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spk09: Good afternoon, everyone, and thank you for participating in today's conference call to discuss NB5 financial results for the second quarter 2022, ended July 2nd, 2022. Joining us today are Dickerson Wright, Chairman and CEO of NB5, Edward Kadastati, CFO of NB5, and Richard Tong, Executive Vice President and General Counsel at NB5. I would now like to turn the call over to Richard Tong.
spk03: Thank you, operator. Welcome, everyone, to NV5's second quarter 2022 earnings call. Before we proceed, I would like to remind everyone that today's discussions 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 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 second quarter 2022 comparisons are being made against the second quarter of 2021. In this presentation, NV5 has included certain non-GAAP financial measures as defined in Regulation G promulgated under the Securities and Exchange Act of 1934 as amended. The non-GAAP financial measures included in this presentation are adjusted earnings per share and adjusted EBITDA. 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 NB5 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, and on the Investors section of the company's website. You may also find today's presentation, which will be referenced during this call, 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 second quarter 2022 results. Dickerson Wright will then provide closing comments before we open the call for your questions. Dickerson, please go ahead.
spk11: Thank you, Richard, and thank you to everyone for joining us on today's call. Hopefully, you all have gone to our investor website to view the NV5 second quarter investor deck.
spk12: If so, let's turn to slide five to discuss our second quarter 2022 results. We achieved double-digit
spk11: Q2 growth in gross revenue, net income, adjusted EBITDA, and earnings per share. We actually delivered $203 million in gross revenues, which is a 13% increase over Q2 21, and $38 million in adjusted EBITDA for the quarter, which is a 10% increase over the second quarter of 2021. Adjusted earnings per share grew 11% versus Q2 2021 to $1.49 per share for the quarter. The record results were once again driven across all verticals. Throughout the quarter, we secured multiple significant contracts, and we enter the second half of 2022 with a strong backlog of $685 million, which is a 14% increase over the same quarter in 2021. This will support our organic growth throughout the balance of the year and well into 2023. On the mergers and acquisition front, if you look to the right side of the page, we acquired G01 in the second quarter, strengthening our electrical utility geospatial leadership position. G01 was founded in 2004 and has a long-term relationship with key Southern California utilities. We continue to pursue a strong pipeline of M&A activity and opportunities, and we currently have multiple potential acquisitions in due diligence. Let's now turn to page six, where we'll discuss the economic resilience of NV5 and why we are sheltered from economic downturns. The services that NV5 provides are non-discretionary. Safe and reliable delivery of energy, safe transportation, and clean water are essential in good or bad economic times. As we know, infrastructure and the electrical grid in the US are inadequate to support the growing population demands, and maintenance and improvements to the grid must continue. These are not just our words. As you see in the quotes below from the S&P Global, the Department of Energy, the California Public Utilities Commission, and the American Society of Civil Engineers, the drivers of our business remain strong. We are a fiscally conservative company, and our preferred capital structure is to maintain a strong cash position with minimal leverage. In addition, the majority of all of our acquisitions are funded out of operating cash flow. The structure of our business gives us a competitive advantage. low fixed costs and support service efficiencies make our business easily scalable. Our cash position minimizes our dependence on debt, which is also a competitive advantage as interest rates rise. Our international operations allow us access to engineers and technical experts that give strong offshoring support as the labor market tightens in North America. Going to page seven, We have highlighted some of our growth areas in our six verticals to demonstrate our growth in the first half of this year, 2022, versus the same period in 2021. The growth of our business is derived primarily by taking market share. In the infrastructure and tick business, our quality construction assurance business, we have driven growth in the east and the west Our utility services continue its expansion into new geographic areas, new clients, and broadening our service offering, as well as growing the relationship with existing clients. Sustainability and clean energy is a rapidly growing part of our buildings business, and our mechanical electrical plumbing and technology design is continuing to rebound. Our subscription-based energy efficiency and international operations are performing very well in 2022, and we continue to leverage our access to international talent to support our U.S. operations. We achieved 83% growth in environmental health services, driven by our real estate transaction business growing and its demand for environmental compliance. In geospatial, we continue double-digit organic growth across the vertical, and acceleration of the offshore wind farm growth initiative, which we anticipate to increase revenue. On page 8, I would like to highlight a few key wins in the quarter and touch on our backlog growth. Our LNG, or liquefied natural gas, business for utilities continues to secure large projects, including the $39 million liquefaction project for a Midwest utility. We secured $8 million in large federal and state geospatial contracts. And in California, we awarded two large contracts by the City of Oceanside and Caltrans for water transportation and infrastructure projects. As I mentioned before, our backlog to begin the third quarter was $685 million, which is a 14% increase over our backlog for the same time a year ago. On page 9, I will discuss our latest acquisition, G01, which expands our national electrical utility geospatial leadership position. G01 specializes in the electrical utility market and delivers innovative LiDAR imagery and advanced data analytics. The acquisition complements our existing offerings in utility asset inspection, vegetation encroachment, and wildfire mitigation, and GEO-1 provides us with access to a key utility in the West that will provide growth opportunities within both our geospatial and core businesses. We will now transition the presentation to our CFO, Ed Kodaspody, to provide an overview of our second quarter performance. Ed, please go ahead.
spk06: Thank you, Dickerson, and good afternoon, everyone. If you would please turn to slide 11 of the presentation, I'll review our second quarter financial results. We had double digit growth across the board as our gross revenues for the second quarter of 2022 increased 13% to $202.7 million compared to $179.5 million in the same period last year. Net income increased 27% to $17.3 million in the second quarter of 2022, compared to $13.6 million in the second quarter of 2021. Our adjusted EBITDA increased 10% to $37.8 million in the second quarter of 2022 from $34.2 million in the same period last year. Our gap earnings per share increased to $1.13 per share in the second quarter of 2022 from $0.91 per share in the second quarter of last year. This was a 24% increase. And our adjusted earnings per share increased to $1.49 per share in the second quarter of 2022 from $1.34 per share in the 2021 second quarter, an 11% increase. On slide 12, you can see we continue to be well positioned to execute our business model. We paid down $35 million in debt under our credit facility during the second quarter and ended the quarter with $44 million of cash on hand, minimal leverage of 0.4 times, and over $336 million in capacity under our credit facility. This puts us in a very good position to drive growth since we are able to fund our typical sized M&A deals and growth initiatives out of our cash from operations while still maintaining a robust balance sheet. All this while being well positioned to protect our margins. As a result, we remain very excited about the future of NV5. I'll now turn it back over to Dickerson for some closing comments.
spk11: Thank you, Ed. Let's turn to slide 14. As you can see, NV5 has now delivered a record first half in terms of growth and profitability. We also believe that our strong performance will continue in the second half of the year. Infrastructure spending and utility investments continue to be strong. and our momentum and geospatial growth continues across the vertical. Our merger and acquisition activity pipeline continues to deliver opportunities, and we enter the second half of the year with a record backlog. In terms of the macroeconomic uncertainty, the mandated nature of our service offerings, sustainable drivers of our business, and our strong balance sheet provides NB5 with an economic safety net to perform well during any macroeconomic downturn. As a result of our strong performance in the first half of 2022, we are increasing our guidance for the full year 2022 in gross revenues, which were previously $785 million to $810 million to now $795 million to $815 million. And we'll also increase guidance for the full year 2022 in adjusted earnings per share, which were previously $5.39 to $5.80 per share, which will now be $5.43 to $5.82 per share. Thank you.
spk09: At this time, I would like to remind everyone, if you would like to ask a question, please press star followed by the number one on your telephone keypad. And our first question will come from Andy Whitman with Baird. Please proceed.
spk05: Great. Good afternoon, gentlemen. Thank you for taking my questions. I just wanted to get a little bit more detail here on some of the numbers. And I was hoping you could help us understand the organic growth rate in the quarter, maybe by telling us how much revenue is going to be disclosed in the 10Q as coming from companies acquired in the last 12 months. I would also like to understand a little bit more about how the change in the revenue guidance was affected by the acquisitions you've announced since the last quarter. In other words, how much revenue from any of those new acquisitions were additive to the updated guidance?
spk06: Sure. Hi, Andy. So with respect to organic growth, that disclosure in the Q doesn't do a 12-month look back like it does in the K, which is the full year, but it to understand the organic growth, essentially, for the six-month period, it was about an 8% organic growth if you were to exclude the benefits we received from anything acquired during the last 12 months. And with respect to the guidance, we raised the guidance, as you noted, the amount of incremental revenue incorporated into that raise was really about, say, $2.5 million or so, very immaterial. The only acquisition we had this quarter was, or this year, was GEO 1. The two smaller ones towards the beginning of the year were really not material. They were more strategic in nature. And so when you consider that that GEO acquisition came in in June and its relative size, just assume about $2.5 million or so was incorporated into the revenue raise.
spk05: Thanks for that. And then, Dick, for you, I guess I would like an update on your cross-selling initiatives from your acquisitions. You're always really good about setting a target and then kind of updating us against that target. So I was hoping you could give us an update there so we can see how much that's contributing to your organic growth.
spk11: Yeah, good question, Andy. cross-selling is really twofold. I always look at the main purpose of being inclusive for all of the acquisitions and showing that by joining NB5, they're part of a platform that can really help you. So we do monitor it. So far this year, we're at 15.8 million in cross-selling for 2022. And our overall goal is 35. 34 million, 34.3 million for the entire year. So we look, we're looking for a stronger half of next year. So in doing the math, if we're giving guidance for over 800 million, uh, we are looking for, uh, the cross selling portion of that. And all of that cross selling will be with, uh, with, with companies that primarily have joined us at the beginning of the year. We haven't figured in what the cross-selling would be from those that are joining us later. But so most of that cross-selling is from internal and would all contribute to organic growth. Great.
spk05: And then just one final question, Dick, for you. The labor market for professional services is relatively tight. I wanted to get your sense of how NV5 is doing against that labor market. and if it is limiting your ability to grow at all.
spk11: Well, you ask the same questions that I ask myself all the time, so very good, Andy. I think if you listen to what Ed said closely, we did two of the very small, not G01, but two of the very smaller acquisitions we did were just really key hires to support some of our needs that we had in the area. One key was mechanical and electrical need. The other was for a need in our transportation area. And those were hires that we needed to fill slots that were open. And we felt by doing those through acquisition of their small, very small practices, they were for strategic and hiring. But it's always a challenge. I have on, if you ever visit my office, you'll see right on the wall, I always measure attrition And we are under the industry standard for public companies, but it's still always a challenge, and it's always a need that we're looking for. We have, though, recently been strengthening our offshore capabilities where we're getting a lot of support for billable positions are being offshored and supported from our Middle East and Asian operations. So, you know, that has helped. But attrition is still a challenge, and we just need to do that better than our competition, just like we want to perform better than our competition.
spk09: Thanks a lot. Your next question comes from the line of Chris Moore with CJS Securities. Please proceed.
spk10: Hey, good afternoon, guys. Thanks for taking a couple questions. Hi, Chris. Hi. Over the last few quarters, you've talked about the opportunity for NV5 to work with utilities as they bury the power lines underground. I was just hoping maybe we could dig into that a little bit deeper. It looks like California utilities are the driver. Can you kind of talk about where utilities are in the process? When's a reasonable expectation that NV5 could start generating energy? meaningful revenue from that kind of work? Well, yes.
spk11: It is front and center for utilities to, for fire mitigation, to put transformer, electrical transition lines underground. Pacific Gas and Electric has the biggest initiative. We have a special NV5 initiative to really generate work from that. We have not seen much from that. Most of our work is coming now from Sandio Gas and Electric. I shouldn't say, but Sandio Gas and Electric, a southern utility. And if you look closely at the G01 project, acquisition that was mainly strategic for us to to approach the uh mitigation for the other southern california utilities and one of which they're very strong and had a long relationship with so we're starting to see revenue from from all three of those things and i would say the total revenue that we're seeing right now is somewhere near 30 million which can certainly go a lot more but it's probably roughly four percent or so of what our our projections have been, and that's what's current. We want that to be more, of course.
spk10: Gotcha. And you, you see that, you know, kind of accelerating in, in 23. I'm just, you know, I've, I've heard numbers out there in terms of, you know, kind of what it's going to cost per mile to go ahead and bury these. And then it sounds like you guys are in a position to, to get something like 10% of that total cost. Is that, is that fair statement?
spk11: Alex is here, too, and so we've woken him up, and he's ready to answer maybe some of the questions you have for that.
spk02: I think one of the things that's important to provide a little bit more color is that a lot of the work that we're providing now is related to substations and other work that we do for the utilities. So the undergrounding is a relatively new initiative that we're pursuing with some of the Northern California utilities. But I think it's important to appreciate that our overall revenue that we generate from powering utility companies far exceeds what is currently being performed for the undergrounding. So with that color, what we expect to see right now, we're in the process of negotiating contracts and we've also submitted our qualifications. I would expect to see that by the end of 2022, We'll have contracts underway, but the real work will start in Ernest in 2023.
spk11: We do also have an initiative that includes our geospatial services for this very portion with our utility. So Mark Abato is also here. And Mark, maybe you can comment on what we're doing with geospatial and how we're expanding that service to the utilities.
spk08: Sure, happy to. You know, as we've grown our service offering in the utility space, we've had a terrific time in terms of translating one of our core solutions, which is vegetation management and other utility analytics from the transmission line environment, largely corridor environment, where there's roughly about 400,000 line miles in the United States. And we've taken that, we've been able to transition that and apply that in a distribution line environment where the market is significantly larger. There's some 14 times more line miles in a distribution circuit than there are in the transmission across the U.S. So we've been able to, again, translate a number of our solutions into that much larger opportunity for electrical utilities.
spk11: Thanks, Mark. Chris, let me just add one other comment, actually two comments. One is we did a pilot program for a Southern California utility in what would be the cost per mile of changing or transitioning from overhead electrical delivery to underground. And we came in and almost saw 40% cost savings to them as opposed to what they had budgeted for that same So we look at a very robust opportunity. We just recently, and there was an announcement on that, or there will be an announcement. Have we announced the Arizona Public Service? There will be another announcement shortly on a very large Western utility that we have an expanded services, and some of that will include mitigation, fire mitigation work. So I just wanted to add those two things also, Chris. Go ahead. Awesome.
spk10: Very helpful. Yeah, the last one for me really is back to Ed. I just wanted to understand from a – looks like it was a pretty good quarter from a free cash flow perspective. First half of the year is $54 million. Are you looking to kind of match what cash generation that you did in 2021? How does that look this year versus 2021?
spk06: I think what you'll find, Chris, is that as we grow and as we're ramping up as we are now in terms of double digits, we have an impact on working capital. It's just a natural consequence of growing at the rate that we are. We expect to be upwards of $100 million in cash from ops for the full year. I like to look at As a proxy, if you want to strip out the impact of working capital, just consider our adjusted EBITDA, less our CAPEX, right? And that gets you to about a $56 million number for the first half of the year. But keep in mind when you do that that we have been investing, as Dick was talking about earlier, in offshore wind farming. So a lot of that $10 million CAPEX is not a recurring rate of CAPEX. And so if you strip that out, once you've normalized what normal CapEx would be for us without those investments on top of EBITDA and without the working capital impact, then your kind of normalized annual free cash flow would be even higher, if that makes any sense.
spk10: Got it. No, it does.
spk06: Very helpful. I will leave it there.
spk10: Thanks, guys.
spk09: Your next question comes from the line of Rob Brown with Lake Street Capital Markets. Please proceed.
spk12: Hi, Dick. Hi, Ed.
spk01: Hi, Rob.
spk12: Good to hear from you.
spk01: Thank you. First question on that. You mentioned a nice utility LNG contract. How are you seeing that market develop? Are you seeing more contracts there? And is there a pipeline of stuff out there?
spk11: Well, they are having a very good year. They're extremely busy. In the pipeline, I think there's going to be continued work. But Alex, maybe you can answer that if you know of any additional work that there.
spk02: Yeah, so I mean, historically, it's an interesting business because it can be a little bit lumpy. But right now we have tremendous backlog and we are in the process of negotiating a very large contract that will have a significant announcement as we're successful.
spk12: That's in addition to what we've already announced, Rob. Thank you very much.
spk01: And second question is, with sort of the business hitting scale here, Dick, have you changed sort of your view on the EBITDA margin targets that you can get to? Is any view on that kind of creeping up?
spk11: Yeah, well, I think so. We can always improve. And the whole premise of the business, and I'll mention a little bit of that in the concluding comments, but we need to be scalable. And so you can imagine as we bring on more revenue, Our support services is scalable. Our fixed costs are scalable. I would say the only thing that we're seeing, but on the EBITDA line, we'll certainly see a greater improvement because of the capital expenditures, the additional capital expenditures we're making. But we think that, you know, it's a work in process, but we certainly see room for improvement. additional EBITDA improvement, and as we grow and become more scalable, I think this should be easier.
spk12: Okay, thank you. I'll turn it over.
spk09: Your next question comes from Jeff Martin with Roth Capital Partners. Please proceed.
spk00: Thanks. Good afternoon, everyone. Hi, Jeff. Hi, Dave. Hi, Jeff. Hi there. Dick, I was curious if you could give us an update. You mentioned there was discussion at the Investor Day earlier this year about buildings and clean energy. I was wondering if you could give us an update on the progress there and what you see ultimately the long-term market opportunity for MD5.
spk11: Well, recently that piece of the business has been growing quite a bit. We haven't... done a release announcement, but we just won a very significant contract with one of the gaming institutions, and that was for energy efficiency for all of their holdings, and that's in the States. Internationally, though, we're really seeing quite an improvement in operations. We announced an operation in Singapore, which really specializes in energy efficiency on on their data entry plans and acquisition projects that they do for a lot of the international American firms, such as Google and Microsoft. And energy efficiency seems to be growing quite a bit internationally, and we have additional opportunities we're looking for in in the Philippines and Kuala Lumpur for energy efficiency.
spk00: Okay, great. And then could you give us an update on the real estate transaction side of the business? That's one area that I think people would appreciate an update given kind of an increase in uncertainty. Yeah, yeah.
spk11: I know that's, Jeff, great question. And you know why it's a great question? Because I really happen to, I just spoke with our group this morning, so I'll sound much more knowledgeable than I really am. But we have two key areas of addressing the transaction and real estate efficiency business. One deals mainly with large portfolio companies, and they seem to – they're both looking for an even stronger second half, and that is – it's counterintuitive because on the portfolio side, people want to get as many of the projects under the way before interest rates go any higher. And that's on the one side. And the other side of our business is that acquisition we did with Global Realty Support Services. Their main business has been with federal funding projects, Fannie Mae and Ginnie Mac. And they go through three very large banking institutions to do that. And they've just seen some increase. So they're running about 17% over where they were at the same time last year. but they're looking for a significantly stronger second half. And so on that side of the business, both pieces look for strength, but for different reasons. The one portfolio business, a lot of clients are getting things in before the interest rates go too much higher. And then on the federal side of it, Fannie Mae, Ginnie Mac, and anything federally funded, that seems to be, they seem to be releasing that now. And they are reporting, they are very, very enthused about the second half. So I was pleasantly surprised. I was always under the impression if interest rates go up, then maybe that transactional business goes down. We do see some softening. We're not doing very much of it. We do see some softening of that in the residential market, and that's really reflected on our utility, our municipality business. But as far as the key components that are driven by the real estate environmental transaction business, It's really coming from those two sectors. And I may have announced earlier, I said we've had an 83% growth in environmental. It's really the growth came from that real estate transaction business, those two key components.
spk00: Great. Thanks for that. I have one other question, and it's really for Ed here. It looks like the past four quarters, we've seen subconsultants as a percentage of gross revenue at an elevated level relative to historical numbers. Curious if there's a specific element of the business that is tied to that and help us understand that. And then secondly, the other direct cost, which I believe is reimbursements, has been elevated the past two quarters, was also curious if there's a specific driver of that.
spk06: Yes. So with respect to the sub-consultant expense, it was really driven primarily by If you recall, the GRS acquisition was at the very end of last year. And so when you look at year over year, you're going to see the impact of that. As a percentage, their sub-consultant costs are about 55%. Of course, they have markup, but they just tend to outsource a lot of that. And the other aspect of it is just the natural cyclical nature of the LNG business and how that changes throughout the year, but that's more temporary. And Jeff, I'm sorry, the second part of your question?
spk00: The other direct cost line, which I believe is reimbursements.
spk06: Right, and that's more attributable to the LNG business just because they have pass-through costs as they build out their projects. Some of that flows through that other direct cost line. And so that will kind of change throughout the year, but it's not something that we'd expect to stay at that rate. Got it.
spk12: Appreciate the help. Thank you.
spk09: As a reminder, if you would like to ask a question at this time, please press star followed by the number one on your telephone keypad. Your next question comes from Mark Raddick with Sudoti. Your line is open.
spk12: Good evening, everyone.
spk11: Hi, Mark.
spk07: So I think I heard that you have your mark there, and so I want to take advantage of that if I could. I wanted to sort of ask about kind of what we're seeing with geospatial especially, and maybe we can sort of take into consideration the G01 acquisition because it seems as though, at least from the outside looking in, it's the opportunity sort of to continue to build on the the service offerings, what have you. I mean, it kind of looks like Mark's in the position of being a kid in a candy store. So I was wondering if maybe you might give us an update as to sort of, not just with G01, but some of the other opportunities that we might see and with Geospatial going forward.
spk11: Yeah, we are focusing on, thanks, Mark. Good question. We are focusing, you know, obviously we look for very good companies and, you know, we have quite a bit of acquisition opportunity in this pipeline. But as far as geospatial, we really think it's building a platform to grow in the areas that we want to grow. But we'll focus some of the acquisitions that are coming up that will really grow further our geospatial service line. And I think The G01 really helps with analytics, and they do a lot of acquisition work, but they were stronger on analytics, and they take data and make that data usable for their clients, and that's going to be a big help to grow Geospatial+. It's going to introduce us to a client, a utility client that, heretofore, we have not had much to do with, so we think that's really going to grow organically. through the expansion and then being involved with the network and are being introduced to this newer client. As far as other opportunities, we think the real differentiator in geospatial is not so much the acquisition of data, but it's the actual analytics of that data. And I think we're very strong that way. And we're looking for other opportunities that may grow the business significantly in the analytical area. As I said, Mark Abato is on the phone now, and he knows very well of what we're looking at. Of course, there are certain things we just can't say, but he kind of knows his focus. And he has really been focused on our software and analytics and being up to speed. So, Mark, maybe you can just give a little color to that.
spk08: Yeah, I think what I would add is that so many of our solutions are targeted towards the environmental sector as well as infrastructure. And I'll include utilities in infrastructure. And I think those are two highly attractive and growing markets that are relying more and more on technology to manage the natural and the as-built environments. And You don't need to look much further than the infrastructure bill to understand where funding is going, whether it be transportation or grid resiliency. And then certainly from an environmental standpoint, the resiliency programs are aimed at coastal environment and the nation's power grid, transportation solutions, water availability, flood and landslide threat detection. They're all just great examples of where geospatial applications can certainly make a difference. And the other thing I guess I'd say is, at the same time, geospatial solutions are highly relevant in developing clean energy sources like wind energy, both on and offshore, measuring carbon sequestration capacity, and identifying and managing critical mineral stores that will support energy transition and emission goals. I think that our solutions and advancing technology, certainly well beyond data acquisition, as Dick was just pointing out, it's on the analytics and the insights that we can deliver through geospatial solutions. I think you described it very appropriately. We are sort of kids in candy stores.
spk07: And then I guess my second question is, and it's really sort of more of a big picture one, it seems as though you know, it's one thing to sort of have this growing backlog and certainly, you know, the new business wins that are announced on a now very regular basis. I was wondering, though, how it seems as though given the, you know, the environment that we're functioning in ahead of, you know, funding visibility, I was wondering if you could talk a little bit about that backlog is not just a number. It certainly seems as though it relatively speaking maybe relative to history it seems as though you might be in a position where not only do you have a numerical visibility but this may be more of a certainty from from the client activity or maybe you could talk a little bit about you know is a better way to put it maybe is the crystal ball a little cleaner now than it would have been in the past given sort of maybe what you're hearing from customers and what their plans are and does that sort of allow you to to sort of manage your side of things, whether on the SG&A line and growth opportunities as well. Thanks.
spk11: Okay, Mark. Well, I like to say that old saying, I see, said the blind man. So anyway, I don't know what disability we have. I'd like to speak to how we record backlog, and this has been over the years. I mean, if there's anything that's important to us, our backlog is really aligned with the budget. It's not indefinite quantity. It's not something we're going to do over three or four years. It's just work that we feel comfortable with that we will do in a rolling 12-month period. So we rely on the backlog. And a good number for backlog that we have seen over the years is backlog usually represents 65% of the budgeted revenue that you plan on doing. That means 65% of that has already been obtained. And then now the get piece of that would be the balance of that. Right now, if you look at the backlog we have at 685,000 and our new guidance for slightly over 800 million, that's running closer to 80%. So we feel comfortable with the work that we've booked and that we will do that work in the next 12 months. But some things can happen. Some things stop. Some work is not. Projects may cease. But then again, others come in. So the longer we have or the better we have as a percentage of the get portion being lower, So 65%, if you've got to now count on getting a 35% additional, that is a little bit more difficult than 80% and then having to get 20% additional. So we're comfortable with the backlog. We think we can see things a little clearer as we grow. And I watch the backlog very carefully. And so that tends to give a good indication of what we want. of the guidance that we give. So I don't know if that answers your question, Mark, but that's kind of how we see things, and we hope to improve on that. That was very helpful. Thank you.
spk12: Okay. Thank you.
spk09: 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.
spk11: Thank you, Operator, and thank everyone for listening in. And let me do this two-way. We want to thank our clients. We want to thank all of you that are listening. And even more importantly, we want to thank all of our employees that are the ones generating this work and doing the work and performing. And two things. We need to perform. We need to do work. that we can really add value to the clients. So I want to thank our people for doing that. You see that we're growing. You see that we, once again, I want to thank everyone for a very good and successful quarter. But I'd just like to maybe comment on what is fueling our ability to grow. I think you have to grow as a company. And if you're not growing, then you cannot fulfill all of the promises that you make to those people that we mentioned to you, investors, shareholders, employees. All of the things that we want to do really surround on our ability and are supported by our ability to grow. So we want to grow on two fronts. The main, main driving front is our organic growth. What are we doing with companies that join us? What are we doing with our core business and our foundation business? It has to have the ability to grow. So we want to now do those acquisitions of companies joining us that can be very strategic and really help that organic growth. So we grow through companies that we integrate, we grow through acquisition, but more importantly, We grow by having strong operations and strong business units. And so I want to compliment everyone for doing that. But you kind of see that's our business. Our business is not something that is dependent on economic times. I mean, obviously, we tend to be in the public sector. We tend to have businesses that are not as reliant on what is done economically or what is the commercial thing. But the second thing, and you heard Ed comment on that, and it's in our slides, we want to be a leveraged light. We want to have a business with cash, which we have. We want to have a business that can support our growth financially. And so we tend to be conservative that way. So I just wanted to comment on what are the results? What are the things that are driving those results? If you look at us, look at how we grow the company, look how the acquisitions that are integrated, we really believe in integration, and then what is our ability to help those companies and expose them to the network. So the last comment I'd like to make is one of that ways that we can be inclusive to everyone in the company is through our cross-selling. through our all of our offices dependent on other offices and we that's why we measure that it's extremely important to us so I want to thank everyone for being listening to our call today I want to thank our people that are building that and we want to be inclusive with everyone so you'll notice today that we had comments from our operating people in geospatial we had comments also and participation from our core business, and I want to thank Alex Hockman and Mark Abato for joining us in the call today. But more importantly, we want to thank everyone for listening, and we will do our best to deliver another strong quarter in the third quarter like we have delivered the second quarter. So thank everyone for listening today, and we'll be speaking to you again soon. Thank you.
spk09: This concludes today's conference call. You may now disconnect.
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