Release Date: February 20, 2025

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

Positive Points

• NV5 Global Inc (NASDAQ:NVEE) achieved a 10% increase in revenues, reaching $941 million in 2024 compared to $857 million in 2023.
• The company reported a record backlog of $904 million entering 2025, which is 8% higher than the previous year.
• Gross margins improved from 49.7% in 2023 to 51.3% in 2024.
• NV5 Global Inc (NASDAQ:NVEE) set a revenue target of $1.6 billion by the end of 2028, indicating strong growth ambitions.
• The company is focusing on expanding its high-margin recurring tech services, which are expected to contribute significantly to margin expansion and long-term client engagement.

Negative Points

• Net income decreased to $5.4 million in Q4 2024 from $10.1 million in the same quarter of the previous year.
• GAAP diluted EPS dropped to $0.09 in Q4 2024 from $0.16 in the prior year period.
• The company faced increased acquisition-related costs of $3.9 million and intangible amortization expenses of $2.3 million.
• Inflation and integration periods of acquisitions have impacted NV5 Global Inc (NASDAQ:NVEE)'s operating margins.
• Cash flow from operations decreased to $57.3 million in 2024 from $62.2 million in the previous year, primarily due to working capital timing issues.

Q & A Highlights

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

Q: Can you elaborate on the expected 150 basis point improvement in EBITDA margins for 2025? Is it driven by mix, cost, or other factors? A: Dickerson Wright, Executive Chairman: The improvement is primarily through efficiency, focusing on reducing administrative costs as a percentage of revenue. This is not a big leap as we have achieved similar improvements in the past. The focus will be on accelerating our administrative program to lower costs and improve EBITDA margins by 150 basis points, which is a realistic target based on past performance.

Q: What is the organic growth outlook for the geospatial segment over the next few years? A: Dickerson Wright, Executive Chairman: We have budgeted for about 10 to 11% organic growth in our geospatial group. This is based on historical performance and is focused more on improving EBITDA than just revenue growth.

Q: How much of the 2025 revenue growth is expected to come from acquisitions versus organic growth? A: Ed Kodaspodi, CFO: The revenue growth assumptions range from 5% organic growth on the low end to 7% on the high end. Approximately $17 million will come from acquisitions completed in 2024 that were not included in the full year.

Q: Can you provide more details on the backlog and any potential risks from federal contracts? A: Ben Harrod, CEO: The backlog is well-diversified across different segments, with minimal disruption from federal contract delays. The growth in backlog is largely due to expanding relationships with utilities and public agencies, which gives us confidence in our 2025 outlook.

Q: What are the expectations for organic growth in the infrastructure and building technology segments? A: Dickerson Wright, Executive Chairman: We expect mid to high single-digit organic growth across all segments. Infrastructure demands are likely to drive higher growth in that segment, while geospatial is expected to grow between 10 and 11%.

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