Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• NV5 Global Inc (NASDAQ:NVEE) reported a strong start to 2025, exceeding budget expectations with 5% organic growth in gross revenues.
• The company achieved record first-quarter results with $234 million in gross revenues, a 10% increase from the previous year.
• NV5 Global Inc (NASDAQ:NVEE) completed three strategic acquisitions in Q1, enhancing its platform and accelerating organic growth.
• The infrastructure and buildings and technology segments showed strong performance, with 12% and 17% growth in gross revenues, respectively.
• The company has implemented successful margin and cash flow initiatives, achieving a 96% increase in cash flows from operations compared to the previous year.

Negative Points

• Growth in the geospatial segment was slowed due to delays in federal contract awards, attributed to the transition of a new administration.
• The company's GAAP results were impacted by a $1.4 million increase in amortization of intangible assets due to acquisitions.
• NV5 Global Inc (NASDAQ:NVEE) experienced a contract cancellation with the Centers for Disease Control and Prevention, valued at approximately $100,000.
• The company faces challenges in its cross-selling program, as it previously incentivized employees for signing contracts rather than as revenue was generated.
• There is a need for a gradual ramp-up in profit margins, with significant improvements expected in the second half of the year.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with NVEE.

Q: Can you provide an update on the geospatial segment's performance and expectations for the year? A: The geospatial segment experienced some initial delays due to internal integration processes, particularly in the software side. However, improvements are expected throughout the year, driven by the mandated nature of services and positive market conditions. (Respondent: Unidentified_3)

Q: What is the current federal versus private sector split in the geospatial segment, and how do you see it evolving? A: Currently, approximately 48% of the geospatial segment's revenue comes from federal contracts. We anticipate growth in the private sector, particularly in utilities, which may lead to a larger share of private sector work over time. (Respondent: Unidentified_8)

Q: Can you elaborate on the typical size and scope of commissioning service contracts in the data center business? A: Typical commissioning service contracts in the data center business range from $1 to $2 million, often executed in phases. The scope can vary significantly, including commissioning, power delivery, MEP, and fire protection services. (Respondent: Unidentified_4)

Q: How confident are you in achieving the 150 basis points margin expansion goal for the year? A: We expect a gradual ramp-up in margin improvements, with more significant impacts in the second half of the year. Initiatives like software business restructuring and office consolidations are already underway, contributing to this goal. (Respondent: Unidentified_5)

Q: Has there been any impact from tariffs on your clients' projects, and how might this affect NV5? A: NV5's exposure to tariffs is limited as most materials used are domestic and not subject to tariffs. We have not seen any significant disruptions from tariffs on our clients' projects. (Respondent: Unidentified_3)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.