Lauren Wright - Director of Investor relations Dickerson Wright - Chairman and Chief Executive Officer Michael Rama - Chief Financial Officer Richard Tong - General Counsel.

Ryan Cassil - Seaport Global Robert Brown - Lake Street Capital Jeff Martin - ROTH Capital Jayant Ishwar - Singular Research Will Hamilton - Manatuck Hil.

Good afternoon, everyone and thank you for participating in today's conference call to discuss NV5's Financial Results for the Firth Quarter Ended April 1, 2017. Joining us today are Dickerson Wright, Chairman and CEO of NV5; Michael Rama, CFO of NV5; and Richard Tong, General Counsel for NV5. I would now like to turn the call over to Richard Tong.

You have the floor, sir..

Thank you, operator. Before we proceed, I would like to remind everyone that this conference call may contain forward-looking statements within the meaning of the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including statements concerning future events and future financial performance.

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.

All forward-looking statements are based on information available to the company on the date hereof and the company assumes no obligation to update such statements except as required by law.

I would like to remind everyone that a webcast replay of this call will be available via the link provided by today's press release and on the Company's website under presentation at www.nv5.com. Any redistribution, retransmission, or rebroadcast of this call in any way without the express written consent of NV5 Global Inc is strictly prohibited.

We will begin the call with comments from Dickerson Wright, Chairman and CEO of NV5, before turning the call over to Michael Rama, Chief Financial Officer, for a review of the first quarter 2017 financial results and outlook for the remainder of the year. We will then open the call for your questions. Dickerson, please go ahead..

Thank you Richard and thank you to everyone joining us for NC5's first quarter 2017 earnings conference call. As you saw after the close of the market today, we issued a press release announcing our financial results for the first quarter ended April 1, 2017. And we also announced three acquisition to further straighten our existing verticals.

We are pleased to report strong first quarter results with increased revenues EBITDA, net income and earnings per share. We almost always experienced a weaker first quarter due to seasonality in our industry and this quarter we lost an above average number of work day due record rains in California.

Despite this we realized organic growth of 6% in Q1 and again expanded our backlog considerably. NV5 has accomplished uninterrupted growth since our IPO in March 2013. With a compounded annual growth rate of 35% that has brought us from 60 million in gross profit into a budgeted revenue in 2017 in excess of 300 million.

The first quarter of 2017 is our 18th consecutive quarter of growth and profitability. Our strategy remains focused empowering entrepreneurial leaders with the company to head the service lines in which they are the foremost experts.

We must also deliver our budget and keep a balance sheet low over head cost and flat organization while promoting cross selling among our service verticals. Our net revenues continue to improve as a result of our disciplined cross selling approach, which has added 16 million to our bottom line.

Since the beginning of April alone, we have added over 5 million in new wins due to cross selling. Our cross selling initiatives continues to be team efforts across all five of our verticals.

This includes teaming efforts among our infrastructure civil program management and environmental groups, but we also exceeding more teaming efforts emerging as results of our NEP services that we offer and our expanded surveying services.

We expect cross selling opportunities to continue to increase as we integrate more strategic acquisitions and synergy will be a key element of our organic growth plan to take us to our new publicized goal of $600 million in revenues by year 2020. We have seen expanded backlog growth among all of our service verticals.

We recently announced some important contracts including $11 million in revenues from the AES Corporation for chief delicate building official services on the Alamitos and Huntington Beach Energy projects. We expect to approach $25 million in fees over the next three years on these projects.

We also completed work on national museum of African-American history in Washington DC and we expect to be working with the same architectural firm on the Obama Presidential Library and Museum in Chicago in the coming years. We have also received multiple new national surveying contract as a result for our expanded drone and LIDAR services practice.

We also won several major infrastructure contracts in New York earlier this year that had delayed starts, but are getting underway this summer. These include two design projects, an environmental permitting services contract, a participant safety and drainage study totaling approximately $10.5 million in fees over the next three years.

I would like to now provide an update about acquisitions. Those have we recently completed and those that we are targeting in the future. On April 17, we announced the acquisition of Bock & Clark Corporation a prominent national provider of real estate transactional services with approximately $39 million in annual revenues.

The acquisition was based almost entirely in cash expect for restricted stock rented to key employees of Bock & Clark and it's immediately accretive to NV5's earnings. Bock & Clark has the 105 employees and eight offices in the U.S. including offices in areas and NV5 has been targeting for further expansion.

This includes Huston, Chicago and the state of Ohio. Bock & Clark brings NV5 into a new market and client base namely the provision of ALTA, topographic aerial and boundary surveys and zone reports and letters to national law firms, title firms, financial institutions and real-estate investment trusts.

We have already experienced a greater number of cross-selling opportunities due to Bock & Clark's expanded surveying capabilities nationwide. Bock & Clark shares NV5's commitments to organic growth and has grown notably from $12 million in gross revenues in 2010 with an impressive profit margin.

their revenue base is since Bock & Clark's frequently engages the same client and project multiple times to conduct updated surveys. There is a segment opportunity for Bock & Clark where NV5 has a strong presence in California and Florida.

We look forward to take advantage of all these opportunities for synergy and to the cultural fit we perceive between the two companies. Today, we also announced the acquisition Holdrege Kull, Lochrane Engineering and an agreement to acquire the remaining 60% stake in Energen.

All of our acquisitions need to be structured entirely in cash except for a limited amount of restricted stock rented to the key employees and will be immediately accretive to NV5's earnings.

The H&K and Lochrane acquisitions will provide a strategic support to NV5's existing operations and it will help us maximize our business where we already have a major presence. H&K is a full service geotechnical engineering firm based on Northern California with approximately $6 million in annual revenues.

41 full-time employees in five office locations throughout California. H&K will help grow our Northern California presence and we can now offer additional services to our clients throughout the state. Lochrane is a Florida based infrastructure engineering firm that focuses on several designs surveying and transportation engineering.

Lochrane will expand and strengthen our infrastructure in CQA articulate platforms in the growing Florida market. Lochrane is an infrastructure engineering firm that's focused on civil and transportation engineering with 6.5 million in annual rough news and 48 full-time employees.

The firm is a well known and respected entity in the Florida infrastructure market having worked on many major projects in the states. Finally, we have agreement to acquired [indiscernible] of the equity in Energen, an international energy services firm in which we had already hold a 40% stake as a result of our JBA acquisitions.

JBA invested in Energen, Hong Kong in order to expand its operations in the Asia Pacific region and to better serve shared clients such as MGM Wynn Intercontinental Hotels. We are optimistic that Energen will serve as a respective point of entre for NV5 into the global marketplace.

This will also open-up more revenues for us to carefully pursue international engineering and energy service projects. Energen will now have in turn a national office platform a NV5 to further grow their U.S. footprint. We continue to target acquisitions in the engineering sector that will bring high profitability and spur organic growth.

At any given time we have as many as 10 active deals in the pipeline in our industry and sector reputation for acquisitions allows us to be very selective. Even though acquisitions remain an important part of our growth strategy.

We must have a significant comfort level before the efforts issue and that we do making sure that we can revise added value to the target to higher organic growth and profitability and through our integration process.

We remain specifically focused on [indiscernible] our existing platforms and enter into new highly profitable verticals and service lines. I would like to now turn the call over to our Chief Financial Officer, Michael Rama, for a more detailed overview of the financial results for the first quarter. Michael..

Thank you, Dickerson, and thank you everyone for joining us this afternoon. First I'll review the results for the Company's first quarter ended April 1, 2017, and then I will provide an outlook for 2017.

Gross revenues in the first quarter of 2017 were $64.1 million an increase of 43% compared to gross revenues of $44.9 million in the first quarter of 2016. Net revenues for the first quarter of 2017 were $63.1 million compared to $38.1 million an increase of 39% from the first quarter of 2016.

The increase in revenue in the first quarter of 2017 is due to organic growth of 6% and revenues from acquisitions closed during 2016. EBITDA for the first quarter of 2017 was $5 million, an increase of 10% from the first quarter of last year.

EBITDA for the first quarter of 2017 was impacted by the loss of revenue due to record rainfall resulting in decreased utilization for our several business units in California and the cost associated with the consolidation and integration of acquisitions.

Net income in the first quarter of 2017 was $2.3 million an increase of 10% compared to net income of $2.1 million in the first quarter of 2016. Net income for the first quarter of 2017 reflects an income tax benefit of approximately $700,000 realized during the quarter.

First quarter 2017 GAAP earnings per share was $0.21 per diluted share versus $0.25 per diluted share in the first quarter of 2016.

First quarter 2017 adjusted earnings per share that is excluding the impact of amortization of intangible assets from acquisitions was $0.39 per diluted share versus $0.32 per diluted share in the first quarter of 2016, the increase of 22%.

Our first quarter 2017 GAAP earnings per share and adjusted earnings per share reflects the weighted average share outstanding of 10.7 million shares for the three months ended April 1, 2017 compared to the weighted average share outstanding of 8.1 million share for the three months ended March 31, 2016 as well as a impact of an income tax benefit realized during the quarter.

On a comparative basis, first quarter 2017 GAAP earnings per share would have been $0.28 per share when using the lower weighted average share outstanding from the first quarter 2016 of 8.1 million shares. At April 1, 2017 our cash and cash equivalents were $33.9 million compared to a $35.7 million as of December 31, 2016.

At April 1, 2017, we reported backlog of $225.2 million compared to $220.8 million as of December 31, 2016. Our backlog is an estimate of revenues to be recognized over a rolling 12 months period. Now moving on to our outlook for the remainder of 2017, we are raising our 2017 guidance for revenues and diluted earnings per share.

We expect full-year 2017 revenues to range from $331 million to $345 million which represent an increase of 51% from 2016 revenues of $228 million.

We further expect that full-year adjusted earnings per share will range from $2.12 per diluted share to $2.25 per diluted share and that full-year GAAP earnings per share will range from $1.59 to $1.72 per diluted share.

We know that this guidance includes the impact of acquisition through May 4, 2017, but does not include any anticipated acquisitions for the remainder of 2017. This completes our prepared remarks and we would like to open the call to your questions..

[Operator Instruction] We will be taking our first question from the line of Ryan Cassil of Seaport Global. Your line is open..

Just wanted to clarify the change in the guidance, the increase, are there any underline assumptions that change with respect to the organic business, or you guys simply just adding on the acquired growth and expected earnings from those acquisition?.

Well, two things the first is, no we certainly anticipate organic growth, we are certainly well within our budgeted guidelines and as you will notice Ryan, we had 6% organic growth in the first quarter. So I think if we would assume at least the continued 8% or so organic growth.

So it's a combination of both, it's tying in of the acquisition that we have done but it certainly is dependent on our organic growth which is measured by our increase in backlog and the growth as we grow internally..

Okay, I was trying to just do that back of the envelope here quickly, correct me if I'm wrong but it seems like you are increasing your guide just under $30 million and there rough math seems like the acquisition since you guys last gave guidance would be closer to $39 million, $35 million to $40 million.

Am I missing something there?.

I don’t know what you are the back bump will opening, I would probably dial Mike Roman in here quickly but, I think obviously you look that we booked the revenue when we own the company. So we are certainly looking in that guidance, we just could not take full-year revenue of the acquisition that we have recently made.

We only can take in the month that we do have. So it’s a combination of that selling conservatively, I think you said 39 million, I think we gave the upper end of the guidance to 345 million in the upper end.

But Mike may be you see it differently than I do, but I think it’s a combination of the organic growth and that actually baking in that revenue when we own the company that we have acquired..

Correct yes, yes I will confirm that..

Okay, I guess I was looking at Bock & Clark trying to handicap that full-year, I think it was 39 million contribution, trying to handicap that for when you acquired that and the H&K, Lochrane, Energen contributions and we can follow-up offline.

but it seems like it was more in the range of 35 million to 40 million incremental versus the 29 million incremental you guys were talking about but I can double check that offline..

And not to belabor the point, but 5% to 8% organic growth on a flat budget of 300 million guidance would be somewhere around 15 million to 24 million.

And so I think we obviously we would rather under promise and over deliver, but what we think the guidance we gave is something we can certainly reach, but its baked in with both the organic growth and the acquisition. So we are fairly close from what you are saying..

And then the backlog increases fairly modest sequentially, can you try to break out and I know it’s difficult the organic growth in the backlog, what the organic number is versus how much acquired revenue is in that 225 number. Is there a way to think about that, as you guys layer in more and more these acquisitions..

We don’t count any organic growth in the acquisitions until we own it, so there isn’t any organic growth presumed in any of the companies that we have acquired until we have them.

But the backlog Ryan its really, it’s a base line and so sometime we could count backlog and may be April 1, we may have won a very large contract that’s going to work for year, we will that will have to go into backlog at the second quarter. So it’s a snap shot or window of time.

The key thing is that I look at anyway in backlog is to make sure that we are not eroding it that we are winning new work to replace the work that we sold. And as our sales increase and obviously that's a larger deduct from the backlog that we are growing.

So two things, it's a windowless time and it's just the trend is what we really need to look at and make sure that there is an increase in the backlog. But it's really when we feel we are going to be billing that work in what quarter..

Okay sounds good. So I guess, Is there a way to think about how much of the 225 is acquired revenues from a dollar basis over the last inside of 12 months? And maybe we could probably follow-up offline to get that number as well if you guys don’t have it in front of you..

Yes, we would have to look back but there was off the top of my head from 2016 there was probably close to $30 million $40 million of acquired backlog that we acquired during the year from those from the acquisitions..

Okay, so that's helpful. It gets you to $190 million or so of sort of organic backlog, if I’m understanding it right which is - that's helpful. And then, the last one for me and I can get back into queue. The operating expenses in the quarter $18.5 million or so little bit up as a percent of sales basis.

Any color there, are there some synergy still to be sort of squeezed out there or is that sort of percent what we should be modeling sort of a higher level for the rest of the year? Just trying to understand the direction of those number?.

I think what I said in the narrative and I think something to look at closely Ryan is obviously we are service company, we have lost over $2 million in revenue in the quarter in the rain, but it was record rains in California.

Those were work that we done by salaried people, so we still had the cost of that labor, but we did not have that revenue to replace it. So then you would see an increase in expenses as a percentage of the revenue that we did record, but Mike you may..

Ryan to follow-up on that, if you exclude if you add additional revenues that we would have lost that accounted for about two percentage points of the actual operating cost as well as now when you look at quarter-over-quarter, our intangible assets have gone up or close to $2 million just in the Q1, 2017 versus under $1 million versus in the first quarter of 2016.

So if you strip out right size or adjust if you will the operating expenses as a percentage of revenue excluding these intangibles we are looking at about three percentage points improvements quarter-over-quarter from last year..

Okay that's helpful. Alright, I'll jump back in queue. Thank you, guys..

The next question comes from the line of Robert Brown from Lake Street Capital. Your line is open..

Hi good afternoon, thanks for taking my call. Just wanted to get a little bit more detail on the recent acquisitions announced.

Maybe you went through some areas, but where are the kind of the main areas and synergies you see and how they fit into your kind of backfilling into your verticals that you are addressing?.

That's very, very good question. Let's start with and no set order, but H&K or Holdrege & Kull is a really well known old geotechnical engineering firm that mainly is in Northern California.

We really did not have a geotechnical presence in Northern California and a lot of that work that was being done was being as a sub-consultant to others because we could not cover that work.

They are well known, great reputation, so that is really going to strengthen our infrastructure group and our CQA group in Northern California, because we didn’t have a presence there to do that work.

So they are going to have a great cross selling internal client base with our Hanna acquisition, with our program management and with our infrastructure groups in Northern California. So we feel that was the very strategic acquisition that we can immediately see how that will fill in.

Second one is Lochrane Engineering, we have a very as you well know a very significant high-profile presence in Florida.

What we didn’t have in Florida we just had a very small infrastructure engineering presence most of our work in Florida before was our Construction Quality Assurance Group, our Geotechnical Engineering Group within that and our Forensics Group and we had a small presence in transportation for FDOT in the Tampa area.

So Lochrane, which is well known and actually our strategy has always been to design the infrastructure work as a feeder of the other verticals. So Lochrane, we feel will really strengthening our infrastructure presence and work very closely with the existing platform we haven in CQA in Florida, so we like that.

Third one though was we acquired in last quarter of last year we acquired an international mechanical electrical plumbing firm and really dealt with high-end inside the building envelope engineering work for most of the casino and travel, leisure industry and a very large international presence in Macao and in Hong Kong.

Within that group was a specialist in energy efficiency for Casinos and monitoring and really high-tech involvement and that was Energen, and we owned 40% of Energen through the acquisition of JBA, who had owned that.

Now with the agreement to acquire the other 60% this will really allow us to support their growth not only in internationally in the Hong-Kong in Macao, but also they have a small presence in Southern California that we think we can expand on now that revenue base will be a greater incentive for us to utilize them in our cross-selling network.

So that's how they would fit in. The Energen would fit more into our energy group. The Lochrane that would be in more in infrastructure and the H&K acquisition will where we support our CQA and our infrastructure group. So that's how we see this fit and were pretty excited about them..

Okay, I think that's a great overview.

And then could you remind us on the seasonality the business I know Q1 was a little weaker but how does it play out through the year?.

Well, I'm knocking on serious hardwood right now which is my head.

But we know this is our real busy season right now we are coming into, second and third quarters are our busiest quarters and we just have an impact in our first quarter and fourth quarter and usually the impact in the first quarter is more in the northeast where there is a where we have winterization in seasonality, but this year the record rainfalls in California is spilled over from December which impacted us and which impacted us in the first quarter of this year.

And I’m just very, very pleased with the overall result of the first quarter because of losing those rain days.

So if you want to look at it Bob, the seasonality is we normally, historically expect our slowest quarter in the first quarter than our second slowest quarter usually the last quarter and then our really quarter that we look for strong revenue growth and organization is the second and third quarter of the year.

So we are in our busy season right now..

Okay. Thank you, I’ll turn it over..

Our next question comes from the line of Jeff Martin from ROTH Capital. Your line is open..

Dick, could you talk a little bit about [indiscernible] in California and that’s a pretty significant driver to infrastructure upgrades and maintenance and if you are planning strategically for that maybe shed some insight there and what you think from the different groups internally on that?.

Jeff, the macro picture is we love having the wind at our back and so we think that now the California's economy is getting much strong. Now that we have the [indiscernible] funded the 5.6 billion that’s been signed in the California going forward budget that Governor Brown signed up on it. I think that’s what you are referring to..

Yes [Multiple Speakers].

The one think as I can see if the gas tax increases certainly going to help to fund that and the funding is having the sense Jeff our approach is that we want to be strategically getting that funding and so we are really embedded and very empowered with many of the local municipality in California.

So that is our presence, through our Silver Source acquisition, through what we are showing on to all of the Southern California in our work and our presence with municipality and the Central Valley of California, Northern California. We have a very, very high visibility on the state for this infrastructure work and spending.

And I’m seeing a real uptick now in the projects and activity of the projects and the work that’s going on because of this. So as you have known in following the company for years, it was always us having a large presence in California with something that we had to explain with how the California budgets going.

So we really being opportunistic and I think our positioning is really going to be supporting the municipality as they get these funding grants. And the funding grant requires an application, draft plans and stuff [indiscernible]. So we really are looking to be a resource for the municipality. And so that’s how we are approaching it.

But it's going to help, it's going to help our business in our sector..

Okay, great.

And then the follow-up on an earlier question, the change in the guidance and you had 2 million of impact in California, I assume that will be recaptured over the course of this year? You had four acquisitions that added certain run rate of revenue, but your guidance is a little bit below if you just add those back in, I would agree there.

But you also mentioned some projects start delays in New York that may have impact it, did I hear that correctly?.

Yes, the announcement that we made in the narrative are those five very - I think $10.5 million or $11.5 million of projects that’s ready to go, that there are projects ready to go and it’s just the each of those state agencies is going to delay in those projects, and we fully expect those projects to start, but we have to then not expect as much of the revenue as we really anticipated if the project would have started sooner.

So some of that revenue is spill over, we won't get the full piece of that 11.5 million immediately. That we have to wait for those project start, but there are some we won them. But in the guidance I think we tend to be a bit conservative but, we would rather under promise and over deliver..

Got it and then questions for Mike, first quarter I have seen that the operating expenses are going to inflated a little bit relative to the rest of the year due impart to payroll taxes, is that right. I think in the past the acquisition layering in as mass that somewhat.

But I just want to clarify there that in the first quarter of the year you are typically going to get higher salary wages, payroll tax et cetera in the first quarter to do that..

Yes Jeff good observation, we get probably in the first quarter with the acquired payroll tax [indiscernible] some of the people they max out and then that said [positive] from a quarter over quarter in the future quarters smooth itself out..

Okay, so first quarter is your seasonally weakest quarter in general and then on the operating expense sides its seasonally the heaviest, specific way to summarize that..

Correct..

And then you mentioned cost issue was consolidation and innovation of acquisitions are you able to put a dollar number on that in the quarter..

Various things, we have overlapping in certain areas in rents that we always jump on and or jumping in front of right away to try to right size that we have overlapped in rent space. We also have insurances and we have various things that throughout the year that we will recapture and smooth out.

It could take up the 12 months for some of these costs to right size if you will from an integration and consolidation standpoint. So its insurances, its rents, its duplication of certain cost and back office things that we will scale as year goes on..

Okay and then if you have it hand in, do you mind giving us the gross intangibles amortization number of the quarter..

It was 1.9 million, for Q1..

Thanks guys. Good to talk to you..

Thank you. Our next question comes from the line of [indiscernible]. Your line is open..

Can you talk about finishing the five divisions, what is your understanding the macro factors affecting them and where the macro factors is trending currently..

Greg you meant our five service lines..

Yes, finishing your service lines, what will be the macro factors that you consider to be affecting each of those service lines and how are those macro factors trending at this point..

Well certainly the strategy in the premise of NV5 is really to be an infrastructure company, infrastructure support and we believe that the infrastructure group, which includes our design and includes many of the services that will feed the other vertical.

So we like in macro, the macro wins we love that everyone is talking about infrastructure, there is going to be a need for infrastructure and what we love to say it’s not so dependent on the economy. People have to drink clean water whether it's a good or bad economy, they have to go for bridges that don't fail and they have to treat waste.

So we feel the macro picture for infrastructure if that is good it's going to help the other verticals.

I think where I see where we really starting to see some great trends is in as our economy get stronger, we do see our CQA which has to do a lot to do with building and planning and permitting and inspection and outsourcing and private, what we called private providing committing work, we see that growing.

And then we think we look at what we can do with the recent acquisition of Bock & Clark which has somehow overlapped many of the other verticals. We are going to be able to give a lot of cross-selling opportunities for them and then for us. So I see as I see a trending in our construction quality assurance, our infrastructure our program management.

And then I think that as we develop more and more of a presence, I would look for growth in our energy business and our business is really focusing on two things. One is the energy generation, which we feel with great wins in California that we have announced.

And also inside the building envelope which are in a very strong position now in the mechanical, electrical and plumbing, energy efficiency space. So that's kind a where I see the trend going. I see the macro-trend is certainly infrastructure and I think for us infrastructure will feed those other service lines..

Okay, great. thanks for comments..

Thank you. Our next question comes from the line of Jayant Ishwar from Singular Research. Your line is open..

Yes thanks. Great acquisitions, really amazed at how you are able to get these companies at these types of prices the accretive valuations for you. Need to talk to you offline at some point about these things how to do these kinds of acquisitions? Yes ago ahead..

[indiscernible] I would like to say this. We just really stay with the things that we know. We have been at it a long time, we are kind of known in the space in the areas that we are in, we are very selective and we think we have something that we may have. We stay with the friendship knowledge that we do know and have.

And so we think that we can see opportunities that being very strategic and specific that people that have a broader approach may not be able to capitalize on..

The other question was really a technical question for Mike.

The tax benefit of $700,000, could you tell us what that for, was that a similar benefit in the Q1 of last year?.

Good question. Effective January 1st this year, there was actually an accounting rule change that allows for upon vesting of restricted stock that any tax savings or tax benefit actually runs through the income statements as appose to. So it's really an accounting change that changes in 2017.

So that was we had shares of stock that vested during the first quarter that we able to recognize through our income statement as a benefit rather than our balance sheet..

Thank you..

[Operator Instructions] it looks like we have got just one from [indiscernible]. Your line is now open..

Just one other thing. Basically what could go wrong and how could you guys mess-up. i.e.

what are the non [indiscernible] risk factors in the 10-K as you see them at this point?.

I think many things can go wrong and I think the biggest danger that people have in our business is one we are just simple people, we stay with the things we know, but I think where a service company in general can go wrong I think we always have to be really cautious of and very aware of fixed cost.

Fixed costs are something that as a service industry we shouldn’t have. Fixed costs like real estate, leases and buildings and that can at a percentage of revenue only increase as your revenue decreases. So that is something that we need to be very, very careful of.

But I think we have been doing this for a long-time haven’t knock on - we acquire knowledge, we learn a little bit each day about how to get better and what not to do. So I think we just have to be very conscious, stay with the things we know, we know those five verticals, we know that universe and really be aware of how things back up.

We have no control, it can really effect the budget and those are the fixed cost in any service business. So those are the things that I think I would be concerned with.

Can we be sued or professional liability insurance, we have coverage for those kind of things and insurances, but I would say that is the one thing that I always think about is overhead, how do we control it and how do we not get involved in things that we are going to have expense whether we have business or not..

Okay, and then overtime.

How do you boost up your corporate service center, in other words when you do these acquisitions I think you start to do human resources, payroll, IT and things like that and how is that going and in terms of your ability to take cost out of these acquisitions and to improve the function that the shared function you are providing to these organizations..

Well, I think there has to be integration that's the integration plan and as you know the five things that we feel that we can support a company with and there has to be scalability and as companies that do acquire other companies, I think the very first thing is we have to add value, improve that on [indiscernible] organic and help them with organic growth.

So the key things that we look at it, is an integration plan overtime. We work mutually with the companies that we have acquired to go through these things, we can control payroll together, we don’t need to have one finance group where we can scale.

We have one human resources which is very important to me the human resources and having a capability of knowing everybody in the company.

Risk management is such a key thing, we have three, full-time attorneys, we really watch risk management and we think we can really consolidate the insurance cost and things that they are doing at risk and have a buying power concerning that. IT is very, very important to us.

And so we really want to spend the money and look at how we can do things more efficiently, how we can do design work and in the East Coast or the West Coast and vice versa. All of that comes from a vibrant IT group.

And then the last thing of cost is the branding and marketing of one company and bringing that power, but the integration is a process for each of those steps that we take over a period of time. And depending on the size of the acquisition that could be as short realizing savings in six months, it could go up to a year or so.

But eventually we want to get all of those things into the integration and that’s where our scalability comes about. And that’s why in the narrative that we said in the earnings release. At first sometimes that there is a cost to that integration, because there is some duplicity or doubling of insurances or support services.

So I think the integration process will rate - but we insist on those five things that mentioned..

Okay, great. Thanks. I appreciate it..

Our next question comes from the line of Will Hamilton from Manatuck Hill. Your line is open..

Just one quick question on margins, obviously some challenges this quarter [indiscernible] on acquisitions integrations.

But Dick, as you look for the full-year, are you still optimistic about margins being higher versus say 2016 given what you are doing internally and then the acquisitions you are laying in?.

Yes, well I would be quite disappointing, if we didn’t see the gross margin improving. We know the service line in the business we are in, we are careful on utilization rates and then that [indiscernible]. So you never can be pleased with everything.

But I was pleasantly pleased that we could have that drop in revenue and have those costs and still not have as much of an erosion on the gross margin. So to answer your question, we are expecting improvement in the growth margin as we go forward..

Right. And then in terms of EBITDA margins..

Well, we think the EBITDA currently improve. Yes, particular as we scale our services, we feel that EBITDA will improve. We are very conservative on the 12% to 15%. But I certainly think that we would certainly expect to be in the upper range on the EBITDA..

And Michael, just on the amortization, the adjusted EPS, it looks like to both low and the high and $0.53 does that include some of the recent acquisitions?.

Repeat the question again..

The intangible amortization that we are backing out of on the adjusted EPS?.

Yes, the 1.9 million for 2017, includes all the acquisitions that we have acquired through from last year into this year, include anything new acquisitions for in the second quarter..

The 1.9 was in the first quarter right?.

That’s correct..

That will go up with obviously….

That will increase as we go forward with the new acquisition, that’s correct..

Roughly how much, do you have those numbers roughly at this point?.

Probably another $1 million or so going forward. That’s kind of an forward question..

We don’t really want to speak into that right if we can..

Alright understood. Thank you guys..

Thanks Will..

[Operator Instructions] I'm seeing no other questions in the queue at this time. So I would like to turn the call back over to management for any closing comments..

Thank you and thanks everyone for listing to our first quarter call. We certainly appreciate the questions and we really are pleased with what we are doing, but more than that the support that we have from our investors, then our partners, then our shareholders.

As you know, we believe that we are in this together, our employee base, we want them all to be shareholders they are going forward with us. So we see some good things ahead of us, but the key thing is that we have to stay focused on our business model and our strategy.

And so I want to thank everyone for the support that you have given us and I can tell you that we will continue to stay focused on improving our Company, improving value of the company and delivering solid returns to the shareholders and our employees of course.

I appreciate everyone's interest in the call today and we look forward to speaking to you again in the second quarter. Thank you everyone..

Ladies and gentlemen thank you again for your participation in today's conference call. This now concludes the program and you may now disconnect at this time. Everyone have a day..