Lauren Wright - IR Dickerson Wright - CEO Michael Rama - CFO.

Jeff Martin - ROTH Gregg Hillman - First Wilshire.

Good afternoon everyone and thank you for participating in today's conference call to discuss NV5's financial results for the third quarter ended September 30, 2015. Joining us today are Mr. Dickerson Wright, Chairman and CEO of NV5 Holdings, Mr. Michael Rama, CFO of NV5 Holdings and Dr. Lauren Wright, Director of Investor Relations for NV5 Holdings.

I would now like to turn the call over to Lauren Wright..

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 other statements with respect to our abilities related to driving business development, achieving operational efficiencies, completing strategic acquisitions, expanding our backlog and achieving our 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 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 November 19, 2015, starting at 7:30 PM Eastern tonight.

A webcast replay will also be available via the link provided in today's press release and 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 Incorporated, 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 review of the third quarter 2015 financial and outlook for the rest of the year, we will then open the call for your questions. Dickerson, please go ahead..

Thank you, Lauren. And hello, everyone. Thank you for joining us for the NV5's third quarter 2015 conference call. As you saw after the close of the market today, we issued a press release announcing our financial results for the third quarter ended September 30, 2015.

We reported very strong third quarter results with revenues increasing 55%, EBITDA increasing 78% and net income increasing 74%. We saw growth among all of our business lines in the third quarter, as well as some significant wins, a ramp up and request for our services and our backlog again expanded substantially.

We see the unelected organic growth we have realized since our inception as evidence that NV5’s operating philosophy is working. What is that philosophy first we maintained a very flat vertically structured organization that empowers recognize experts in a particular field to head the service line they know best regardless of the geographic area.

This has resulted in increased organic growth and performance excellence. Second we have built a shared services center that provides scalable back office support to all of our business line. The shared service center has also created an efficient platform for unification of acquisitions.

Third we have stimulated even more operational growth through a dedicated organization to promote cross selling among our service lines. And through our differentiated service platform we furnish a stability through all the economic cycles.

We are on track to reach our publics goal of 300 million in revenues news by the end of 2016 and we are looking forward to set a challenging thresholds for growth after that.

I would like to speak in more detail now about the acquisitions we recently completed including an update on the RBA group and all win environmental and discuss some notable new contract wins before I turn the call over to Mike Rama to discuss financial details. As you may know we acquire the RBA group in July.

A northeastern infrastructure engineering firm with 250 employees. The integration of RBA is progressing very well and we see a great cortical fit and a great skill fit. Between our existing infrastructure operations on the west coast and the RBA team.

They've already began to collaborate on some major transportation projects and there have already been some synergies recognized between our facilities program management team and the architects and planners at RBA. We are looking forward to announcing the fruits of all these integrated efforts in the upcoming months.

Since our last earnings call alone RBA has been winning work with our existing client base at a sensational rate. Here are just a few of the most recent contracts RBAs engineering construction services and urban planning groups have won.

More than $10 million for green infrastructure design services from the city of New York for various sites in the borrower of Queen. More than 1.6 million for the first phase in a two phase contract with the city of New York to rehabilitate the Bronx River Greenway.

1.4 million to repair and replace a major road way in Suburb [ph] County for the New York state DOT. 3 million from the New Jersey state DOT for general engineering services.

RBA also continues to be instrumental in the structural engineering and landscape architecture efforts to fully rebuild and strengthen the coastal infrastructure in the neighborhoods most devastated by Hurricane Sandy. And they are also the New York port authority’s go to firm from many of the most prestigious building projects in Manhattan.

We also acquired Allwyn Environmental which is being effectively integrated into the existing NV5 organization as a new highly profitable business lines, nuclear environmental services.

Just last month NV5 was the awarded the construction quality control contract from Bacto [ph] a client NV5 has been working with for 20 years and one of the primary sub-contractors for the department energy's 12.3 billion waste treatment plant in Hanford, Washington.

NV5 is now one of only a few engineering companies in the country with NQ1 certification.

We believe our coveted nuclear environmental safety team in the southwest will be a very successful in this market going forward because the barrier of entry is so high and the need for construction quality assurance services is growing as nuclear plants around the United States are closing and look for safe way to store and treat ways.

Concerning acquisitions our pipeline remains very full and very promising. Although we continue to be aggressive looking for deals in the ranging from 3 million to 50 million in revenue we are now also being approach with much larger deals that are reputation as integrators focused on growth has allowed us to consider.

We also continue to win great work through our existing program management construction management and infrastructure design operations with local agencies and municipalities and since the second quarter ended we have announced approximately 12 million in work on university, airport and bridge design contracts in the southwest.

I would now like to turn the call over to our Chief Financial Officer, Michael Rama for a more detailed overview of the financial results for the third quarter.

Michael?.

Thank you, Dickerson and thank you for joining us everyone. First, I will review the results for the company's third quarter and nine months ended September 30, 2015 and then I will provide an outlook for the remainder of 2015.

Total gross revenues in the third quarter of 2015 were $48.7 million, an increase of 55% compared to gross revenues of $31.4 million in the third quarter of 2014. Net revenues for the third quarter of 2015, were $38.4 million compared to $28.4 million, an increase of 74% from the third quarter of 2014.

The increases in gross and net revenues were due primarily to organic growth from our existing platform as well as the contributions from the company's acquisitions in 2014 and 2015. Net income in the third quarter of 2015 was $3 million, an increase of 74% compared to net income of $1.7 million in the third quarter of 2014.

Third quarter 2015 diluted earnings per share was $0.38 versus $0.31 in the third quarter of 2014.

Our third quarter 2015 earnings per share reflect the weighted average shares outstanding of 7.9 million shares for the three months ended September 30, 2015 compared to the weighted average shares outstanding of 5.6 million shares for the three months ended September 30, 2014.

EBITDA for the third quarter of 2015 was $6 million or 15.6% of net revenues, an increase of 78% up from $3.4 million or 13.9% of net revenues for the third quarter of last year. On a per share basis EBITDA was $0.75 per diluted share for the third quarter of 2015 compared to $0.60 per diluted share for the third quarter of 2014.

Now we'll review the year-to-date results for the nine months ended September 30, 2015. Gross revenues for the nine months ended September 30, 2015 were $112.3 million, an increase of 40% from $79.6 million for the nine months ended September 30, 2014.

Net revenues for the nine months ended September 30, 2015 was $88.9 million compared to $61 million, an increase of 46% for the nine months ended September 30, 2014. Our organic growth for the nine months ended September 30, 2015 was 11%.

The increases in gross and net revenues were primarily due to organic growth from our existing platform as well as the contributions from the company's acquisitions in 2015 and 2014.

Net income for the nine months ended September 30, 2015 was $5.8 million or $0.84 per diluted share, up from net income of $3.5 million or $0.63 per diluted share for the nine months ended September 30, 2014.

Diluted earnings per share reflect weighted average shares outstanding of 6.9 million shares for the nine months ended September 30, 2015 compared to weighted average shares outstanding of 5.5 million shares for the nine months ended September 30, 2014.

Included in the weighted average shares outstanding for the nine months ended September 30, 2015 is the impact of 1.6 million shares issue from our secondary offering on May 28, 2015.

EBITDA for the nine months ended September 30, 2015 was $11.9 million or 13.4% of net revenues, up from $7.2 million or 11.8% of net revenues for the nine months ended September 30, 2014.

On a per share basis EBITDA was $1.72 per diluted share for the nine months ended September 30, 2015 compared to $1.30 per diluted share for the nine months ended September 30, 2014. As of September 30, 2015 our cash and cash equivalents were $20.4 million compared to $6.9 million as of December 31, 2014.

As of September 30, 2015 we reported backlog of $151 million compared to $116.8 million at June 30, 2015 and $82.1 million as of December 31, 2014. Our backlog is an estimate of revenues to be recognized over a rolling 12-month period.

Now moving on to our outlook for 2015, during our last earnings conference call, we raised 2015 guidance for full-year gross revenues to the range of $155 million to $160 million and diluted earnings per share to the range of $1.07 to $1.17 per share.

We are once again raising our guidance for the full year 2015 gross revenues, recognizing the impact of acquisitions closed through October 31, 2015. We now expect full-year 2015 gross revenues to range from $155 million to $162 million, which represents an increase up 43% to 50% from 2014 gross revenues of $108.4 million.

We further expect that full-year 2015 diluted earnings per share will range from $1.09 per share to $1.19 per share, representing an increase up 25% to 37% over diluted earnings per share of $0.87 for the full year 2014. We know that this guidance does not include any anticipated acquisitions for the remainder of 2015.

This completes our prepared remarks and would like to open the call up for your questions..

Thank you, sir. [Operator Instructions] Our first question is from Mike Swirsky of Seaport Global [ph]. Your line is open..

Can we just first quick small question the way can you give us an estimate as to what the actual organic growth was in the quarter with an actual number?.

It's very difficult for doing that because of the run rate of the acquisitions we’re doing.

We were pleased with it, can't give you that exact number because we didn’t differentiate out the acquisitions that were rolling in for that period, but we thought nine months and we’ll continue to do that would be a much more representative than the weight of an acquisition and trying to figure out organic growth for that quarter if they came in.

So I can say this, we are very pleased with what it was but to be definitive I think it's best to go with the nine months where you saw 11% organic growth. .

Okay nine month to 11% got it.

Maybe can we also get your thoughts on if something you still have some growth to come for the rest of the year? Give us a sense as to where the labor markets are right now, do you have enough people to get this all kind of work done and are there any pressure’s on ally [ph] rates and does any of that past around to the customer?.

Okay. Well, we are very thankful that we have a robust construction environment with the tailwinds behind us.

A recent survey said that public construction was up 14.1% over the same period last year, so Michael so you understand organization, our product is our billing of our people and the services so we have an organization that does nothing but assure staffing.

We have three full time people working in the recruiting groups, we know our operating officers in each of the verticals, identify lead times for people and so we are very careful because if we can't sell an unbilled slot you lose that revenue. So far we think we're addressing it.

We think most of the contracts that have labor rates that may increase our fees our based on the net multi apply basis, so if the rate is increased we get the multiple on the higher rate. So we don’t have too many unit price contracts that are effected by a labor increase.

Our construction quality assurance vertical has many contracts like that but in those contracts we are allowed in an increase in an annual increase to the unit price, so if there is an increase in labor hopefully it's are followed by the contract increase. I hope that it's answered your question. .

Yes, absolutely.

And then can you give me a kind of your thoughts on -- I think we’re closing in on a long return federal highway build here, do you get a sense that there is some tailwinds beyond just 2016 for some of the public construction markets? And are there any areas that you are particularly excited about as other areas of the country or your own services that might benefit from a fixed year long term federal highway build?.

Okay, sure. That was very helpful to hear that 366 million, I guess the senate and the house are going to rectify the -- what that amounts is going to be.

But where we are in position we are very pleased with this and where we -- our strategy of courses in the west where we have a large infrastructure organization, now also in the northeast where we have RBA with a very significant infrastructure engineering organization.

We like the northeast because there has been a tremendous pressure on infrastructure.

If you happen to go in to Manhattan you will see nothing but high rises but you see little horizontal road improvement to support this so we think we are in a very good spot in those areas, it's in the west, the northeast and in the Rocky Mountain region so we've gone through a very soft time years ago with transportations so now we are looking forward to some opportunities..

Is there any sense on the timing of some of those will any of them come in 2015 or is it more of a 2017 story right now?.

I can't answer that question, I can speak to the contracts that we have and I can and not knowing what's going to be under that bill or not but with our transportation organizations and contracts we are anticipating a strong 2016..

Oh, great perfect. Thanks guys, appreciate it..

Thank you. Our next question is from Jeff Martin of ROTH. Your line is open..

Dick, could you touch on the movement in the sub-contractor line in the quarter I would assume that's tied to RBA and you anticipate that to start to creep down like the rest of the business had been trending?.

Jeff you're right on, I think RBA had a significant impact and we've had an initiative to reduce the amount of sub-consultant and we're just starting to utilize that initiative with RBA and with Allwyn and both of them came in without that. So, we started that -- in very good cash, we started to see the sub-consultant go up from what we normally had.

I was pleased though that the EBITDA and the EBIT actually reflected an increase over the revenue, I didn't see a real erosion there.

So maybe Mike you may have a comment on that?.

I think we're also seeing the benefit of what the RBA we also have, last year we had a big -- the mix was AK dominant a little bit and then now we're trying -- we're normalizing more the margins because of the -- because of RBA and the program management group over in with JLA acquisition.

So we're seeing more rounding out of our overall gross margins as well, back to normal, back to more than normal mid-40%s at 50%..

And then I was going to comment on, who would have thought our EBITDA margins would have ticked down sequentially because of RBA didn't anticipate it to be a strong as OS and I like to see a sequential uptick there. .

[Multiple Speakers] realize the scalability of the -- you've heard me many times Jeff, speak of the scalability about -- of the back office and so we're starting to manage many of those back office functions with not a great increase in staff over our larger revenue..

Do you have -- I mean you've had quite a bit of new contract announcements, do you have any thoughts on a range for organic growth in 2016?.

What organic growth will be in 2015?.

2016?.

2016. Well, we see some -- continue to see wonderful backlog and wins and I just don't have a number to give you, but I'm not seeing a decrease in organic growth and I think 11% over a much a higher number in the quarter, in the nine months ended September 30 was very significant to me.

So, hopefully we'll be able to maintain that same organic growth in 2016..

You and I’ve had numerous conversations about the industries running at about 5% or 6% rate of growth when projects are there to be funded and it would make sense that with the enhancement both from geographic standpoint and across your five verticals that you increased your revenue capture, probably captured some of those contracts, you may have not been able to handle in the past and that would justify, a growth rate that -- 3,4,5, 100 basis points higher than the industry that's a fair statement?.

I think obviously we're seeing much more opportunities, but also Jeff, we really want to focus -- that our strategy is the flat organization and verticals that can respond.

So we're looking in areas that seem to be growing higher than the overall engineering industry and I think many times that keep are measuring organic growth in a pure engineering design industry.

But our organic growth includes our program management group, it includes now that we're happy with our energy group and we're very happy with our nuclear services group and also RCQA and forensic, so there's more to it than just the standard design, infrastructure, engineering companies, which their organic growth is 6% to 7%..

Mike, can you comment or could you give us some insight into the accounts receivable increase in the quarter? And then if you've got the DSO number for the quarter, last quarter and the year ago quarter, that'd be helpful?.

Our DSO for this quarter was 80 days, last quarter, second quarter was 82 days and actually at year end was around 85 days.

So what's happening on our AR this is our -- third quarter is our busiest quarter of the year, so we're really billing and collecting at a rate that's actually billing side more than we're collecting, but we're going to see that cash flow starting to come in the fourth quarter, just because of the nature -- our cyclical nature of our business.

So, we've built just in the month of September $16 million, so that was our working process just for that month. So, it's very common we saw it in last year through September 30th, the same, what looks to be a decline in cash flow, but it's really just a timing with our -- the way our business is running, the third quarter being our busiest quarter..

And then cash tax rate, if we went back into a cash flow number of EBITDA, what would -- what's your cash tax rate earning?.

Cash tax rate, we're running around 37%, tax rate..

Thank you. [Operator Instructions] Our next question is from Gregg Hillman of First Wilshire. Your line is open sir..

Could you talk about, I guess the balance sheet a little bit.

Well first of all just review -- what did you pay for RBA again?.

$13 million [ph]..

In cash, was there any stock on owner’s notes?.

I think the cash component was 6.5 million limited amount of stock and then they were seller carried back for the balance. .

Okay.

And then I think your debt is around with $13 million to $14 million right now, what are your current lines and do you think you can expand your lines in the next couple of months or get better terms?.

We’re currently at -- we have our current line of credit at $8 million, based upon our receivable, balance and the business we think were anticipating gains to $20 million to $25 million types of facility..

And when it one way you close to that?.

Our current facility goes through a May 2016, so were looking over -- beginning part the year we’ll look to start talking to our banks and other lenders to see what other options are out there.

And Greg we were approached by them, they’ve been asking us if we like to increase the warrant..

Okay.

And then who is your current lender?.

Well for the senior debt is Torrey Pines which is regional bank in Southern California and we don’t have any other lines of credit with any other financial institution..

Okay.

And what is your finish for R1 the environmental?.

1.3 million..

Okay.

And I think that takes you into a new vertical within environmental, you weren’t in nuclear before, what kind of nuclear works do they do?.

The majority of their work is supporting the closures of nuclear facility and treatment of nuclear waste, but they have -- we have five people I believe up at Hanford facility and that is for the quality control and inspection in courts with a definitive protocol for the treatment of the nuclear waste from the closure.

So that's the major thing they are doing, inspection and that work flow is under prescribed standard, they are following the standard in doing that..

Okay I think [indiscernible] could use some creativity in terms of you are getting there [indiscernible] units to work, maybe you can help them along those lines?.

Yes. We were very thankful for the work that Bacto is giving us that’s for sure and there is a lot of things coming up as you know, [indiscernible] look like they going to have to address that with a closure..

Okay. Then and to [indiscernible] and you are just staying within those flat vertical that are you in right now I take it and then free of the backlog.

The companies that you are looking at right now what verticals are they in or are they just across the board?.

Well I don’t want to -- Greg, I can't be specific, but we have -- where we are excited about a -- some of engineering and the mechanical space that is doing energy efficiencies for federal facilities.

We like that space, we really love the program management space and forensic space and we always have and right now I have never seen as many opportunities. This the most that I've seen in -- that I can remember. But it easy to say we have 10 deals going on at any one time, but now I think we even have more than that and we’re always active.

But it seems like the spaces that we’re in now are those niche spaces that are -- that their profitably is higher than the industry standard and that it gives the opportunity to be more embedded with our clients..

Okay. And I take it this the first time they’ve probably -- some of these firms have had their press earnings until recently and then finally they've got earnings up a little bit, to the sense that they can get decent price for their engineering firm.

So where they here to before they had been able to -- in having been there, like for the past as five years.

Do you think that's a true statement?.

Well I think that the market overall in the engineering service base is much stronger. There always seems to be buyers and sellers out there, but we've been able -- we haven’t gone -- had to and believe me I'm knocking on serious hard wood right now which is my head, we have not had to go beyond that trailing multiples that we have an experience.

And so we still get that good arbitress, but to say that a macro thing about the space right now. The sellers are getting much more educated and we’re finding them to be represented much more than they were in just representing themselves in the sale and I think there is usually more than just one or two buyers that are looking at the firms.

So it's kind of the robust market on both sides..

Okay.

So it hasn’t gotten over heated in terms of multiples at this point?.

We’re selective and we have the nice little something that we say, we want partners, we want our knock on what it’s been doing fairly well. We want to -- we put stock in the deal so we're creating partners and that seems to be very attractive to those firms that we're talking to..

Thank you. At this time this concludes our question-and-answer session. Now I'll like to turn the call back over to Mr. Wright for closing remarks..

Operator, there's no other questions out there I assume?.

Correct sir..

The first thing, I continue to thank you and thank our shareholders and thank those that had the interest in our company each quarter. We appreciate your support, we appreciate the belief you've had in our company and I say that's and you've heard me say that many time. Although our approach is strategic, our team is been doing this for a long time.

It's, one foot in front of the other. We know how to acquire firms, we know how to integrate and more than that we think that we can grow these companies organically and I hope you've seen by those result I’m very, very pleased with our progress so far.

We always have things to do and things to improve on but with your continued support we will continue to move forward and reach our goals. So, I want to thank everyone for listening and we look forward to speaking to you again at the next quarter. Thank you..

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, you may now disconnect. Everyone have a great day..