Don Markley - SVP, The Piacente Group, IR Dickerson Wright - Chairman and CEO Michael P. Rama - VP and CFO.

Jeff Martin - ROTH Capital Partners, LLC Steve Anderson - Anderson Investment Group.

Greetings and welcome to the NV5 Holdings, Incorporated Fourth Quarter 2014 Financial Results Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder this conference is being recorded.

I would now like to turn the conference over to your host, Don Markley with Investor Relations. Thank you, Don. You may now begin..

Thank you, operator. Before we proceed I would like to remind everyone that this call contains forward-looking statements within the meaning of the Safe Harbor provisions of the U.S.

Private Securities Litigation Reform Act of 1995, including among others, statements with respect to our abilities related to driving business development, achieving operational efficiencies, completing strategic acquisitions, expanding our backlog and achieving 2015 guidance related to gross revenues and diluted earnings per share.

The company cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements contained herein.

Such factors include but are not limited to A, changes in demand from the local and state government and private clients that we serve; B, general economic conditions nationally and globally and their effect on the market for our services; C, competitive pressures and trends in our industry and our ability to successfully compete with our competitors; D, changes in laws, regulations and/or policies; E, our ability to successfully execute our mergers and acquisition strategy, including the integration of new companies into the company's business; F, backlog cancellations and adjustments; and G, the risk factors set forth in the company's most recent SEC filings.

All forward-looking statements are based on information available to the company on the date hereof and the company assumes no obligations to update such statements except as required by law. I would like to remind everyone that this call will be available for replay through April 2, 2015, starting at 8 PM Eastern tonight.

A webcast replay will also be available via the link provided in today's press release as well as available on the company's website at www.nv5.com. Any redistribution, retransmission or rebroadcast of this call in any way without the expressed written consent of NV5 Holdings, Inc., is strictly prohibited.

We will begin the call with commentary from Dickerson Wright, Chairman and CEO of NV5, before turning the call over to Michael Rama, Chief Financial Officer for a review of financial results and outlook. We will then open the call for your questions. Dickerson, please go ahead..

Thank you Don and good afternoon everyone. As you saw at the close of the market today we issued a press release announcing our financial results for the fourth quarter and also full year ended December 31, 2014. We reported record fourth quarter results with revenues increasing 70% and net income increasing 163% year-over-year.

Our increase in revenues and net income has continued uninterrupted since our inception. This is the result of our focus on successful driving organic business development, achieving operating efficiencies and making the right strategic acquisitions as well as an improving industry environment.

A key aspect of our business model is that we empower our professionals to be a continual resource to our clients while expanding our business opportunities. This has resulted in larger proposals and subsequent contract awards. The success of this model is evident in our increased backlog and performance.

There are several areas that I would like to highlight in my prepared remarks today, including contract wins, a significant acquisition and additions to our management and executive team. Here are just a few of the notable contract wins from the fourth quarter and more recently.

A contract from San Diego County Regional Airport Authority to provide as-needed surveying services at San Diego International Airport. The $2 million contract is for an initial term of three years with a possible two year extension.

We have provided engineering services to the San Diego County Regional Airport Authority since 2003 and this latest contract award demonstrates that NV5 continues to be viewed as a valued added partner.

We were also awarded over $1 million for three program management contracts in Colorado including safety upgrades in several school buildings in Garfield County and the renovation of the Town of Vail's Golf Clubhouse.

And earlier this month we were very pleased to announce a contract totaling more than $23 million with the California Department of Transportation. This is District 10 or known as Caltrans-District 10, where we are providing on-call construction engineering, inspection and material sampling and testing services for three years.

NV5 originally began working with Caltrans-District 10 in 2007. Caltrans-District 10 encompasses eight counties and more than 3,500 miles of state roads stretching from Alpine to Merced and as far east as Mariposa.

In January 2015 we made a significant addition to NV5 in terms of both size and location with the acquisition of Joslin, Lesser & Associates, a program management and owner’s representation consulting firm that primarily services government owned facilities, private education and also public K-12 school districts in Massachusetts and around Boston.

JLA’s staff includes 30 professionals with annualized revenues approaching $10 million. The acquisition of JLA is an exciting opportunity for NV5 to expand our presence in a major metropolitan area in the Northeast and further add to our private education, public and governmental client base.

JLA has a distinguished history of managing public capital improvement projects and will make a great addition to our program management protocol. This acquisition was made with a combination of cash, notes and stock and is immediately accretive to NV5’s earnings.

Our acquisition opportunity pipeline remains full and we expect to complete additional acquisitions throughout the year. As we acquire companies we achieve leverage in a number of ways. First we can scale their administrative needs into our existing structure. This has an almost immediate benefit to their and our operating margin.

Longer-term as we expand our capabilities from both a geographic and new services standpoint we create new opportunities across our verticals within the existing customer base.

In light of continued growth we also made key management appointments that strengthen our team and ensure we are positioned to address as wide a range of opportunities as possible. I like to first mention Alex Hockman, who was named President and Chief Operating Officer and was appointed to the Public Board of Directors of NV5.

I have personally worked closely with Alex since 2003 after acquiring his firm and he has a long history of delivering operating results. Alex will assume the daily operational responsibilities of NV5’s core industry verticals allowing me more time to focus on strategic planning and further acquisitions.

We also named François Tardan to the Board of Directors of NV5. François served as Executive Vice President and Chief Financial Officer of Bureau Veritas from 1998 to 2011. During his tenure revenue grew from EUR650 million to EUR3.4 billion and the company completed over 100 acquisitions.

I know firsthand that François will bring a wealth of experience and knowledge to our Board.

I would now like to turn the call over to our Chief Financial Officer Michael Rama for an overview of 2014 financials and the 2015 outlook, Michael?.

Thanks, Dickerson and good afternoon everyone. I will first provide a review of the company's fourth quarter 2014 results; review the full year 2014 results and finally our 2015 outlook. Total gross revenues in the fourth quarter of 2014 were $28.7 million, a 70% increase compared with gross revenues of $16.9 million in the fourth quarter of 2013.

The increase was due to organic growth of 14% from our existing platform as well as the contribution from acquisitions made in 2014. Income from operations in the fourth quarter of 2014 was $2.5 million, a 215% increase from $792,000 in the fourth quarter of 2013.

Our operating margins increased 85% from 4.7% in the fourth quarter of 2013 to 8.7% in the fourth quarter of 2014. Total operating expenses were $8.7 million in the fourth quarter of 2014 compared with $8 million in the same period last year. The increase in operating expenses was due to integration costs from acquired businesses in 2014.

As a percentage of gross revenues, operating expenses were 30.2% in the fourth quarter of 2014 compared to 47.1% for the fourth quarter of 2013.

This decrease was the result of the increase in our employee utilization compared to the same period in 2013 and internal focus on performance optimization and the scalability of operation as we integrate new acquisitions.

Net income in the fourth quarter of 2014 was $1.4 million, an increase of 163% compared to net income of $535,000 in the fourth quarter of 2013. Fourth quarter 2014 diluted earnings per share was $0.25 versus $0.10 in the fourth quarter of 2013.

Our fourth quarter 2014 earnings per share reflects the weighted average shares outstanding of 5.7 million shares for the three months ended December 31, 2014 compared to weighted average shares outstanding of 5.2 million shares for the three months ended December 31, 2013.

Net income and diluted earnings per share for the fourth quarter 2014 reflect a higher income tax rate of 42.3% compared with an income tax rate of 22.6% in the fourth quarter of 2013. The effective tax rate for the fourth quarter of 2014 reflects an additional tax provision of $400,000 generated from a legacy acquisition.

Turning now to our full year 2014 results, we reported gross revenues of $108.4 million in 2014, an increase of 59% over $68.2 million in 2013, which included organic growth of 14%. Our income from operations in 2014 more than doubled to $8.2 million compared to $3.9 million in 2013.

Our operating margins increased 33% from 5.7% for the full year 2013 to 7.6% for the full year 2014. Total operating expenses were $36.9 million in 2014 compared with $30.9 million in 2013. As a percentage of gross revenues operating expenses were 34.1% in 2014 compared with 45.3% for 2013.

Finally, net income for 2014 was $4.9 million, an increase of 77% compared to net income of $2.8 million in 2013. 2014 full year diluted earnings per share was $0.87, up from $0.70 in 2013. Our 2014 earnings per share reflects the weighted average shares outstanding of 5.6 million compared with weighted average shares outstanding of 4 million in 2013.

The net income and diluted earnings per share for 2014 reflect a higher income tax rate of 38.6% compared with an income tax rate of 24.1% for 2013. The results of 2013 include certain tax credits from 2012. The effective income tax rate for the full year 2014 reflects an additional tax provision of $550,000 generated from a legacy acquisition.

At December 31st we reported backlog of $82.1 million compared to $60.2 million at December 31, 2013. Our backlog is an estimate of revenues to be recognized over a rolling 12 month period. As of December 31, 2014 our cash and cash equivalents were $6.9 million.

Subsequent to the close of fiscal year 2014 we redeemed all of our remaining outstanding public warrants of which there was just over 400,000 at $7.80 per share. This added $3.2 million of cash to our balance sheet. Now moving onto our outlook for 2015, we are initiating full year 2015 guidance for gross revenues and diluted earnings per share.

Our guidance for full year 2015 gross revenues, including the impact of closed acquisitions during the fourth quarter of 2015 ranges from $124 million to $132 million, representing an increase of 14% to 22% from gross revenues in 2014 of $108.4 million. Our guidance for 2015 diluted earnings per share ranges from $1.01 per share to $1.09 per share.

We note that this guidance includes contributions from acquisitions closed thus far in 2015 as of their respective closing dates. However this guidance does not include any anticipated acquisitions for the remainder of 2015. This completes our prepared remarks. And at this point we'd like to open the call up for your questions. .

Thank you. We'll now be conducting the question-and-answer session. [Operator Instructions]. Thank you, and our first question comes from the line of Jeff Martin with ROTH Capital Partners. Please proceed with your question. .

Thanks. Hi Dick, hi Mike. .

Hi Jeff. .

Congratulations on a great year. .

Thank you. .

Could you share some insight into some of the specific drivers of organic growth, either by territory, by service offering or by type of business?.

Okay sure. I'll try that. As far as, we got organic growth a number of ways. First, of course we are very pleased with the organic growth that we've received from our acquisition of AK and we looked at what we have planned for the revenue of acquisitions and a significant increase with them.

So that was in the geographic region of the south and the east and particularly from our Sabal Trail’s project that is a pipeline from Orlando through the Southeast.

But second, I think that we really experienced significant organic growth in our program management group, which we're very pleased with because of their higher margins and EBIT and so we are very pleased with the growth in that vertical.

And third, of course and you'll notice, which is really not -- we haven't seen the effect yet is the growth in our California market -- is the growth in our California market which reflected our transportation business with Caltrans and we saw significant organic growth in those.

And those are from existing contracts and with some synergy between the offices. .

That's great.

And then can you characterize the pipeline that may not be included in the backlog yet but will be added hopefully over the course of the year?.

Yes we feel but pipeline was very conservative. I believe you see that the pipeline showed up an increase. However, as Mike alluded to in his remarks, we have a rolling 12 months for backlog. So what we would do is we're replacing now, we're replacing the backlog of December with the backlog rolling from next January.

And as you know in our business the first quarter is usually our lowest revenue quarter. So the backlog that we with the increase, we had to take that in consideration. We also would not include in the backlog anything that we are not expecting or we have expected to be announced in the second quarter.

So the backlog we know is very conservative that was reported and I believe that was $82 million, $82.1 million. So that is conservative because its reflecting the adding of a weaker quarter in revenue..

Okay and then can you give us a sense of what type of organic growth or organic growth range you are assuming in your 2015 guidance?.

We estimated in our budget for 2015 a 12% organic growth..

Okay.

And is that mostly based on current work in the backlog?.

Yes, absolutely..

Okay.

And then if we want to look at the tax rate for this year, do we just back out that $550,000 additional provision from 2014 and that gives us a normalized tax rate and that’s a good rate to use going forward?.

Yes, recall also that the R&D tax credits have not been enacted for 2015 yet. So although if you back that out for ‘14 you will get a lower tax rate of say 32% or 33% but right now the R&Ds are enacted yet for 2015. So we are in our guidance, we reflected a higher tax rate of about 37%..

Okay that’s helpful.

And then was there any change in contingent consideration during the quarter?.

No, we paid out during the year $333,000 of contingent consideration from our previous acquisition, just -- we had one target that, we had two acquisitions that met their goals and one that did not meet their metric but it was less than $100,000..

Okay great.

And then Mike can you give me the D&A and stock comp number for the quarter?.

Yes, for the quarter the depreciation and amortization was $546,000. And the stock-based compensation for the quarter was $218,000 expense..

Okay. And then cash from operations and CapEx for the quarter would be great..

Our free cash flow for the quarter was $2.2 million, and we spent about $100,000 in CapEx..

Great, thanks guys, appreciate your time..

Thanks Steve -- or Jeff..

Thank you. [Operator Instructions] And our next question comes from the line of Steve Anderson with the Anderson Investment Group. Please proceed with your question..

Congratulations on another great quarter..

Thanks, Steve..

Can you give us some flavor so we can see the year-over-year proposal flow increase or someway to give us an idea of the flow, and if you come up with some metric you are going to be able to give us?.

Well, we don’t -- at a group level, which I am speaking now on a consolidated level, we don’t aggregate total proposals.

I can maybe say this that what we are seeing by the vertical and by the region, we are seeing a significant increase in the size of the proposals that we are having the opportunity to go after, and particularly we are seeing a stronger increase in the public sector on overall nationally.

I think we are seeing in Southern California, we seeing a significant increase in private sector proposal activity and we are probably seeing less of a private sector proposal activity in the Southeast and we have such a booming Florida market, but that is being offset by a significant increase in public proposal activity and this is particularly in our Tampa Bay area..

Well, I didn’t quite follow that.

Which one is declining and which one is increasing in Tampa?.

No, Tampa is -- we have a dual operation. As you know we made an acquisition in Tampa about two years ago, but we have expanded that with key hires and with wins in both the waste water and transportation area. So that’s expanding in Tampa.

In Florida market we had a very, very strong Miami and Broward and Dade County market where we saw in the private sector tremendous buildup in the condominium bases work in going. And so we think maybe with the stronger dollar there may not be as many international buyers, but that just a macro answer.

However in our Broward County in South Florida we're seeing tremendous opportunities growing in this ongoing and proposals under review for expansion activity at the Fort Lauderdale airport and other Broward County public work.

So it's kind of Steve, we always try to balance, be opportunistic in the private market but make sure that we have a foundation for our public core business. .

Okay and perhaps you can give us the approximate breakdown in your expected revenues between public sector and private sector. .

Sure. I think a good number is we generally have always looked for somewhere in the low 60s of public work and the balance being private sector work. In our public we also used quasi sector work.

So it's about 70% in pubic and we count public as public schools, we count them also as higher education, we count public as hospitals that would have state funding, that we continue to be looked at in our public area. So that's -- it's looking now like it's more about 70%, public 30% private work. .

Excellent. Thank you very much. .

Thanks Steve. .

Thank you. [Operator Instructions]. Thank you. There are no other questioners in the queue at this time. I would now like to turn the call back over for management for any closing comments. .

Well, thank you, thanks everyone taking the time to listen to our earnings call and our year end results. As you can see we're very excited and we're very pleased about the results and our growth, both organic growth, opportunities through acquisitions and really our process improvement for bottom line performance.

We're going to continue to stay focused, we're going to continue with our strategy, which we believe we are executing and it’s working well.

And I would like to say to all of those that have supported the stock that we will continue moving forward with our strategy and we're looking forward to have very positive results in 2015 and we're excited about the opportunities ahead for us. So thank you everyone for listening and we look forward to speaking you again next quarter. .

Thank you. This concludes today's teleconference. You may disconnect your lines at this time and we thank all of you for your participation..