatial services for utility asset management, shoreline resilience and location of natural resources including rare earth minerals are strong drivers for the demand for our geospatial services. The growth of our geospatial services in these markets is further supported by the recurring and mandated nature of these services, the scalability of tech enabled capabilities and subscription-based nature of our software offerings. These three segments allow NV5 to serve our clients throughout the entire asset lifecycle from cradle to grave. From site selection through design, build and operations, NV5 delivers services that are scalable, efficient, highly accurate and recurring in nature. We're very excited about the new capabilities that Accurant brings to our clients, which will further embed NV5 into our client organizations. For example, in utility infrastructure, NV5 is largely dedicated to supporting the reliability and safety of electrical transmission and distribution, but our capabilities and power generation are limited. Accurant's work in power generation provides an opportunity to support utilities from electrical generation all the way to delivery of electricity to customers. Another area of synergy that we're looking forward to leveraging is our geospatial data capabilities to support asset management in the energy and industrial sector. Remote sensing geospatial technology can support corridor mapping, leak detection and digital twin technology for asset inventory and infrastructure assessments at scale that we believe will benefit Accurant's clients. And with that, I'd like to turn the call back over to Satel.

Thanks Dickerson and Ben for that overview of the NV5 business. We're thrilled to share this combination with our stakeholders. The merger of these two great organizations builds upon our stated vision of building a world class tick company and engineering is a critical component to that strategy. Leveraging the technology enabled solutions in NV5 with our field service platform will create an even better one stop shop for our customers. Through this merger, we will have a robust organization with approximately 11,000 team members across the world opening new customers and markets for both our businesses. As Ben mentioned, we have already identified tangible organic cross-selling opportunities where both businesses can benefit from this combination. To name a few, we can offer integrated NDT and rope access to NV5's infrastructure clients through in-house services as well as NV5's engineering and geospatial capabilities through Accurant's robust Canadian footprint where NV5 is currently not present. These are just a few examples of the exciting and abundant collaborative opportunities that will come and be created by this merger and we're confident there will be more to come. Our companies have long successful histories of being chosen acquirers of businesses. We believe that together the total addressable market and opportunity for inorganic growth is even more robust. We are excited to partner together to continue to be the leaders in these markets to win new customers and expand wallet share within our existing customer basis. Our preliminary assessment has identified meaningful savings opportunities through consolidation of our regional offices and optimization of shared functions across our organizations. We hope and expect to find incremental savings beyond what we have publicly identified. NV5 has been a public company for far longer than we have and aggregating their team and expertise will be invaluable as we continue our journey as a public company. I am excited to partner with Ben to continue to work and build an efficient world class organization. I would like to assure our teammates across North America and the UK that this merger offers greater opportunities to grow our company and that together we will be an even stronger organization. Thank you all to our team and members of our team for your hard work. With that, I would like to open up the call for questions. Operator.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, Balby, poll for questions. The first question is from Chris Moore from CJS Securities. Please go ahead.

Hi, this is actually Lee Jagoda for Chris this morning. Congratulations.

Thanks, Chris. Hey, thanks.

Sorry, it wasn't Chris. Who is it? It's Lee Jagoda for Chris this morning. Okay.

Thank you.

So, I guess as we're thinking about this transaction, this feels a lot like API Group in the early days there. So, I guess with the proposed addition of NV5 into the portfolio, can you talk more about the platform that it creates to pursue M&A in the future?

Well,

I think that

really accurate alone, first of all, we're in a $4 billion NVT market. So, we have an extremely expanded total addressable market now when you look at the size and scale of combining engineering services with inspection, which is our primary platform today. And the other thing is it's really the end markets as well. Accurin is primarily in industrial end markets. And NV5 brings infrastructure as a key growth area and a large, very large total addressable market, adding to that the buildings, civil engineering infrastructure. So, the total addressable market is massive. Both companies have a strong history of integrating tuck-in acquisitions. And I see that continuing. Of course, there'll be some pause as we work to de-lever. But I wouldn't say, in the long term, there'll be other transformational deals similar to API Group.

The only thing I would add, Tal, is if you look historically at the size and multiples paid for these kind of tuck-in acquisitions, it's remarkably similar between the two businesses historically. And both businesses maintain a really robust M&A pipeline that we're going to with that strategy. As you mentioned, it's very similar to the API story.

And then just a quick follow-up. Maybe speak to the geographic and customer overlap between the two businesses. And how should we think about the ability to accelerate organic growth for the combined company as a result of potentially not that much overlap here?

Yeah, I think it's surprising how little customer overlap there is. And that creates opportunities to sell respective company services into our customer base. From a geographic overlap, our primary overlap is in the US. There's very little or no NB5 business in Canada. And Accur and business outside of North America is extremely small. NB5 has created some launch points in several countries around the world with interesting projects that we could certainly

contribute to. Great. I'll hop back in queue.

The next question is from Katherine Thompson from Thompson Research Group. Please go ahead. Hi. Thank you for taking my questions

today. First, kind of two different buckets of types of questions. But just one first for housekeeping. What is or isn't included in the 20 million synergies? And what are the opportunities perhaps not outlined in today's diet that you published for just from a cost and operational standpoint?

All right. Thanks, Katherine. And hi, Katherine. Kristin, do you want to take the 20?

Thanks for the question. So I would just add that our synergy review during the diligence phase was fairly high level and desktop oriented. From a benchmarking perspective, we feel like it's conservative, primarily back office headcount and some real estate. And we'll work through the signed to close period to refine that number.

I assume that there would also be some savings for under just have one public company versus public company savings to.

Absolutely.

Yeah.

OK. As you know, we're still building our public company costs. So it's certainly helpful to have experience from NB5.

Yep. Yep. Absolutely. Then going to the meat of the business, you know, from our view, complementary businesses. I wanted to kind of touch on each of the major segments on the infrastructure support. It's interesting. We were in D.C. last week. And if there is one area of dollars that are resoundingly not going to be cut, it is that of infrastructure. Could you tell us a little bit more about what type of work you do with infrastructure? And also kind of tagging from the earlier question, like what are the opportunities with a combined company?

Sure. I think I'd like Ben to answer that. But I'll just start by indicating that inaccurate infrastructure is clearly a small end market for us. But I have to say over the last two years, we have seen more and more exciting projects where we've deployed rope access and NDT and engineering on the same sites. And the type of projects I'd be referring to would be pipelines suspended under a bridge, doing those assessments and using our platform access solutions and the engineering to redesign, you know, hangar systems to withstand different hurricane or earthquake type environment. So, Ben, do you have some thoughts on Catherine's question?

Yeah, I would agree absolutely with you around the funding. We actually had that question on our earnings call recently, and we're not seeing any concern there around the funding of the projects that we work on. And most of the work that we're doing is on the transportation side of things and the utilities, power delivery, which with an aging infrastructure and a lot of focus on fire hardening or storm hardening and a lot of demand for that work. So we see a very robust pipeline there and haven't had any issues on the funding side of things.

Okay, helpful. Shifting also to, while I have you on the geospatial and the opportunities for complementary services with existing, accurate services, particularly it strikes me with your NDT business. Maybe pull through a little bit on that in crossover.

Yeah, for us on the geospatial side, we're quite excited about that. We're already working on some projects in the oil and gas and pipeline mapping. So we think the asset management sort of support services that we do and also in utilities where our geospatial team has a strong presence will sort of enhance and support some of the services that Akron are doing.

At Akron, we've been, sorry Catherine, at Akron we've been entering the utilities market providing mapping with drones, but our data analysis capabilities are far more limited. So it's an area of small overlap that could be greatly expanded and we have been requested on many occasions to provide a digital twinning of industrial facilities.

Yeah, that's an area that we're very strong in.

Okay, perfect. And then final question from me. Note that data centers is a fast growing segment for MB5. What type of services do you provide and how do you get kind of on the boots on the ground standpoint with the data center build out and the maintenance or the servicing for it on an ongoing basis? Thank you very much and best of luck.

The data centers is an exciting part of our business. We've been rapidly expanding the services that we provide through the data centers. We started out with design and commissioning of the systems within the buildings, but we've been rapidly bringing in the other services. Most of that work was actually on our international operations, but over the last 18 months we've been almost matching the revenue here in the US as we're sort of working with most of the large

hyperscalers. Thank you. This is Dick Wright. Maybe I was just listening very carefully and I'd like to maybe give some specific example how I see the overlapping of the companies. Our infrastructure business, the MB5 side, is about $500 million and it's all on mandated services. It's all on everything that delivers systems and improves. As our population grows, the demand is finite on water supply, sewage, delivery systems, roads, bridges, all of the things that are... Our biggest driver of this is the population growth. As far as how geospatial can really... Geospatial, and I'll talk about the data centers too, but how geospatial can really help, I feel, this intersection between what Actron is doing. We can oversee and fly over bridges that need repair. Sometimes we can do maybe 30 bridges in a very period of time and actually isolate what is needed as far as welding, as far as lamentation. We can do this, map out that facility and then drive that work into the traditional NDE services that Actron delivers. On the data center work, what really is the driver and why we are international with that is really the grid, the aging grid. In the US, the grid is driven by public utilities and they have demands for other things. For example, there's moratoriums on some of the data center work in hot climates like Arizona where they would rather give to their clients air conditioning rather than energy for the data centers. Internationally, the grid is not as reliable. All of what we call the fintech fang clients that we have are building their own power sources. Because of that, we will be involved in every aspect of the data center work from the actual cooling of the data center. We'll do inspection work to the final commissioning project. On many things, we act as the project manager on these, but that is driven also by not reliable grid. There's a tremendous growth internationally in places that require this energy for data centers, but the grid, the public grid cannot supply that. We have been very embedded with our clients on these sort of things. That is where we see a tremendous opportunity of introduction for Actron to a client base that maybe they have not been exposed to. We always look for barrier sentries. What can we deliver to a client that they may need? For the example, we wouldn't approach it where we subcontract NDE services, we would be using Actron. We would approach the client from solving their problem. For example, a bridge lamentation, we wouldn't just manage the welds. We would tell them on every bridge geospatially what needs to be done or what we see on the defects and that would follow up with the follow-up NDE work. Just the last thing, on public utilities in the states, huge transformer lines that we fly over geospatially and we can tell actually each transmission line what there is metal fatigue, what problems they have, and that would lead to the repair work and that would lead for inspection of that work by Actron. We are really excited about the opportunities of how Actron could fit all three main segments of our business.

That is very helpful. I guess succinctly, this is just yet another backdoor way to play the reindustrialization and support of infrastructure in the US.

All right, thanks very much. Absolutely.

The next question is from Andy Whitman from Baird. Please go ahead.

Great, thanks for taking my questions. Good morning, everyone. I think my first question is probably for Robbie. The question is, thinking about the way you've underwritten NV5 here, just kind of curious if you could talk about the kinds of organic growth that you believe that this company can present for you guys over the coming few years. There have been some investor debate about what the right EBITDA margin is on NV5. I'd be kind of curious as to how you thought about that and how that contributed to the IRR that you're expecting here. We obviously see the deal multiple. It's obviously a point in time. Obviously, as you go and integrate these businesses, that multiple is going to become something probably very different. Just kind of want to understand your underwriting process and the IRRs that you're thinking about with this investment.

Absolutely. Look, I think what's so exciting for us is really the commercial opportunities that exist here. The top line cross-selling synergy is incredibly meaningful and very difficult to quantify. When I think about how the long-term growth algorithm will sort of play out, this is going to be a high single-digit top line grower over the long term. What we found when we were diligent, saying accurate in the beginning, was it's a very efficiently run business. You have a corporate function that really supports leadership at the managing profitability by technician at the branch level. I think there's a series of cost disciplines that we can really share with the NV5 team. The strategy here is not to disrupt what's working. It's to share best practices, make sure we field the best team from both businesses to really optimize the performance of both. Over the long term, I expect that once this deal is put together, we'll do an investor day similar to what we did with API and put out the growth algorithm and long-term targets to manage people. There's no reason that these two businesses can achieve EBITDA margins on a combined basis of an excess of 20%. That really for us is very, very exciting. It's going to be a lot of work to get there, but there's no question that these capital-efficient businesses with limited capex will generate a lot of free cash flow for us to reinvest in the businesses. Frankly, the areas of high margin between the two companies are the areas where we intend to deploy capital and grow.

Got it. That's a helpful perspective. Thank you for that. Just for my follow-up, I guess for Kristin, if you could just help us understand the quarter a little bit better by maybe quantifying the -over-year delta from the company costs that you incurred in the quarter. That seems like the one kind of discrete item that's identifiable. Obviously, the other areas that you talked about for the profit margins are harder, the tough comp and some of these other things that get a little squishier. I think the public company costs should be identifiable. I thought maybe you could help quantify that so we can help understand what happened in the March quarter versus last year as well.

Sure. Thank you. I would say last quarter, we guided to 12 to 15 million of total public company costs for the full year. I would say we're on track for that.

That was going to ramp through the year. I guess that's kind of the genesis of my question. How much was it actually in one queue?

About two million.

Okay. Thank you.

Just on that point, I think it's important just to emphasize we're leveraging a lot of temporary employees and third-party consultants, which obviously carry a higher cost with it. Through this merger, we're going to have the opportunity to leverage what MV5 has built and done very well for a number of years. There's going to be a lot of efficiencies, especially on the public company cost side.

Okay. Great. Thanks.

The next question is from Jeff Martin from Ross Capital Partners. Please go ahead.

Good morning, everyone. Great to talk with you this morning. I guess I'll start with the revenue synergies. Which side of the equation, Accu and or MV5, are more excited about the central revenue synergies? I think you've touched on each segment where you see those coming, but maybe sort rank which are going to be the most impactful over, say, the first 12 to 18 months.

I think there are many, and both companies are excited about offering the other companies service capabilities to existing customers. That's sort of the most obvious place to start, is that Accu and can immediately offer the services of MV5 and vice versa. I think there is a lot of excitement in penetration of new end markets. That's a real focal area. If you look at Accu and being largely in the industrial space, servicing chemical plants, pulp and paper, refineries, oil sands, facilities, this type of customer is fairly absent from MV5's list. The engineering expertise and depth and service offering for them to expand is compelling. On the reverse approach, Accu and is not deep at all in building and in the infrastructure space. I think between those two, infrastructure has the most parallels and is the most exciting market for us to provide services to. As per Catherine's question, the infrastructure market has so many similarities to the industrial markets we serve, and it's all around the theme of aging assets. In the markets we serve, we've become experts at supporting, even on our engineering side, life assessment studies, finite element analysis on failure. All of the services we provide to aging infrastructure are parallels from a materials expertise in infrastructure, but yet bringing some of the civil engineering expertise in that market is compelling. If I had to force rank these, I think cross-selling services to existing customers both ways is very material. And penetrating new end markets, we've just seen at Accu in a lot of opportunities in mining as an example of a new end market. It's an area that we hadn't previously penetrated, and so to have infrastructure as a new end market to chase, we find very exciting. I don't know Ben, if something rose to the top of your list, but those seem most obvious to me. Yeah,

and hey Jeff, I think the geographical expansion would be the other one. I agree with everything else you said, Tal, and then probably Dick touched on it quite well, but our technology enabled services, Dick mentioned the bridge delamination and our ability to fly 40 bridges in a day versus the traditional way of chain dragging and doing one in three days. I think bringing that technology enabled service to AccuRANCE clients and service is a really exciting opportunity as well with our geospatial capabilities both around the data capture, but probably more importantly the data analytics, which is where we really shine. So that's a very scalable service and something that we're really looking forward to bringing to AccuRANCE clients.

Jeff, if I could just expand on what Ben just said, just envision NV5 flying a drone or aircraft and identifying a number of areas of concern on 35 bridges. AccuRANCE can now follow up and install an engineered platform to save the customer a lot of money on scaffolding. We can go in and do a detailed assessment of the condition. We could provide a weld procedure or re-engineer a component or corrosion that needs to be mitigated and we can execute that inspection and repair and post repair inspection all in-house with one capability and neither NV5 or AccuRANCE had that capability before.

Yeah, I think that really aligns with the message we've been giving around pushing our service long into the life cycle of any asset that we work on. We don't just want to be doing one-off design projects. So having a long-term relationship with these assets and the recurring revenue from it is what we're looking to drive and this really aligns with that.

Great. And then in terms of the regulatory approval here, I can't imagine that there's much risk of this getting bogged down by regulatory approval. Maybe you could comment on that. No, we have no reason to. Yeah, go ahead, Rob.

Sorry. It's all sort of the customary approvals that need to happen but there's no real regulatory risk here.

That's what I would have thought. And then finally on the revenue synergy, maybe talk to us about the timeline of realizing those and maybe which is what is the pecking order of you know of going after those cost energies.

Thank you. Well, I think it's hard to be

precise. There are so many opportunities. I think day one we would be educating our salespeople on how to sell other services so that we can, you know, you don't need an office in Canada to offer NV5 solutions. We can immediately provide those to our customers. But there'll be some ramping over many years to integrate these businesses and fully realize the potential. But I think in the first six months we'll see a material amount of cross-selling opportunities.

And on the cost side, these are things that we've identified sort of in the first 24 months that we'll strive to achieve. And frankly, this is really just the start. As we collaborate with the NV5 team, we're going to find areas where we're going to move quickly, areas where we're going to take a little slightly longer time. But I think there are certainly more to come here and it's going to be a collaborative effort between our organizations on the best way to

optimize. Yeah, we actually sub out some of the work that Acturon does to others. So some of these things could be quite immediate.

There's a little bit the other way as well. We've subbed out data analysis on laser scans to other companies. So this is a deep expertise of NV5.

It appears like a great fit. Congratulations.

Thank

you.

The next question is from Rob Brown from Lake Street Capital Markets. Please go ahead.

Good morning. Thanks for taking my question. Just want to expand a little bit further on the M&A strategy going forward. How does this change from both companies have had M&A strategies, but with a combined business, how does your M&A strategy change? And are there sort of new companies you can look at given the combination now?

Yeah, look, I don't think anything is going to change materially. And we're going to align strategically on where we want to deploy capital. And there's no change today in thinking from what the companies have done historically. So we're going to sort of leverage what we've done well for many years in both businesses and build from there.

Rob, this is Dick. Maybe I could just add from the NV5 and why we're so excited about this. As you know, we've been saying there's 144,000 engineering firms in North America. We're just scratching the surface. And you can imagine as each of these smaller firms, they range in size from as big as international companies, they're very small sole practitioners. But as we incorporate these services, we will add the testing and inspection services that perhaps they haven't been adding. And one of those key services will also be non-destructive testing and things that Akron adds. So we look at a phenomenal opportunity to address just the addressable market in North America of 144,000 firms. And you can imagine how this could be internationally. And so we really see a phenomenal opportunity to introduce our services and introduce Akron to these services for the testing and inspection work. And our approach would be to these engineering

firms in that regard. Okay, great. Thank you. Congratulations. It looks like a great combination. Thank you.

The next question is from Josh Chan from UBS. Please go ahead.

Hi, good morning. This is Karan Singhani, I'm Josh. Thanks for taking our questions. So I just wanted to double-click on the quota itself. Just like with the organic growth being so strong at San Jose and more than our expectations, I was wondering if you can break down the different components of that growth, like how much was from pricing, new sites, cross-selling, and similarly, did you see any impact from the exit of the lower-model projects or sites?

Sure, I'll take that. In the first quarter, our revenue growth was largely from run and maintain sites. Compared to the same quarter last year, we had one, two run and maintain sites. And we also had a significant increase in rope access services at a major site. That site was using six or eight different rope access companies, and they consolidated to one vendor with Hacurin. So between additional run and maintain sites, the rope access growth, we had slightly better average growth in our engineering group as well. That drove

the top-line growth. Got it. That's helpful.

And maybe just as my follow-up on tariff impacts, can you maybe speak about the kind of conversations you're having with customers right now? Are you seeing any kind of impact, maybe secondary impacts with customers just like being cautious with their budgets, and specifically to the oil and gas customers, given that oil price has been subdued in the last few weeks and months? Right,

sure. A couple things. First, I want to make it clear that refineries don't profit from oil price. They profit from crack spread. Crack spread has been relatively stable, but despite that, whether it was stable or not, they have aging assets and require inspection. So focusing specifically on tariffs, as first I want to say, the direct impact to Hacurin is very minimal. Our supplies and equipment purchases are less than 10 percent of our revenue, and so any impacts from greater costs, we certainly have some, but they're small in their impact on our company. But the indirect impacts are real. Our customers all have different products they sell and different things they purchase to run their facilities. And where we've seen in our conversations, where we've seen the biggest impact, is that you all hear about run and inspection, or we do a lot of inspection to get a chance to go inside vessels, tanks, and boilers and do more detailed inspection. But also during an outage, they schedule to upgrade equipment, what we call sustaining capital. So they may have an 18-month plan to replace a vessel that's worn out. And I think that's where we've seen a bit of a pause. I think these facilities are probably reluctant to order steel in this environment, and so they are delaying some of the sustaining capital work, and that's manifested itself as shorter and smaller outages. That's what we're seeing. But again, I want to emphasize that outages are 10% of our revenue. And so we see some shifting and some reduction, and I think it's largely around cautionary spending on their side in the camp of sustaining capital. Some customers, like chemical plants, they may have impact on their input costs, and so they could be squeezing here and there, but it really the recurring nature and importance of our work, it's 1% of their spend. We don't see a lot of impact on the run and maintain activity.

Right. Yeah, absolutely. Thanks so much. All right. Thank you.

The next question is from Kate Sullivan from Maxim Group. Please go ahead.

Hi. Thank you. Congratulations all. Ben, you had good comments about the geospatial, bringing your geospatial capabilities to the industrial market, specifically refining and chemical plants. I think how early is it for US refineries and chemical plants to start to use geospatial technology or have most of them already, please?

Yeah, we've been seeing demand in that area, and we actually do have some clients in that sector, but I think being able to leverage Accurance clients and bring that in, and as Tel already said, they're subbing out some of that work, so that opportunity's immediate.

Does NV5 have sensor technology capabilities already, or outsource that, or is that what Accurance is bringing to the table, or how would that integrate with what you already do

on the geospatial? No, we have the sensor capabilities. We have very strong sensor capture capabilities. We have all that technology in-house and the ability to do the analytics on the data that we capture, which is where we have a very strong

capability. Thank

you. This concludes the question and answer session. I would like to turn the floor back over to Tal Paisi, CEO for COLA's closing comments.

All right. Well, it's been an exciting day for us. Thank you for everyone joining our call today. We certainly appreciate your support and we look forward to updating you on our progress next quarter. Thanks. Goodbye.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.