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spk00: Good afternoon, everyone, and thank you for participating in today's conference call to discuss NV5's financial results for the second quarter, 2023, ended July 1st, 2023. Joining us today are Dickerson Wright, Chairman and CEO of NV5, Edward Codispotti, CFO of NV5, Alex Hockman, President and COO of NV5, Ben Herold, COO of NV5, and Richard Tong, Executive Vice President and General Counsel at NV5. I would like now to turn the call over to Richard Tong.
spk12: Thank you, Operator. Welcome, everyone, to NV5's second quarter 2023 earnings call. Before we proceed, I would like to notify all participants that today's presentation can be found on ir.nv5.com. and remind everyone that today's discussion 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 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 the second quarter 2023 comparisons are being made against the second quarter of 2022. In this presentation, NV5 has included certain non-GAAP financial measures as defined in Regulation G promulgated by 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 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 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, then turning the call over to Ben Harad, CEO of NV5, then hearing from Alex Hochman, President and CEO of NV5, before turning the call over to Ed Kodaspody, Chief Financial Officer, for a review of the second quarter 2023 results. Dickerson-Wright will then provide closing comments before we open the call for your questions. Dickerson, please go ahead.
spk04: Thank you, Richard, and thanks to everyone for joining us today. for this call. The second quarter results exceeded our planned budget. We're on track to meet the guidance previously given for 2023. As you see, turning to page five, not only was an improvement over quarter one, but we finished the quarter above consensus. The results consisted of organic growth from our existing business, but also revenue and organic growth of acquisitions made prior to and during quarter number one. In particular, the acquisitions of software and analytical services strengthens a stable foundation for growth and subscription-based and reoccurring revenue. We also announced some recent project wins that support and enhance a sustainable infrastructure and assist the existing utility power grid. We have begun to see the federal infrastructure bill materialize. We have recently begun to see green shoes for our real estate transactional business with revenue increasing, but still not at prior rates. We have established organic growth initiatives that can provide additional resources for our clients. We have structured the organization to have our most senior people spend additional time with our clients. We feel that this will increase organic growth. Perhaps we can now go to slide six, which highlights our technology expansion with the acquisition of which was announced yesterday of red technology in Singapore. This increases our resources in the areas strengthening our mission critical data center support activity and promoting further organic growth in the Asia Pacific region. In fact, the acquisition will be a catalyst for further growth and adds to our existing employee base. The employee base now numbers over 250 full-time equivalents in the region. I will now turn the presentation over to Ben Harad and Alex Hockman to provide an update on the buildings and infrastructure businesses.
spk01: Please turn to slide seven. In 2020, we formed a highly focused division within our international team called NB5 Mission Critical. The idea was to provide a one-stop shop for blue chip clients that was highly outcome driven. Our clients needed a consultant that could rapidly bring international standards to unskilled markets. while adopting the local regulations and culture. Our mission-critical business has grown close to 400% since its founding, and in the first half of the year, it has delivered 14% organic growth. The acquisition of Red Technologies expands both our client base and service offerings in the mission-critical space. Red Technologies provides IT and fiber optic consulting, which is both upstream and downstream of our systems design and commissioning services. Having already worked together on a number of projects, we are very well positioned to vertically integrate our services and bring more recurring revenue into the business. In the domestic market, we're also seeing areas of very strong growth. The acquisition of Sage Energy in 2021 bolstered our clean energy group with expertise in renewables and the electric vehicle market, services that are in very high demand right now. As an owner's representative, we engage at the early phase of a project, which often leads to downstream engineering work and other NV5 verticals. At the beginning of this year, we formed a building digitization group, drawing from our expertise in geospatial, building analytics, and information modeling to provide scan-to-BIM and digital twin platforms to our clients. This is now becoming a core part of our more traditional services, such as MEP design and program management, bringing more value to our clients, allowing us to deliver projects more efficiently while growing our subscription-based revenue. Our technology and acoustics group is on track for a record year. We continue to be market leaders in higher education, a market which is currently seeing a strong rebound since the pandemic. We continue to diversify into other markets with recent master services agreements awarded with a large software and government entity. Alex Hockman will now give an update on the infrastructure and utilities businesses.
spk13: Thank you, Ben, and good afternoon to everyone. Please turn to slide eight. NV5 has been at the forefront of sustainable planning, design, and construction to meet the demands of the population, functionality, and protecting our environment. We have participated in the Institute for Sustainable Infrastructure and have been active in the development of Envision. Envision is a holistic sustainability framework and rating system that it enables through a thorough examination of the sustainability and resiliency of all types of civil infrastructure. Examples of infrastructure investments that protect our environment include the recently announced $16 million New York City DEP Greenwater Stormwater Project. This project will include the design of an interceptor sewer system to address the concerns with combined sewage outflow systems, also known as CSOs. When treatment plants are over capacity, untreated sewage is discharged directly into our waterways. The design and construction of interceptor systems reduces the demand on treatment centers and drastically improves the water quality of our rivers and oceans. We are also starting to see projects resulting from the Infrastructure Investment and Jobs Act, IIJA, which is also known as the Bipartisan Infrastructure Law, or BIL. The BIL will make available more than $1 trillion in funding for infrastructure programs across transportation, energy, and water sectors through a combination of grants, loans, and tax incentives. Our Philadelphia office authored a successful RAISE grant application for Camden County, New Jersey, announced in June 2023. Through this grant, Camden County won $19 million for segments of the Camden County Trail, a 34-mile trail through 17 municipalities, which NV5 is designing. RAISE is an acronym for Rebuilding American Infrastructure with Sustainability and Equity. And our Long Island office has performed grant writing services for counties and towns and are awaiting results of the application for federal funds for pedestrian safety and non-motorized greenway programs. We are in the early stages but are well positioned to assist our public and private sector clients with grant writing, design, and project management services for these important infrastructure projects. The multi-discipline approach of our Utility Services Group has us well positioned to assist throughout the life cycle of energy companies' assets and capital improvement projects. We are seeing increased activity across all of our areas of expertise, including transmission and distribution lines, substations, gas, LNG, and a rapidly growing demand for EV charging stations. Recently, a major West Coast utility reported that undergrounding lines was by far more effective in reducing outages and preventing fires than attempting to mitigate fires through forest management. NV5 has extensive expertise in all aspects and disciplines required to design and project manage these improvements and are projecting significant growth in the future. At this time, I'll turn it back to Dickerson.
spk04: Thank you, Alex. By turning to slide nine, we'll provide an update of our geospatial platform and we'll speak about our continued success as well as our strategy for future growth. The geospatial platform provides three key solutions. One, it mitigates risks. Two, it plans for growth. And three, manages our existing resources. As Ed Kodespody will mention later, we are increasing our investments to provide the most updated technology and to better address new markets. Data acquisition requires updated aerial measurement equipment. Software solutions provide a competitive edge and embeds our relationship with clients with patented software solutions. NV5 is by far the leader in analytical solutions for our clients. These solutions tailor the acquired data to user-friendly solutions. Going to slide 10, you'll see that we depict our backlog and key wins for the second quarter. You'll readily see that our backlog grew 70% over Q2 22 or Q2 last year, all the way to $803 million over a rolling 12-month period. Our key wins touched most of our service offerings. Our geospatial winds provide data for our government agencies, including the Department of Defense. Our infrastructure winds enhances our delivery and energy efficiency for the existing utility grid. Our geospatial technology investments will support our geospatial winds. We will now transition the presentation to our CFO, Ed Kodesplody, to provide an overview of our second quarter performance. Go ahead, Ed.
spk06: Thank you, Dickerson. And good afternoon, everyone. If you would please turn to slide 12 of the presentation, I'll review our second quarter 2023 financial results. Our gross revenues were $222.6 million compared to $202.7 million in the second quarter of last year. The 10% increase in growth was primarily fueled by our AXIM and VIZ acquisitions, as well as organic growth in our geospatial business, which combined represented about $31.4 million. Our top-line growth was partially offset by decreases in our real estate transactional business revenue of $8.3 million, driven by market reactions to interest rates, and decreases in our LNG business revenue of $3 million, driven by the timing of project cycles. Gross profit was $110.3 million compared to $99.2 million in the second quarter of last year, an increase of $11.1 million, or 11%. Gross margin also expanded by 50 basis points during this period. Net income was $15.4 million in the quarter, compared to $17.3 million in the second quarter of last year, a decrease of $1.9 million. Net income was impacted by amortization expense from acquisitions, which increased $3.2 million when compared to the second quarter of last year, and interest expense, which increased $2.8 million. Additionally, our net income this quarter was affected by profit margins in our real estate transactional business due to market reactions to interest rates and profit margins in our LNG business due to the timing of project cycles, as well as the reduction of acquisition earn-out accruals. I'll note that we did see resiliency in our real estate business revenue as it increased 26% over the first quarter of this year. Our adjusted EBITDA was $35 million compared to $37.8 million in the second quarter of last year. As was the case with net income, adjusted EBITDA was impacted by the real estate business and timing of LNG projects. Our GAAP diluted earnings per share were $1 per share in the second quarter of 2023 compared to $1.13 per share in the second quarter of 2022. Our adjusted earnings per share, which exclude the impact of intangible amortization and acquisition-related costs, were $1.29 per share in the second quarter of this year, compared to $1.49 per share in the second quarter of last year. On slide 13, you can see that our cash flows from operations during the second quarter were $14.2 million. Our cash flows from operations for the second quarter were impacted by working capital timing during the quarter, which to a certain extent was driven by the bringing on board of the Axum and Viz acquisitions. As of July 1st, 2023, we had $28.8 million of cash on hand, and our net leverage was 1.4 times. This net leverage includes the impact of the Axum and Viz acquisitions. Turning now to slide 14, we can see how we have invested CapEx in our future growth so far this year. When you look at the $10.2 million of CAPEX investments we made in the first half of this year, about $8.4 million related to geospatial growth. Of this amount, $2 million was invested in our new geospatial vessel to expand the capacity of our fleet and which has already been engaged in active projects. Another $1.5 million went towards offshore wind equipment to support the offshore wind growth initiative. And about $2.7 million was invested in topobathymetric LiDAR sensors for rivers and nearshore geospatial contracts. We believe these investments, along with the strength of our balance sheet, position us well for future growth. And I'll turn it back over to Dickerson for some closing comments.
spk04: Thank you, Ed. What is our strategy and drivers for future growth? Let's now turn to slide 15, and you will see mentioned seven focus points to position NV5 for future growth. Number one, we'll expand our geospatial leadership, which approaches $300 million and makes us the leader, at least in North America for sure, in the geospatial activity. As Ben mentioned, international data center expansion from new markets and M&A activity will also be a driver. We're going to capitalize on the federal infrastructure activity, which we're starting to see begin now in its infancy. There will always be utility improvements for power distribution and natural gas conversion to LNG, and MD5 is positioned very well to capitalize on these opportunities. We will continue our public sector focus, which requires mandated essential services, and it's not dependent on economic conditions. Clean energy and building efficiency will always be something that we focus on to grow. And last but not least, is the sustainable infrastructure that Alex mentioned, not only in the civil area, but in every aspect of the infrastructure support services, we will look for sustainability. So we remain optimistic and we'll continue to implement our strategy and stay nimble in our approach based upon market conditions. We maintain our 2023 guidance of 878 to 950 million revenues and our gap and adjustment EPS guidance will remain the same.
spk05: Thank you.
spk00: In order to ask a question, press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. And your first question comes from Chris Moore, CGS Securities. Chris, please go ahead.
spk03: Hey, good afternoon, guys. Thanks for taking a couple questions. So revenue growth guide stays at roughly 14%. Just give me a sense how much of that is organic versus M&A.
spk06: We expect the organic to be in the high single digits, Chris, so around 7% or so is what we're planning for.
spk03: Got it. Very helpful. Backlog, 803 million, just roughly what percentage of that is geospatial? Does that change significantly year over year?
spk04: This is Dick. Thanks, Chris, for the question. Geospatial has been running about 50% of their turnover, and I think their turnover will be about $200 million this year. So not all of that $803 million, of course, is based on the geospatial activity. So I would say it's about 25%. Got it.
spk03: Very helpful. And last one for me, maybe I know LNG project cycle impacted the first half. Can you talk a little bit more about where you are in those project cycles and what the impact would be in the second half of the year?
spk04: Well, yes, LNG, of course, is billed as what we call a percentage of completion. So it's their estimate of the completion of projects that they're working on will vastly impact the revenue that they choose to generate. So we always try to match up labor and revenue at the same time. So they are being more conservative, and they're growing, And we think for the second half of the year, the LNG business, because of the percentage completion, will be stronger or higher. But it doesn't depict any slowdown in the LNG process. It's just how they're recognizing the revenue on a percent of completion basis.
spk03: Got it. So the accounting related to that should be a little bit of a tailwind for the second half. Correct. Got it. All right. I appreciate it. I will leave it there, guys. Thanks, Chris.
spk00: Next question comes from Andy Whitman from Baird. Andy, please go ahead.
spk07: Oh, great. Thanks for taking my questions, guys. Good afternoon. I guess I wanted to start just trying to understand the margin profile in the quarter. Your G&A line was down pretty substantially in the quarter to $11.5 million. That number had been reliably running in the 17 to 18 oh gosh, just over $18 million per quarter run rate. So I was wondering what the difference was this quarter. Perhaps it was maybe accruals for incentive compensation, or maybe did you take your, I guess you'd call it a contra expense on the earn out liability that you reversed and got a benefit from. Does that show up in GNA? And I was just hoping you could help us understand that item on the income statement.
spk06: Absolutely. I mean, it's the latter of those that you just mentioned. It's the It's a reversal of an earn-out accrual. And so if you refer to the reconciliation of GAAP to non-GAAP in the back of the earnings release, you'll see that our acquisition-related costs had a reversal of $5.3 million on a net basis during the quarter. So that's part of it. You know, we have, as you know, earn-outs built into some of our acquisitions. And that was just an earn-out that was not met that was reversed during the quarter.
spk04: And it's milestone-based. It's milestone-based. There's segments of the earn-out that depends on the acquisition, and I'm not specific to what Ed is mentioning. But the earn-out does not indicate necessarily that they are not – operating correctly, revenue-wise, but it's that segment of time. They were supposed to meet a certain, the acquisitions may have met a certain revenue base on a certain time frame, according to the contract, and they may not have met it. Sometimes they'll catch up, sometimes they won't.
spk07: Got it. Ed, you mentioned those 5.3 net. I was wondering, sometimes you do actually have positive expenses on that, and you did some acquisitions in the quarter, so what was the gross number for the
spk06: for now? 6.25 was the reversal and on it, like you said, we had positive expense going the other way. So 6.25 was a reversal and 5.3 was the net million dollars.
spk07: Yep. Okay. That's helpful. And then I was just wondering just in terms of the cashflow, because you did have some working capital build here, you talked about timing, I guess, what are you guys now thinking for the year and some of the things that, that, got you in the quarter for working capital usage. Have you collected those items here as it stands here in early August in the third quarter?
spk06: I would expect from working capital to the impact of working capital in terms of the cash flows and the second half to improve. What happens oftentimes when you have an acquisition the size of Axum is that the weeks following And the first few months following the acquisition, the AR collections and certain working capital components may not fall into place during that immediate post-acquisition, post-closing period. And so I think that'll recover during the second half, and we should see improvements in our cash flow from operations.
spk07: Got it. Okay. Then just my final question. I guess I just want to try to understand the level of confidence you have here in the second half because for the first half of the year, earnings are down slightly. You guys just talked about a 7% organic growth rate, which would suggest that your back half organic growth rate to make 7% for the year would have to be into the double digits given that you started out a little down on the first half of the year. So what are the business lines that you're seeing accelerate to the degree needed to hit these levels for the second half.
spk04: Well, this is Dick. Thanks, Andy. I think if you're just sure you're not just we're not just relying purely on organic growth, but total growth. So there'll be some acquisitions also that will be part. And it looks like it was going to be just pure organic. It would have to be a growth rate of 13 percent. But we're not expecting that. It does not show any any revenue or input from a recent acquisition we just read. And so it'll look for us to depend both on the organic growth of the company and growth that we may do through acquisitions. As far as the specific areas that we're looking at, I don't want to get too specific, but we are still looking at, we have phenomenal opportunities in technology for acquisitions and the geospatial area. technology areas such as REDD, and also we are looking for some very good opportunities in our core business. So those we all anticipate, not knowing if all of those will come in, but we certainly anticipate some of those to help the second half of the year.
spk07: Okay, I just want to make sure that I'm clear on that then. So just as it relates to the guidance, did I hear you say that REDD is not in the guidance, and are there, if that's right or wrong, but then comment on that, but are you also suggesting that there are acquisitions in guidance that are not announced publicly? Is that what you're saying?
spk04: I'm not saying neither. So let me say what I did say. Red, of course, is included in our guidance because we have it. It was not included in the revenue that was reported because we didn't own it at the time. But it's certainly the revenue we're expecting within the guidance for the second half of the year. And we're assuming, I'm just saying, if you look at the model and look at what we've done and look at the guidance, then you are assuming that all of collectively, not you personally, but collectively, one would assume that it's just going to be organic growth. I'm saying that we are both active in acquisitions and organic growth. So you'd have to look at a combination of that. And that's why we have a little bit more of a comfort level with our guidance given for the rest of the year.
spk07: Okay, that makes sense. Okay, thank you very much. Have a good night. Thank you.
spk00: Thank you. As a reminder, in order to ask a question, press star, then the number one on your telephone keypad. Your next question comes from David Marsh, Singular Research. David, go ahead.
spk08: Hi, guys. Thanks for taking the questions. Yeah, just to follow up a little bit on that last question, especially in regards to your top-line guidance being maintained and how we think about the business and potential seasonality, would there still be an expectation that the fourth quarter would be a little bit lighter than the third quarter from a revenue perspective?
spk04: Well, if If we were looking at things in the rearview mirror, it's always been that our fourth quarter is not as strong as the third quarter. However, the fourth quarter is affected by many things. It's affected by weather. It's affected by what accruals we may have in place and what we've left. But the fourth quarter, it's not as strong. weak as the first quarter, but it's certainly not usually as strong. We just, but we, you know, we can't make any assumptions.
spk06: In this case, the growth that, this particular year, as Dick mentioned, the fourth quarter is always, it could go either way, right? But in this particular year, the way we see the backlog rolling out, we see Q3 revenue and Q4 revenue very, very similar in terms of their run rates. And it's also dependent on weather.
spk08: Right. So, I mean, to meet that top-line number, you know, as was alluded to by some of the previous callers, I mean, you're going to have to put up some pretty sizable numbers here in the second half. And I guess I'd just like to understand, you know, where you get the confidence in terms of – you know, just in terms of the pipeline and the backlog that it's going to come through, you know, kind of this quickly in order to be able to help you meet those numbers. Just really don't want to see you guys have to reduce here in the future.
spk04: Well, obviously, we have more confidence than you seem to have. You know, we work here, so we get to see things a little bit clearer than you may have seen things. But we expect... we've had a history of meeting our guidance and we feel comfortable with, you know, with what can be expected. We certainly see things that perhaps you don't have the ability to see right now and we may have an advantage there.
spk08: Sure, sure, absolutely. And then just kind of turning the balance sheet a little bit, you know, obviously you guys have used a little bit of leverage here to make some of these recent acquisitions. particularly some of the bigger ones, would the expectation be that as you generate positive free cash flow, you'll pay down that debt? What would you say is your ideal debt profile for the company?
spk06: As I mentioned earlier, our leverage right now is 1.4 times, which is relatively low versus some of our competitors. We feel very comfortable with that. As we add acquisitions to the balance sheet you know some two things first of all some of those purchases make maybe you know funded through our cash from operations and then just going forward any you know excess cash that we've got coming in through our cash flows we would we would try to pay down as much of that leverage as possible
spk08: Yeah, I just noticed, you know, obviously a pretty sizable bump up sequentially in interest expense. And so I'm sure that just in the current rate environment, there would probably be some desire to chisel that down a little bit and get that back down to a lower number.
spk06: And by the way, we did pay down during the quarter. I mean, if you don't consider the acquisitions, we actually paid down. around $13 million or so so far during this first half of the year. So we have been on that track of paying down the debt. And then when an acquisition comes along, if there's a need to fund some of that through the facility, then we add to that debt as needed. But our focus is on good acquisitions in terms of return on capital while at the same time be leveraging as much as possible throughout that period.
spk08: All right. Thanks, guys. Well, good luck for the second half and appreciate you taking the questions. Thank you.
spk00: Next question comes from Rob Brown, Lake Street Capital Markets. Rob, please go ahead.
spk10: Good afternoon, Dick and Ed. Hi, Rob. Just wanted to follow back up on the real estate transaction business. You said some pretty good stabilization in the quarter. How is that looking for the back half of the year? And I guess what's some of the dynamics there that that's allowing it to stabilize?
spk04: Well, it improved in this last reporting quarter. We're seeing some buildup in their backlog. And where we've seen some improvement, it's more in the government. That's where we have two groups in our transactional real estate. One of them primarily works with Fannie Mae and Ginnie Mac, and so we've seen some improvement in that area. And overall, we're starting to see improvement. They continue to remain profitable. They're certainly under where they were last year by about $15 million, but we're starting to see some improvement. in revenue, $50 million in revenue.
spk10: Okay, great. Thank you. And then on the red acquisition, it seems like a good fit in the building area. How does that sort of fit in terms of cross-selling and getting synergies in the building area? Just elaborate on how that fits with what you've been doing.
spk04: Well, the cross-selling from any of our international operations has really been and offshoring work that they do work for our offices in the U.S. So we would hope that some of our increased capability with REDD will improve on the cross-selling and offshoring work that they can be doing for our operations in the states.
spk05: Okay, great. Thank you, and congrats on the score. Thank you.
spk00: Your next question comes from Jeff Martin from Ross MKM. Jeff, go ahead.
spk09: Thanks. Good afternoon, everyone. Dick, I apologize if some of these questions are redundant. I hopped on the call a bit late. What was the impact from the LNG business? Sounds like it was more of a timing issue than an end-of-project situation. If you already covered that, if you could repeat it, that would be helpful. If not, then I look forward to hearing more about it.
spk04: Well, the LNG business is a percent of completion business. So they bill on an estimate of where they think things are complete. And so the project, although the project they're working on, we felt a steady buildup as it gets into the third and fourth quarter. They were recognizing their percentage of completion. completion lower than they have done traditionally.
spk06: It's also, Jeff, it's also think about it as these are large, larger contracts, lower volume. And so when you compare one year to the other, you know, just any little timing differences in terms of when things get started, just kind of push things to the right, which is what happens. So there's a lot of demand and a strong backlog for the business. It's really more just a timing issue, and it really relates more to the first half of last year versus the first half of this year. I think the second half will be slightly up from what it was last year, so just a timing issue.
spk09: Okay, and then on the real estate transaction side, my understanding was that the comparisons in the second half of this year got much easier relative to last year. Are you expecting that business to be above last year or are we still in that period of recovery mode where it may take a couple more quarters before the comps become sufficiently easy to post real estate transactions growth?
spk04: Yeah, we're not anticipating the real estate transaction business to be what it was last year. and it's slowly coming back. But it just depends on interest rates and the appetite that, you know, the one side is a very large portfolio business, and so they're very dependent on interest rates. And the other piece of the business that I said was Fannie Mae or Ginnie Mac are also very dependent on mortgage rates that they can get. So we see a slow coming back. It's a profitable business. It's quite scalable. but we don't anticipate it this year to be what it was last year.
spk09: Okay, great. And then one more, if I could. With the new geospatial ocean vessel being delivered, what does the offshore wind opportunity look like in terms of start to see some revenue generation and some growth in geospatial related to the offshore wind opportunities? Is that a 2024 event or even further out?
spk04: Yeah, we just spoke to the people running the geodynamics group, which has the vessel. That project has been delayed, but they're very enthusiastic about the growth of the wind farm. And so we're seeing much more of the revenue to be generated in 2024 than 2023.
spk05: Excellent. Thank you.
spk00: Next question comes from Tate Sullivan, Maxing Group. Tate, go ahead.
spk02: Thank you. I think you mentioned for 2023 initiatives rare earth minerals geospatial work. Is that already a meaningful portion of what you do in geospatial? Is it mostly U.S. geological survey work? Can you give some more background on that?
spk04: Well, it's an additive. an additive to our geospatial platform we are just positioning ourselves now to take advantage that market so it's really and it's a very the Genesis and beginning stage of that and the contribution to revenue but you know we see an increase in our defense work through axum and we see a defense in the geospatial work from and Alex mentioned the envision from software and And so we think that they will be more of a contributor than the rare earth for this year. We will see some revenue from that piece of the business.
spk02: Okay. And then the opportunity with BIM and digital twin, what is that? Did you refer to that in the analyst day as well?
spk04: Well, I think I'm going to – if Ben is on the call, I'm going to defer to Ben to – what we see as the opportunities with them, and Ben and Alex have been working much closer to that than I have been.
spk01: Yeah, it's Ben Herod here. Basically, with that side of the business, with our more traditional services, for example, our MEP group, when we go in and do a tenant improvement job, we'll now scan the space using one of the geospatial scanners and create a digital twin from that, whereas more traditionally we would do that with manual measurements. So that enables us to present a more comprehensive solution to the client and actually set us up for an ongoing contract off the back of what was more traditionally a one-off project.
spk05: Great. Okay. Thank you for that. Okay. Have a great day.
spk00: Next question comes from Mark Reddick, Sedoti. Mark, please go ahead.
spk05: Oh, good evening.
spk11: So a lot of my questions have been answered. I did want to start, though. I wonder if you could talk a little bit about IIJA and sort of how that was initially sort of beginning to show up. Maybe you can talk a little bit about what you're seeing relative to maybe what expectations may have been as to the types of projects you're seeing or the types of visibility that might be coming from that. And then I have just one other follow-up.
spk13: so i i think the expectation that we had is pretty much what we're seeing i think the public expectation may have been that we have a waterfall of projects as a result of the bill in fact what we're seeing is the initial start is coming through some of the grant writing opportunities and as those go into the design phase we'll be in a position to perform design when it goes to construction we'll be there for the project management so from Our expectation, it's basically meeting our expectation.
spk11: Okay, and then just as a quick reminder, so earlier in the year, there was the weather impacts on construction, certainly, and that certainly wasn't just something that affected yourselves, but many others, particularly in Northern California. I was wondering if you could talk a little bit about how that is, is there expectation for some of that to have been delayed and flowed through later, or maybe you can sort of bring us up to date on maybe what's taking place specifically with that market. Thank you.
spk13: So many of our projects were clearly impacted by weather. We felt that very strongly in Q1. And what it does is essentially just move the revenue to the right. The projects aren't terminated, they're not stopped, but they're delayed. And sometimes the delay carried on a little further than even when the weather is clear, there would still be some areas where excavations, for example, had already been dug, but they are now filled with water. So there's a number of ripple effects that happen as a result of severe weather.
spk05: Makes sense. Thank you. You're welcome.
spk00: All right. At this time, this concludes our question and answer session, and I would like now to turn the call back over to Mr. Wright for closing remarks.
spk04: Thank you, operator. I think if you see the tagline of NV5, there's a quote after it, beyond engineering. What do we mean by that? Or what does it mean to be that we want to be beyond engineering? Well, let me mention a few examples and the reason for that strategy. As the Earth's population increases, we must deliver infrastructure and services in a more efficient manner. That is just understood. So our strategy is to have a natural intersection between technology and our traditional engineering services so that we can deliver the infrastructure services that we can help deliver that in a more efficient basis and improve that delivery. So let's mention a few specific technology and improvements that we make to go beyond the traditional engineering. We use geospatial services and software and all forms of artificial intelligence to improve infrastructure support. Examples of our geospatial mapping of transition lines improves the delivery of utility services. We use the latest geospatial technology to monitor coastline erosion and the delivery of clean water sources. Our mission-critical business delivers IT and fiber optics to improve system design for our commercial services. We formed a building digital group, which marries our building analytics information modeling to deliver our BIM and digital twin platforms that we've mentioned previously. This all becomes an integrated part of our transition to the MEP design and to all forms of infrastructure delivery. Our software technology develops a product named InVision, you've heard Alex mention that, which enables us to measure sustainable infrastructure delivery. All of these, this technology helps us to strengthen our core platform and gives us a competitive edge. For this reason, we feel very optimistic about the future growth of NV5 and we feel it gives us a competitive advantage in the marketplace. So we look forward, this will complete our Paul, for the quarter and what we've done, and we look forward to being with you in the second half of the year, and we're very optimistic about the future of NV5. Thank you.
spk00: Thank you all for joining. You may now disconnect.
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