NV5 Global, Inc.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss NV5's financial results for the fourth quarter and full year, ended January 2nd, 2021. Joining us today are Dickerson Reitz, Chairman and CEO of NV5, Edward Cardaspody, CFO of NV5, and Richard Tom, Executive Vice President and General Counsel at NV5. I would now like to turn the call over to Richard Tom.

Thank you, Operator. Welcome everyone to NV5's fourth quarter and full year 2020 earnings call. Consistent with social distancing, speakers today are connected from different locations. So thank you for your patience regarding any latency that we may encounter when we answer questions. Before we proceed, I would like to remind everyone that today's discussions contain 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 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 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 fourth quarter 2020 comparisons are being made against the fourth quarter of 2019, and any references to full year 2020 comparisons are being made to full year 2019. In this presentation, NV5 has included certain non-GAAP financial measures as outlined in Regulation G promulgated under the Securities Exchange Act of 1934 as amended. The non-GAAP financial measures included in this presentation are adjusted earnings per share, adjusted EBITDA, and adjusted EBITDA margin. NV5 provides non-GAAP financial measures to supplement GAAP measures as they provide additional insight into NV5's financial results. However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation and are not in accordance or a substitute for GAAP. In addition, other companies may define non-GAAP measures differently, which limits the ability of investors to compare non-GAAP measures of NV5 to those used by peer companies. A webcast replay of this call and its accompanying presentation are also available via the link provided in today's news release on the Investors section of the company's website. We will begin the call with comments from Dickerson Wright, Chairman and CEO of NV5, before turning the call over to Edward Kodaspody, Chief Financial Officer, for a review of the fourth quarter and full year 2020 results. Dickerson Wright will then provide closing comments before we open the calls for your questions. Dickerson, please go ahead.

Thank you, Richard, and thank you to everyone joining us for NV5's fourth quarter and full year 2020 conference call. We are pleased to announce our positive results for the fourth quarter and for the full year 2020. We released a deck illustrating our overall results for this call. So I will start on slide five with the year in review. We delivered a strong performance in 2020 with a 30% growth in gross revenues, 52% growth in adjusted EBITDA, and a 16% adjusted EBITDA margin. On gross revenues generated by NV5 employees, the percentage is 22%. We improved cash flow throughout the year, generating a 141% increase in cash flows from the operations in 2020 versus 2019. We measure cash on a daily basis, which has recently ranged between $65 million to $82 million, and is readily available for corporate use. This strong cash position is more impressive when you consider that we acquired MediaTek, an international technology and engineering design firm, through the operating cash flows and reduced our debt by $52 million in 2020. This debt reduction has resulted in a net leverage of 2.4 times at the end of 2020 compared to 3.2 times at the end of 2019. We also had a successful 2020 growth in EBITDA. This is noteworthy considering the unusual market conditions due to the pandemic. The unanticipated impact of COVID has affected all aspects of the economy. NV5 has been insulated, being an essential service provider, which has limited the impact on our business. We've always managed a scalable business that limits fixed costs. Our organization's ability to adapt, led by our employees, is the key reason for our success this year. Employees strictly followed the COVID health and safety practices as recommended by the Centers for Disease Control and Prevention across the entire organization and in remote locations. We also grew our virtual tools to continue delivering services to our clients remotely. You may have heard me say that the greatest challenge of the COVID environment is maintaining communication with clients and prospects. Our employees develop the creative approaches to foster these relationships. We also use our virtual environment to increase resource sharing across offices. As a result of this coordinated effort, We maintained our forecast of $105 million in just EBITDA, which was projected at the beginning of 2020, resulting in a 52% increase over the full year of 2019. On slide six, I will describe some of the highlights of the fourth quarter. In Q4, we delivered $160 million in gross revenues, which is a 22% increase compared to the fourth quarter of 2019. I think it is important to point out that Q4 2020 also had two less billable days than the fourth quarter of 2019. We also increased profitability in Q4 2020 with a 28% increase in adjusted EPS, 37% adjusted EBITDA growth, and a 29% increase in cash flows from operations compared to the fourth quarter of 2019. In our operations, we continue to drive growth in our utility services vertical. supporting continued investments improving the aging electrical grid. Our LNG business supported the utility services vertical with a good quarter. NV5 continues to support domestic utilities and reliable power delivery and fire mitigation services. Geospatial services continued its strong performance. Our real estate transaction service, which is part of our environmental vertical, was impacted significantly by COVID. But we are pleased to see this business rebound in quarter four. We anticipate year-over-year improvement in 2021 for this business. In our infrastructure business, we continue to see a strong performance in the West. New York City is resuming contracts that were delayed since March due to COVID, and the North Carolina Department of Transportation has increased funding, which are two positive developments for our infrastructure business entering into 2021. We are heading into 2021 with good momentum. Our backlog is strong going into the year, and we believe our margin improvements is sustainable. We maintain a strong cash position to fund acquisitions and reduce debt. We see further opportunities ahead with the new administration expected to increase investments in clean energy, energy efficiency, and sustainable infrastructure that present opportunities for NV5. We expect the reopening of the economy to positively impact our business. We're already seeing benefits of a reopening economy in New York City where engineering design work has restarted and the North Carolina Department of Transportation's increased funding. Finally, we have a healthy acquisition pipeline with over 30 acquisition pursuits at various stages. Please turn to slide seven for a review of our 2020 cross-selling results and a look at some of the key contracts we have secured so far in 2021. Our cross-selling has benefits to NV5 in a twofold way. It increases our profitability by performing work within the company, but it also serves to strengthen the integration of our offices and acquisitions. Cross-selling has become a part of NV5's corporate culture, and our employees are continually finding new ways to add value for our clients and become more embedded in our clients' organizations. We had an excellent cross-selling year in 2020, delivering almost $33 million in cross-sales which was 26% ahead of our target for the year and 41% higher than the cross-sell total for 2019. We expect to see continued growth in our cross-selling program in 2021, particularly between the core business and our geospatial business. As we looked at 2021, we began the year with a strong backlog and we have secured some significant wins in 2021. We were selected for a $100 million contract with the utility in the West to support power grid modernization and improve service reliability and safety. This is the largest single award for our utility services group, and the contract includes services from all six of our verticals, validating the benefit of our comprehensive service offerings for utilities. In California, NV5 was awarded a $15 million civil program management and engineering design contract to support transportation and water infrastructure improvements by California's municipal government. We were selected by Utility in the East for a $7 million geospatial vegetation and asset management award. The award is part of a multi-year sole source geospatial vegetation management contract with this prominent utility client. NPFI was also awarded a $5 million contract by Southeast State Department of transportation to provide geotechnical engineering, materials testing, and inspection along one of the state's toll roads. Our municipal client base has been strengthened by the resurgence of the residential housing market and associated building permit applications. Please now turn to slide eight, where I will provide you with some details about our latest acquisitions. Our acquisition strategy focused on strengthening our verticals to provide greater value to our clients and expanding our capabilities in technologies that deliver higher margin and have significant barriers of entrée. Let's discuss two of our recent acquisitions. First, Industrial Design Associates International is an example of a technology-based acquisition. IDA delivers commissioning services to the high-growth, high-margin data center in technology markets. The large volume of electricity and data used at these facilities requires more specialized, higher-margin commissioning then would be required for a typical building or a facility. In addition, IDA also offers subscription-based energy efficiency services that monitor energy use in real time using sensors placed throughout the facility to alert the building owner or property manager of a problem. These services complement NV5's existing energy efficiency services that are also delivered on a subscription basis. Our most recent acquisition is Terratech Engineers. a geotechnical engineering, environmental consulting, and materials testing company serving the public and private sectors in North Carolina, South Carolina, and Georgia. We expanded our presence in the Southeast infrastructure and environmental markets in 2018 with the acquisition of Calix. We've been looking to strengthen our testing, inspection, and consulting capabilities and expand our existing environmental health science offerings in the region to complement our infrastructure capabilities. Terratech has been working with NV5 for many years on projects for the North Carolina Department of Transportation and other clients. Terratech's strong management team, the quality of their work, and their longstanding client relationships make it a good fit to strengthen our verticals in the Southeast market. And we're excited to add to them the NV5 organization. We anticipate Terratech also supporting our Northeast infrastructure and design operations. We're actively pursuing additional acquisitions for 2021, and the M&A pipeline is strong. Our intention is to complete additional acquisitions this year, and we have a number of targets that we are currently pursuing. Let's go to slide nine. The new federal administration has been proactive in environmental protection and sustainability with new executive orders targeting greenhouse gases, infrastructure, and permitting water conservation and protection of public lands. These executive orders demonstrate the growing importance of sustainable infrastructure, clean energy, and environmental concerns at the federal, state, and local level. This presents an opportunity for Envy 5, which has a well-established service portfolio to help our clients achieve a sustainable future. Sustainable infrastructure has been a growing requirement in infrastructure for many years. And NV5 has been at the forefront of this field with employees serving as board members on Harvard University's program for sustainable infrastructure for the last 10 years. NV5 has worked on over 300 sustainable projects as designers, program managers, inspectors, and consultants. And that number will continue to grow as the focus on minimizing impacts and improving resiliency grow. Energy efficiency and clean energy are fields that we expect to see additional investments in the upcoming years. Our growing energy efficiency service helps both private and public sector clients identify energy inefficiencies in real time through monitoring-based commissioning on a subscription basis. There are currently $3.6 billion in utility rebates and incentives across the country to fund these energy efficiency programs. As the country continues to migrate to clean energy sources, reliability will continue to be important. As we saw in Texas a couple of weeks ago, all of us depend on the reliable delivery of electricity and natural gas. Renewable power generation, battery storage, and reliable transmissions and delivery of electrical power are expected to be drivers of our power delivery and energy compliance groups. We also expect LNG to continue to grow as a bridge to renewables and feed our LNG services that help utilities store gas for times of peak demand. We also expect a focus on natural resources, water resources, and sea level rise, which are all drivers of geospatial service. Many of our federal, state, and local governments' geospatial clients, such as NOAA, the Department of Interior, NASA, and the USGS depend on NV5 for mapping of forestry, water resources, floodplains, wetland delineation, and coastal nearshore areas for sea level rise. Please turn to slide 10. Environmental sustainability is a key component of all six of our verticals, with service office in each vertical to support our clients' sustainability goals. The current administration has placed an emphasis on environmental issues, and the marketplace has driven a push towards sustainable infrastructure, energy efficiency and renewables, and protection of water and natural resources. To address these issues, NV5 has been positioned to address the market demand for green solutions through investments in technology-based solutions such as geospatial surveying and monitoring-based commissioning, as well as providing a sustainable design, renewable and low-impact building materials and systems, and a reliable generation and delivery of renewable energy. At the bottom of slide 10, you'll see some examples of recently completed ongoing projects in each of the sustainable fields that we support. For the sake of time, I won't go through each of these project examples, but please reach out to us if you would like some more information about sustainable projects we have performed. I will now hand the presentation over to our CFO, Ed Godaspodi, to provide an overview of our Q4 and full-year 2020 performance. Ed?