Good afternoon, everyone. And thank you for participating in today's conference call to discuss NV5's Financial Results for the First Quarter of 2021. Joining us today are Dickerson Wright, Chairman and CEO of NV5; Edward Codispoti, CFO of NV5 and Richard Tong, Executive Vice President and General Counsel of NV5.

I would now like to turn the call over to Richard Tong..

Thank you, operator. Welcome everyone to NV5's first quarter 2021 earnings call. Before we proceed, I would like to remind everyone that today's discussions contain forward-looking statements about the company's future business and financial performance. These are based on management's current expectations and are subject to risks and uncertainties.

Factors that could cause actual results to differ materially from these statements are included in today's presentation slides and in our reports on file with the SEC. During this call, GAAP and non-GAAP financial measures will be discussed.

Reconciliation between the two is available in today's earnings release and on the company's website at www.nv5.com. Please note that unless otherwise stated, all references to first quarter 2021 comparisons are being made against the first quarter of 2020.

In this presentation, NV5 has included certain non-GAAP financial measures as defined in Regulation G promulgated under the Securities and Exchange Act of 1934, as amended. The non-GAAP financial measures included in this presentation are adjusted earnings per share, adjusted EBITDA and adjusted EBITDA margin.

NV5 provides non-GAAP financial measures to supplement GAAP measures as they provide additional insight into the NV5's financial results. However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation and are not in accordance or a substitute for GAAP.

In addition, other companies may define non-GAAP measures differently, which limits the ability of investors to compare non-GAAP measures of NV5 to those used by peer companies.

A webcast replay of this call and its accompanying presentation are also available via the link provided in today's news release and on the Investors section of the company's website.

We will begin the call with comments from Dickerson Wright, Chairman and CEO of NV5, before turning the call over to Edward Codispoti, Chief Financial Officer, for a review of the first quarter 2021 results. Dickerson Wright will then provide closing comments before we open the call for your questions. Dickerson, please go ahead..

Thank you, Richard and thank you to everyone joining us for NV5's first quarter. We are pleased to announce the successful first quarter. I will start on slide five with the Q1 highlights. We delivered $153 million in revenue, $24.2 million in adjusted EBITDA and $0.88 per share of adjusted earnings per share for the quarter.

We also had improved margins over the same period as last year. We generated record cash flows in the first quarter with $48.2 million in cash flows from operations. We finished the quarter with $93 million in cash on hand giving us a lot of dry powder for our M&A program, which continues to be fueled by a healthy pipeline of opportunities.

The first quarter is always our slowest quarter of the year, due in large part to winter weather delays. The more severe the weather the greater the possibility for project delays. One of the big stories in the early part of 2021 was the winter weather.

Over 170 million Americans were under winter weather alerts which were the most in 15 years, and this was the nation's coldest February in 30 years. NV5 did experience some project delays in multiple parts of our business including impacts to our geospatial group.

We had delays in the data collection for some significant projects due to the inability to operate in severe weather. This temporary disruption in the early stages in data collection also displaced the timing of some revenue recognition on the data analytics phase as well. We also experienced some delays and projects, wards, and project starts.

In our infrastructure related businesses, which include the infrastructure, utility services and testing, inspection and consulting verticals, we delivered 4.5% growth over the first quarter of 2020 despite impacts of both weather and the pandemic.

Furthermore, the total backlog grew 25 and we expect to see accelerated growth in the rest of the year and expect to finish the year ahead of current analysts' consensus for revenue and adjusted earnings per share. As many of you know, NV5 is conservative. We prefer to limit leverage.

Subsequently in March, we execute a follow-on offering that raised $141 million in net proceeds, which we have applied, along with our strong cash flows to pay down debt and to fund further acquisitions. You can see the results as our net leverage is less than one, which is where we were prior to the Quantum Spatial acquisition at the end of 2019.

We've always reduced leverage through operating cash flows, and we retired $145 million in debt in Q1. This low net leverage brings us back to our preferred capital structure, and along with our significant cash on hand allows us to act quickly when the acquisition opportunity presents itself.

And it gives us a strong strategic advantage in funding acquisition. Our strong capital position allows us to pursue larger acquisitions that may strengthen our platform or provide entry into new high margin service offerings. In the first quarter, we completed three acquisitions, with the first being International Design Associates or IDA.

IDA strengthened our commissioning capabilities and subscription based energy efficiency offerings in the Middle East and Asia, and complements our International group, which has been performing well in 2021.

In February, we also acquired TerraTech engineers, which strengthen our geotechnical engineering capabilities and testing, inspection and consulting services, which complement our strong infrastructure capabilities in the southeast.

In March, we acquired Geodynamics; sonar based full ocean depth geospatial Solutions Company that strengthened NV5's five geospatial near shore and shallow water geospatial capabilities. We expect water due of climate change and sustainability to be a strong driver of geospatial services.

And the addition of Geodynamics expands our marine capabilities and provides a competitive advantage when pursuing a wide range of marine based environmental and infrastructure related opportunities. Let's turn to slide six for an update on our core business.

The infrastructure market is not as dependent on economic cycles, and our businesses performed well throughout the COVID-19 pandemic. In the first quarter, we secured large contract in New York, North Carolina and Florida, three of our largest markets in the eastern U.S.

In New York City we resumed design services, which have been put on hold for much of 2020 due to the pandemic. In addition, the North Carolina Department of Transportation continues to increase funding for projects throughout the state.

In the West, we took steps to expand our transportation infrastructure business in Southern California, led by key hire in the Los Angeles area who will lead those efforts with Caltrans. In the Pacific Northwest we have seen an increase particularly in our geotechnical engineering group, and we have continued to maintain strong margins.

Utility service continues to be the fastest growing segment within NV5 as we push towards our energy 2021 target about 250 million run rates by the end of this year. Modernization of the electrical grid and natural gas delivery are the main drivers of this business, with an emphasis on the safe and reliable delivery of power.

In addition, our real estate transaction services are above pre pandemic levels. Throughout the pandemic, we have heard many questions about COVID impact on municipal and state budgets. This one state budget impacts were not nearly as bad as we once feared.

Gas taxes, which fund much of the transportation infrastructure benefited from additional vehicle use as people avoided air travel. The boom in residential housing provided permit these for municipalities along with increase in sales taxes, which definitely benefit the municipalities.

In addition, the 2021 American Rescue Plan Act signed in March, provides a $350 billion in relief funding to state local, tribal and territorial governments. We are optimistic that state and local governments will have adequate funding to move forward with their infrastructure plans. Please turn to slide seven for an update on the geospatial business.

As you know we collect geospatial data by drones, fixed wing, aircraft, helicopters, rovers and vessels using sophisticated remote sensing technology including lidar, sonar and various types of advanced imagery. As I touched on it earlier weather conditions can sometimes play a factor in the collection of remote sensing data.

And due to the severe weather in the first quarter of 2021, we experienced data collection delays. In addition to weather delays, our largest market for geospatial services is the federal government.

The transition to the new federal administration did cause some delays in project ward's, which contributed to delays we experienced in project starts in the first quarter.

However we believe that we are poised well for an increase for the balance of the year, as we began to see some momentum in March, with increases in volume and sales activities, along with a strong pipeline of verbal awards, which are waiting signed contracts.

We also secured key wins in April, including our support for a $48 million five year contract with the Bureau of Land Management. We believe that there is potential for margin improvement in the geospatial business. And we continue to seek opportunities to strengthen our position in the sector, and consolidate this highly fragmented geospatial market.

By light, we launched insight, our cloud based geospatial data management software platform in the first quarter. The platform strengthens our entrenched client relationship. And we elected to expand our subscription based geospatial data and analytics model. It is a new service offering and the interest from the market has been strong.

We have already provided 20 quotes to customers and we expect interest to grow as the demand for cloud based Geospatial Data Management Solutions continue to expand. Let's turn to slide eight for an overview of Geodynamics. The latest addition to the geospatial NV5 service vertical.

We expect water to be a driver of growth in the geospatial space, water conservation and floodplain mapping to sea level rise and to shoreline resilience. The applications for geospatial services to support water are vast.

For shoreline and sea level projects, NV5 geospatial previously had the capabilities to provide remote sensing analytic solutions for shoreline and shallow water geospatial solutions. But we lacked deepwater sonar based capabilities.

Geodynamic provides that deepwater sonar base capability to provide a full ocean depth marine geospatial solution, and it positions us to pursue expansion opportunities with key federal, state and local clients as well as offshore wind power where geodynamics has built a strong resume.

We're excited about this new addition to our geospatial capabilities, and we will continue to pursue other opportunities to expand our geospatial business. Please turn to slide nine for a look at our record backlog for quarter one.

Our backlog is higher than it was a year ago before the pandemic and we believe that it shows that clients are feeling more comfortable with moving forward on their infrastructure investments. In the first quarter, we secured significant wins in the geospatial utility services infrastructure and buildings and program management verticals.

We're conservative with how we calculate backlog looking at a 12 month rolling backlog. In other words work that we plan to do in a consecutive 12 month period. We're also pleased with our $596 million backlogs number and are confident that we are well positioned for a strong year.

On slide 10, I'll give an update on our cross selling program and some recent key wins. Cross selling is a focus for NV5 and it allows us to bring work in-house that would otherwise have been subcontract. On average work performance have is much more profitable.

In this year, we have increased our cross selling goal to $600,000 per week, or $31.2 million for the year. It is an ambitious goal, but in the first quarter we are on target. Cross selling is part of the culture at NV5. And we're confident that we can meet the challenge.

On the right side of the slide we've highlighted some of the notable contract wins for quarter one, including a $50 million contract with New York City Department of Design and Construction to provide engineering inspection services. This is our second time in succession in winning this contract.

We're pleased to continue growing our relationship with the City. In the geospatial business we secured a $48 million contract with the Bureau of Land Management, which will support the Bureau of Land Management and conservation mission.

In our utility services group, we secured a $23 million contract and motorized vaporization equipment at a utility LNG facility. Our LNG business has been performing very well and securing great projects throughout the country.

Finally, in South Florida, our testing, inspection and consulting and program management groups secured key projects supporting high rises and online retail distribution facilities. We expanded our program management services into Florida last year. And we have been pleased with the success that they have in such a short amount of time.

Now turn to Slide 11. We received many questions about proposed infrastructure package. And I wanted to take a moment to discuss how an infrastructure bill might impact NV5's business. Before we look at any of the proposed investments of the infrastructure bill, I would like to point out that infrastructure is essential. It is not optional.

So even if no infrastructure bill is passed, anything on infrastructure will continue. NV5 has been built without a major infrastructure bill. And we continue to grow in infrastructure services. We are optimistic that a bill will be passed, and we expect it to benefit NV5.

In the currently proposed bill approximate $1.2 trillion of the $2.3 trillion in the infrastructure proposal would impact segments that NV5 serves. Transportation infrastructure would receive $449 billion for projects that could be served by all of NV5's verticals.

$200 million has being proposed for utilities and broadband which are utility services and geospatial business support. $120 billion is being proposed for water and infrastructure, which could be supported by our geospatial infrastructure, environmental, and our testing and inspection and certification vertical.

Finally, $393 billion has been proposed for buildings and facilities including public buildings, and sustainable retrofit of residential and commercial properties. Our MEP, commissioning, technology design, energy efficiency and buildings program management businesses could support projects funded by this investment.

I cannot provide estimates on what that specific impact would be on NV5 because we don't know when a bill will be passed or what would be included in the final bill. We'll keep an eye on the progress of the proposed bill and make sure we are well positioned to accurately should a final bill be signed into law.

I will now hand the presentation over to our CFO Ed Codispoti to provide an overview of our Q1 financial and full year 2021 performance.

Ed?.

Thank you, Dick, and good afternoon, everyone. If you would please turn to slide 13, I'll review our results for the first quarter of 2021.

Before we review the results for the quarter, I believe it's important to point out that we are comparing our results against the first quarter of last year, which was only partially affected by the pandemic versus the first quarter of this year, which was a full quarter under the COVID-19 pandemic.

In light of this our gross revenues decreased by 7% when compared to last year, driven in large part of the geospatial segment which decreased $11.7 million when compared to last year. This decrease in geospatial revenue was driven by contract award and project start delays, as well as delays due to weather.

The decrease in geospatial was largely offset by strong performance in our infrastructure related businesses. While our business technology services continued to be affected by restrictions due to the pandemic.

We are pleased that we maintained our adjusted EBITDA at $24.2 million, while also expanding our adjusted EBITDA margin to 21.3% versus 19.9% last year as a percentage of gross revenues generated by employees. Furthermore, adjusted EPS increase to $0.88 from $0.84 in prior year.

We can attribute much of the improvement in adjusted EPS to the increase in our adjusted EBITDA margin driven by our scale and operating efficiencies. Some of these efficiencies are the result of our response to the COVID-19 pandemic and we expect to continue to benefit from these efficiencies as we move forward in the post pandemic environment.

We also saw a reduction in our interest expense as a result of our paid down of debt throughout 2020 and Q1 of this year, and a reduction in our effective income tax rate from 25.1% to 24.3%. The increase in adjusted EPS occurred despite an increase in diluted shares outstanding.

Also worth highlighting is that we had a record quarter in terms of cash flows from operations, as we generated $48.1 million, compared to $13.6 million in the first quarter of last year. $36 million of this was a result of collections of build receivables, which is a testament to our focus on working capital and the quality of our balance sheet.

If you would please turn to slide 14, we'll discuss how we strengthened our balance sheet in order to enhance our ability to execute our growth strategy. On March 15 of this year, we completed a secondary offering that raised net proceeds of $141 million. As I mentioned earlier, we also generated cash flows from operations of $48 million.

As a result, we were able to pay down a significant amount of our debt this quarter, as we paid down $145 million in debt. As of the end of the quarter, we had $93 million in cash. And our net leverage ratio was 0.8, which is a 75% reduction when compared to December 2019, when it was 3.2.

We feel confident in the strength of our balance sheet and how it can help fuel NV5's growth, including our M&A strategy. With that said, I'll now turn it back to Dickerson Wright for some closing comments..

Thank you, Ed. Please turn to slide 16. As we look into their major 2021, we believe that we're poised for growth organically and through our M&A program. We're in a favorable financial position with a strong balance sheet and market conditions are expected to improve as the economy continues to open.

Our public sector clients are benefiting from additional gas tax residential permitting revenues and stimulus funding from the 2021 American Rescue Plan Act. And the infrastructure and utility markets are expected to remain strong.

We expect our building segments to have additional opportunities for growth as economic conditions improved from the pandemic. We are focused on capturing revenue that was pushed to future quarters by Q1 weather and contracting delays.

We believe that our federal infrastructure bill would provide additional tailwinds, but we do not need an infrastructure bill to meet our targets for 2021 and beyond. On the M&A front, we continue to seek opportunity to strengthen our platform and expand high margin high barrier to entry offerings.

Our strong cash flows from operations, significant cash in hand, and low leverage gives us the ability to act quickly when opportunities arise and complete larger acquisitions if they fit within our M&A strategy. Our financial position also provides a strategic advantage when pursuing acquisitions due to our ability to use cash.

We also expect to see margin improvements as we invest in high margin businesses realize the benefits of scale and increase the number of services that we can keep in-house as opposed to subcontracting. For 2021, we are resuming guidance.

The opening of the economy provides additional clarity regarding the impact of the pandemic on our business and gives us confidence to provide guidance for revenues and earnings per share.

Therefore, we expect gross revenues in 2021 to range between $695 million and 720 million, which would be a 5% to 9% increase over our $659 million in 2020 gross revenue. We expect full year adjusted EPS to be at between $4.05 per share at $4.45 per share, which would be an increase of 8% to 20% over our 2020 year adjusted EPS of $3.72.

This completes our prepared remarks and now we'd like to open the call for your questions..

[Operator Instructions] And your first question comes from the line of Chris Moore from CGS Securities..

Hey, good afternoon, guys. Thanks for taking few questions. Maybe we could just start with net revenue as a percentage of gross sales. Obviously, looks like some consulting services, there's only 15.2% of revenue this quarter.

And can you just talk in terms of kind of expectations of those percentages moving forward and the drivers there?.

For sure, this is a Dick. I'll start with an answer and then Ed may want to be a little bit more specific. But we usually budget about 17% or above in work that is gross revenue. The 15% that you saw in this quarter is a bit unusual. And that is probably because most we have more work in the public sector, and lesser work in the private sector.

But normally, I think you can expect about 17% or so in sub-consultant revenue, and it's really driven by requirements that we have to use people and use up consultants that are disadvantaged business or a minority business enterprise..

Got it, that's helpful.

In terms of the guidance, maybe just talk a little bit about expected quarterly cadence?.

Yes, sure. Normally, our weakest or slowest quarter is the first quarter. And then the seconds lowest is usually the fourth quarter, with the second and third quarters being much more larger in volume. And that's its tremendous weather related when clients are releasing work for us to do and we can work.

So it's usually the cadence is, first quarter that we just presented is usually our weakest, second and third quarter tend to be stronger. And we're starting to see indications of that in the second quarter. And then the fourth quarter can usually be it could be somewhat slower than the second and third quarters..

Got it, okay. I want to see if there was any catch up, is this year going to be any different on the Q4 side.

So, got it?.

I think this quarter, Chris this quarter we were and I am speaking a little bit in some other comments later. But this had a much more significant weather related impact than we would normally have had experience historically in the first quarter..

And our next question comes from the line of a Rob Brown from Lake Street Capital..

Thank you. Good afternoon.

On the Geodynamics acquisition, just wanted to get a little more color on your thinking there how that opens up the geospatial market and I guess generally how you see that market in terms of the ability to make acquisitions there and the footprint there?.

Well, great. Rob, I'm going to speak generally in an overview. And then specifically, as we wind our concluding comments, Mark Abatto our President of our geospatial group who has more specificity on that, but I can tell you this, we are so happy with Geodynamics because it gives the geospatial capability that we have really strengthened.

And that is an ocean autography deepwater measurement, we were able with the geospatial with shoreline and shallower but this now is deepwater measurements. And it's a growing business. In fact, anecdotally, I just felt I got an email yesterday; they were just off the coast of our Hollywood corporate office.

And they were doing client surveys in oceanography, in deepwater for deepwater measurements. So what it does is it enhances us and it gives us a tremendous competitive advantage, because we can now do things that not many other geospatial firms have that capability to do.

And we really like the geodynamics in the market sector they have and their revenue is not as cyclical as some other commercial activities..

Okay, great. You talked a little bit about the some of the efficiencies you saw during COVID. And I assume that's related to travel.

But how do you see that continuing and you see those efficiencies can you keep those gains going forward?.

We've learned a lot from it. And as part of that some of the concluding discussion on it we have is, I've really seen our company and we're very, very proud of our people and our ability to adapt. And it's interesting to note that there are many things you can do that obviously sometimes you didn't think you could do before.

So obviously our savings has been in travel related costs, the accommodation costs, conference costs. And Rob, we've done this together, but road shows now we're doing virtually and we're doing a lot of conferences virtually. So to some extent, we think that as the economy opens, we will still have some of that scalability and efficiency.

And there'll be some things of course, nothing beats seeing a client face to face. But we think that we'd save a lot in costs that were not essential because of this.

Another class we've seen as people are working remotely, we've seen that tremendous contribution from our remote engineers and people work remotely in the utilization rate, and also in our facility costs. We've learned now that a lot of our facilities; we may not need all of that space.

So our general counsel, and their group is looking very closely at some leases, we have. In fact, Alex Hockman, the President of our company was just in our Southern California areas and looking for lease efficiency and lease space.

So we anticipate that facility costs as a percentage of revenue will go down, we think travel costs as a percentage of revenue will go down. And we think some of the other accommodation costs et cetera; will go down as a percentage of revenue.

I don't think it'll be as draconian assets in for the pandemic, but we certainly will learn by efficiencies we can have in some of those fixed costs..

And your next question comes from the line of Jeff Martin, from ROTH Capital Partner..

Thanks for taking the questions. Dick, I was wondering if you could elaborate on the insight cloud platform more than geospatial.

Is that part of the driver, you're expecting margin improvement or is it more broad based than that?.

I think it's and as I said, Mark Abatto will be speaking specifically to that in our concluding comments, and but I think we're looking for it more as a revenue generator, and a way to go to market and to maybe drive more of the top line. I just not experienced enough with it to know what it will do for the bottom line.

But as it applies to fixed costs and other costs and more revenue we have, fixed costs will go down as a percentage. So I think that insight will be more of a top line driver in revenue..

Okay and then regarding a comment around Business Technology Services being more severely impacted by the pandemic. Could you elaborate on that? I'm not exactly sure what you mean by that business technology services.

I guess you have the BTS segment?.

It's well, Jeff, it's a fancy name. It's mechanical, electrical, commissioning plumbing things. And a lot of our client base is based in the hospitality industry. So obviously, when our Las Vegas operation was definitely impacted, because the casinos were not growing and expanding during that period of time, its opening up now.

And so that business technology services, something that really applies to our hospitality, and our entertainment business. And we were doing and we still do work in our subscription based revenue, energy efficiency work in Macau, but no one can even go to Macau, us and shut off even from Mainland China.

So, a lot of that has impacted some of the work that we were doing in the mechanical electrical components of what's going on in hospitality and hotels, et cetera, that aren't just weren't making the improvements. And that's really the business that had been impacted..

Okay, great. And then I was just curious if you could give us some sort of insight into what you're thinking in terms of Q2, and you don't have to necessarily give revenue guidance for that. But to help, consensus is more accurate for Q2. Just curious if there's any color you can provide so that we can get a sense of how that's going to play out..

Well, the colors can be pretty gray, Jeff. But what we can say is that we're starting to see improvement. We're getting some clarity on April. And we'll learn more about May. But we're starting to see an improvement in the business and an improvement in revenue for that.

And we're seeing that's really affected by the opening of the economy and delayed projects, we mentioned the pipeline that are getting to start and so we're starting to see an improvement in Q2. But it's really much too early to say with exactly what we're expecting in revenue other than an improvement that we're seeing..

Okay, great.

And then one housekeeping item, I missed the number on geospatial that that gave regarding the revenue dollars, it's down?.

$11.7 million..

And your next question comes from the line of Michael Feniger from Bank of America..

Hey, guys, thanks for taking my questions. Just on the gross revenue guidance.

With the acquisitions that have closed? How much is their contribution to that gross revenue number? That was not in 2020?.

Well, it's minimal, because a lot of that of the acquisitions depends on the timing in the quarter of the acquisition. So we got little benefit from all three, weather. And obviously, there were smaller acquisitions, but we got little benefit from any of that in the quarter.

Minimal, at best and I would say, even accumulative maybe $3 million to $5 million maximum..

Okay, but that's for the quarter. I was just curious for 2021. Like what we should be kind of expecting with that range.

There are a number of how much of that revenue range that you guys have provided, which is great that you reinstated guidance, how much of that is organic versus acquired revenue?.

Well, the acquired revenue, of all free is probably going to be a maximum of about $15 million for the full year and then the rest will be the growth of the company..

And just Dickerson, I'm curious how we should think about the backlog which is good to see that it was up 4% or 5%, year-over-year. If you look at your backlog relative to your revenue over the next nine months, it looks lower than where was the last three years relative to what you guys were able to deliver.

So I guess I'm just curious, like, how much of that backlog is set to be delivered in 2021? And does that mean you guys got to win more work where you guys are now deliver that outlook, then maybe you guys were a year ago and the year before that? Any context around that would help?.

Okay, sure. If you go to that, the slide that we showed in the bar chart and you can see the backlog increasing. A very good backlog in our service engineering business is about 65% of the anticipated revenue over a 12 month period. And so if you take that 580, something number 586.

And look at the low end of our guidance that is certainly above the 65%....

84%..

Its 84%. So we think that the backlog is this will be an indicator of strong growth in our guidance..

Got it, okay. And then just lastly, if I could squeeze in one on the acquisition pipeline, you talked about potentially large acquisitions, you guys moving towards higher margin higher services. I'm just curious, we're hearing that there's a lot of aggressive private equity in the space, we're seeing more M&A.

How should we think about you got your appetite to do a bigger deal, and how to think about maybe the multiples for the type of higher value add services, the geospatial type businesses, if those multiples have in fact, they crept higher in the last few months, or in the last six months? Thanks..

Michael, I think you're dead on. We've seen a lot of involvement of private equity. And that's a pure financial buyer. It's interesting though the private equity has been a majority participant but not 100% total acquisition.

So the multiples tend to go up and we're seeing in our core business, the multiple increasing from what we were, historically look at 6% increases to 7% and higher. In some of our high barrier long trade businesses, the multiples have gotten as high as 10%.

What we try to do is, we try to be an of course, we're a strategic buyer, not a financial buyer. So we're really interested in people being with us. And we use a natural arbitrage in the stock portion of the acquisition, to get to allow that multiples to get a little bit higher. So I mean there's a bit of pause.

So what I'm saying is that we're tending to see more utilization of our stock as part of the transaction, and as our stock appreciates, we can apply that more.

And that would even though the valuation is rising, the utilization of our stock allows for more of an arbitrage in the price of our stock and the multiple of the earnings that we're pursuing..

And your next question comes from the lines Lisa Springer, from Singular Research..

My question is, so what happened to the colonial pipeline kind of highlights how susceptible U.S.

infrastructure is to the outside attack? I'm wondering if providing security for infrastructure, how big an opportunity that presents for you, and then what the areas of your business will be affected?.

Well, cyber security is always an issue. And we've taken more of a defensive posture. And we are really making sure that we have the security in place of all of our people. And we've applied a certain software protections for what we're doing.

But I don't know is that's going to create an opportunity for us, more than it's going to be more of a defensive posture that we want to put up more about a firewall against the ransomware..

And your next question comes from the line of Marc Riddick from Sidoti. Your line is open..

Good evening, everyone. So I wanted to touch a little bit on it. I know there are a lot of questions around sustainability of cost savings and expense savings and some of the differences of what we may see sustained over time.

I was wondering if you could touch on some areas that you might see as internal areas of investment that maybe could benefit from the savings of other areas that you might be looking to shore up and we might look for future internal investments. Thank you..

Marc, I'm not quite sure I understand your question.

But are you looking at what further efficiencies we can look for? Maybe you could ask me that again?.

Yes, sure. I'm looking more so on the offensive side of things.

I'm thinking along the lines of investments and labor investments and technology, things like that, other areas that you are looking at internally that you might end up going on the offensive as far as increasing spending, to take advantage of some of the savings that you're getting from other places internally?.

Well, certainly, I don't speak for. Alex and Ed. But I'm fairly allergic to this ending if it's not directly applied. So we feel we have a - our scalability comes from our efficiency in integrating and managing the companies that we have.

So there's a budget for our management of the support services and the support services, of course are our legal and financial, our human resources, our accounting, our IT, and our overall branding and marketing of all of the organizations and that they have a set budget.

And obviously, the more our revenue grows, the more efficient - or the more that will drop to the bottom line because of the scalability of our network.

Now, if there's - I'm not certain of specific IT tools that would allow for more efficiency, I can say this, our international group is really benefited by software that we've had that allows our people to work remotely and it's come in quite handy in the COVID area, where are people working remotely.

So our engineers can apply software that they don't necessarily have to be housed in a one central specific location. And so we think we've seen some efficiency there, and will explore more ways of efficiencies that we can deliver our service in a more cost effective manner.

But as far as the actual support service management, their specific budgets that we manage very closely..

Okay, great. And then the last question for me, I was wondering if you can just maybe share some thoughts as to now with the leverage levels back down to below one time, and the acquisition pipeline that you have the four years.

I want if you could say just share some general thoughts as to how you feel about leverage levels going forward, whether we should think about it as being somewhat similar to what we've seen historically, prior to the geospatial acquisition, or just in general, how we should think about maybe what your comfort level is, with the general range of leverage going forward? Thank you..

Well, amazing to me, but I'm going to refer to Ed on some of the specifics on the leverage. But amazing to me is that we've grown this company, from an absolute startup, to our guidance of close to $700 million in revenue with little leverage and leverage under one.

Now you're going to hear from many astute financial people, let's say that you can have more leverage, we just think that we would like to operate at a cash flow, we'd like to keep our leverage under one. But Ed, can speak to what highest our leverage has been by picking out a slice of that.

And really what our comfort level is, we just don't, believe in leverage, unless it's a specific opportunity, such as we had with Quantum Spatial. But Ed maybe you can speak a little bit to that,.

I was going to say the same thing, because with Dick and I both feel the same way in the sense that we're very comfortable being number one times, there has to be a specific opportunity, where we come in an opportunistic way and we have to justify bringing that leverage up, like in the case of Quantum Spatial.

But other than that we in the ordinary course of business, we would prefer the under one times..

Your next question comes from the line of Andy Whitman from Baird. Your line is open..

Great, super, and thanks for taking my questions this afternoon. I guess I was hoping to understand the weather impact a little bit more, I was wondering if you could quantify how much revenue you think are pushed out of the quarter.

And if revenue was pushed out into the quarter will all be made up in 2Q or if it basically kind of pushes the whole chain of events associated with that work out through the year then.

So just want to try to understand how much that was?.

Sure, well, we would hope to recover a lot of that revenue, but in the service business, you have to be opportunistic, and you have to supply the service when it's needed. When projects are absolutely shutdown, or you just can't acquire due to weather, it's just some facts. 70% of our addressable service area was affected by the severe winter.

And I think the loss in revenue was twofold. One, we lost - and it's very hard to be very specific as to what revenue was lost, but in the geospatial area, we lost business days because we couldn't fly.

And then that has a twofold effect if you can acquire that data, then the other revenue generating with the geospatial business, let's say analytic side. So what the acquisition of data feeds the analytic side, so when you can't fly, you've lost a significant amount of revenue. We also were affected by COVID.

We had been impacted in some phases our business but the weather was something that we just did not anticipate. As I said 70% of our addressable market was under severe weather conditions in February. And quantitatively, I'm not going to say that all of the geospatial revenue can be recovered.

But we're certainly hoping that some of those projects were delayed and can move further. But Mark Abatto will give with more specificity what he anticipates seeing in the second and the remainder of the year with as far as geospatial, and he'll be commenting on that shortly..

Thanks.

I was just wondering, with so much going on with reopening, or whatever you want to call it here, I was hoping you could talk a little bit more detail about if the bidding submission pace, I don't know, if you track the amount of bids, that you've got out pending response from customers, or if there's anything you can really sink your teeth into that can help us get a sense of how much or if the bidding pace with your private sector as well as your public sector customers has improved, if at all?.

Well, we're probably a little bit unusual in one way. Andy, we don't really look at things in the bidding process. No, we rather be selected in on qualifications. And we usually have a go no go decision on 70% of them. So we're not - I don't really gain a tremendous amount on what bidding opportunities that we have.

I look for more is what is the ratio of wins of the opportunities that we know we can apply to. As far as what I see and I don't want to be anecdotal about this. But what I see is a certain increase a significant increase in activity. But in the concluding comments, Alex Hockman, specifically who runs the majority of our core business.

He will also give his outlook on what he sees on how we see the market growing. I certainly have seen - I'm optimistic, I've certainly seen a significant increase in activity, but I think Alex will can mentioned some specific projects that are specific carry along what we see going forward..

And our last question comes from Michael Feniger from Bank of America. Your line is open..

He gets two, he had one already, but don't allow a second one. Go ahead..

Thank you. I just wanted to squeeze one in I appreciate it. It was a great cash flow quarter, Dickerson or Ed.

I mean, can you guys just help us quickly with the guidance? And then you can give that the revenue and EPS just, or maybe this is more for Ed? How should we think about the EBITDA range with your guidance, and also the cash flow conversion, like what the cash flow could potentially look like for the year, given a good start to the year and your guidance on the revenue and earnings? Thank you, guys..

Sure, Mike, this is Ed. From the perspective of adjusted EBITDA, of course, we don't have a crystal ball. But given the guidance on the revenue side, the adjusted EBITDA we feel would come in somewhere in the range of $110 million to $120 million. And our conversion rates are between 85% and 90%.

Obviously, Q1 was a strong quarter, because some of those cash flows within the $48 million stemmed from the collections of receivables. There's been a lot of focus on that, as I mentioned earlier. But throughout the remainder of the year, we'll have some volatility and working capital.

So we wouldn't expect to maintain that that same level of cash flow generation. But we still do feel strong about the overall year being at a conversion rate of say 85% to 90%..

And at this time, this concludes our question-and-answer session; I would now like to turn the call over back to Mr. Wright for closing remarks..

Thank you. Well, as you can see in our presentation today, we are very optimistic about the year. We're optimistic about what will the economy opening opportunities that we have, but I thought we should be more specific.

So you'll notice there was an erosion trend in our geospatial business and so is very good to hear from Marc on what he sees the second half of the year to look like as far as the geospatial services, and then we'll probably ask Alex Hockman the same question in the core business.

So, Mark, maybe you can comment on how you see things and going forward..

Sure, happy to Dickerson. On the geospatial side, we expect to see improvement in the second half of the year for several reasons.

First, and most importantly, the demand drivers for advanced geospatial solutions continue to accelerate with respect to infrastructure investment, electrical grid resiliency, and renewable energy development, along with environmental impact studies and environmental monitoring and planning.

The second reason for optimism is our solutions are essential to the design, the execution, the monitoring, and the ongoing analytics of significant regulatory compliance and safety programs across both the government and the private sectors.

And we believe that the pent up demand for these required programs that have been delayed could be very, very significant. Now the timing of those taskings will determine how much we're able to convert to revenue this year and how much will be added to backlog entering 2022.

And then finally, despite the delays in tasking that Dickerson mentioned, the contract vehicles, through which these taskings are awarded remain in place today with NV5. And we are positioned very well for those that are renewing this year. So those are just three of the key themes that we look to relative to the outlook for the remainder of 2021..

Thank you, Mark, very helpful. I may ask Alex Hockman, who is the President of our, what we call our core business, and which is a significant amount of the operations that our traditional services that we would have. And Alex, maybe you can comment on how you see the remainder of the year..

I think with the - what we call the reopening of the economy is been very optimistic in terms of how the year will finish up. I think we're also seeing synergies that we're developing with the geospatial group with the core business and now allow a full suite of service offerings to clients.

And frankly, we didn't have before it and while the acquisition there, Quantum took place, at the end of 2019, it has taken time for this relationship to mature. And we're seeing new opportunities that are presenting themselves.

As you mentioned previously, we don't actually look at opportunities, many of our contracting vehicles come through request for qualifications through which we ultimately receive a professional services agreement or master service agreement.

So we don't actually have that journey of responding to pitch, there are more opportunities that then avail themselves. And once we have defined the qualifications and have the categories, we're then able to have the contracting mechanism in place. And that is seeing a lot of opportunities as well work for the core business..

Thank you, Alex. I think there's a couple of a thing that I would like to have us. Think of and apply them to us as we see the balance of 2021. I think what this COVID is brought to all of us is our allowing us or requiring us to have the ability to adapt, adapt to the circumstances. Yes, we all can go into one fixed office now.

Yes, we need to keep our distance. Yes, we need to support our people remotely. So these are adapted that we had to do. We are now getting used to doing many Zoom calls where we would do a lot of our road shows in dealing with our clients. And so, the ability to adapt is something that I am very proud of that we've been able to do.

And these are things that adjustments that we have made as a company and our people and I wanted to congratulate them on their ability to operate under changing circumstances and changing requirements. Where are we, there's no questions about our leverage and where we are in stock price.

We can now be much more selective in the M&A front because our verticals or our platforms are much more mature and each year, they become more mature and our people can be very selective to an acquisition or growth area or service area that they can improve the margin bet more embedded with the client and so I think this is something that we are, we are pursuing.

We mentioned also arbitrage, as our stock has increased, I can remember the days we went public at $6 a share. And now as our stock continues to increase, we can use this to be much more strategic in our acquisitions. We're becoming very selective in the acquisitions, we won.

And yes, even though there is a real increase in infrastructure, by the market and those entering and those paying prices that they may feel historically are much higher than they had before. Our ability with the growth in our stock and our ability to utilize stock continues to give us a competitive advantage.

We've been at the acquisition process for quite some time. The phone rings, people we can be much more selective. And we always you've heard me say this before, but we have a number of acquisitions right now on the plate. And we're looking now in strategic areas that we can strengthen our platform.

So, I want to thank everyone for your continued interest in NV5. I think that we're looking forward to a very good year. And that's why we've been we restored the guidance with increases and we feel comfortable with us meeting the projections and guidance that we can ends up.

I thank everyone for your support and we look forward to working together to have a good balance of the year 2021. So thank you all for your time and we'll speak to you once again at the end of the second quarter results..

And this concludes today's conference call. Thank you for participating. You may now disconnect your lines..