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Edited Transcript of NVEE earnings conference call or presentation 7-Aug-19 8:30pm GMT

Q2 2019 NV5 Global Inc Earnings Call

HOLLYWOOD Sep 11, 2019 (Thomson StreetEvents) -- Edited Transcript of NV5 Global Inc earnings conference call or presentation Wednesday, August 7, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alexander A. Hockman

NV5 Global, Inc. - President, COO & Director

* Dickerson Wright

NV5 Global, Inc. - Chairman & CEO

* Edward H. Codispoti

NV5 Global, Inc. - CFO

* Richard Tong

NV5 Global, Inc. - Executive VP & General Counsel

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Conference Call Participants

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* Jeffrey Michael Martin

ROTH Capital Partners, LLC, Research Division - Director of Research & Senior Research Analyst

* Lisa Springer

Singular Research, LLC - Research Analyst

* Robert Duncan Brown

Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst

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Presentation

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Operator [1]

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Good afternoon, everyone, and thank you for participating in today's conference call to discuss NV5's financial results for the second quarter ended June 29, 2019. Joining us today are Dickerson Wright, Chairman and CEO of NV5; Edward Codispoti, CFO of NV5; Alex Hockman, President and COO of NV5; and Richard Tong, Executive Vice President and General Counsel at NV5.

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

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Richard Tong, NV5 Global, Inc. - Executive VP & General Counsel [2]

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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, including those discussed in the Risk Factors section of NV5's annual report on Form 10-K for the year ended December 29, 2018, which is on file with the Securities and Exchange Commission as well as in other documents that the company files with the commission from time to time.

These factors could cause actual results to differ materially from those reflected by the forward-looking statements contained herein. While the company may elect to update forward-looking statements at some time in the future, the company specifically disclaims any obligation to do so even if estimates change, and therefore you should not rely on these forward-looking statements as representing views of any date subsequent to today.

During this call, GAAP and non-GAAP financial measures will be discussed. A reconciliation between the 2 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 second quarter 2019 comparisons are being made against the second quarter of 2018.

I would like to remind everyone that a webcast replay of this call will also be available via the link provided in today's news release in the Investors section of the company's website. 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; and Alex Hockman, President and COO of NV5, before turning the call over to Edward Codispoti, Chief Financial Officer, for a review of the second quarter 2019 results and outlook for 2019. We will then open the call for your questions.

Dickerson, please go ahead.

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Dickerson Wright, NV5 Global, Inc. - Chairman & CEO [3]

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Thank you, Richard, and thank you to everyone joining us for NV5's second quarter 2019 conference call. We are pleased to announce another excellent quarter. We accomplished revenue and earnings growth even though some of our operations reported project delays and anticipated projects that impacted revenue growth in the quarter.

As always, we want to measure our success objectively. Therefore, I will briefly mention our year-over-year comparison to the second quarter of 2018. I will also mention specific accomplishments from first quarter 2019 to second quarter 2019. Ed Codispoti, our CFO, will speak more specifically on our financial results, and Alex Hockman will highlight our operational accomplishments.

First, our overall financial accomplishments for the second quarter year 2019. Total revenue increased 23% year-over-year to $128 million for quarter 2. Net revenues, or revenues performed in-house, increased to $99.5 million in quarter 2, an increase of 18% year-over-year. Our organic revenue growth was 6% over last quarter. Adjusted EPS was $1 per share on 12.5 million shares compared to $0.91 on 11 million shares in Q2 2018. Cash flow increased 177% to $44.4 million compared to $16 million for the first 6 months of 2019. Backlog was $451 million as of June 29, 2019, a 43% increase from $315 million as of June 30, 2018.

I would also like to comment on the successful cross-selling between our offices. We have set specific financial goals for cross-selling and at the end of Q2, we have completed $10.5 million in cross sales between our offices. This represents work performed by our employees at a higher margin that otherwise would have been performed by subconsultants.

I would now like to comment on the 4 acquisitions that we have made since the beginning of quarter 2. In June, we completed 2 acquisitions, Page One Consultants in Florida and Alta Environmental in California. Page One expands our construction quality assurance network throughout North Florida and Central Florida, including the high-growth markets of Orlando and Tampa. Alta Environmental strengthens our technical environmental transactional capabilities in the Southwest.

The GeoDesign acquisition was completed at the beginning of July, and it provides NV5 with a strong geotechnical engineering presence throughout the Pacific Northwest and Los Angeles. Our latest acquisition, WHPacific, a firm founded in 1912, gives us strong engineering design capabilities in growing markets, including the state of Washington, Oregon, Idaho, Arizona and New Mexico.

An additional benefit of both GeoDesign and WHPacific is the support that these 2 companies provide for our ENERGY 2021 Initiative by providing us expanded capabilities and cross-selling opportunities for our power clients in the Puget Sound region and Pacific Northwest.

Our mergers and acquisition pipeline is still full of opportunities. However, our focus for the balance of 2019 will be on more strategic acquisitions that will densify existing platform and give us a competitive advantage in new service lines and geographies.

I would now like to introduce to the discussion Alex Hockman, the President of NV5. Alex will comment specifically concerning our national operations and projects.

Alex?

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Alexander A. Hockman, NV5 Global, Inc. - President, COO & Director [4]

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Thank you, Dickerson, and good afternoon, everyone. One of the priorities of the power delivery group is to further expand its geographic coverage. And in Q2, the group successfully delivered 4 new master services agreements in targeted geographies. These MSAs include substation, transmission and distribution services for a large utility in the Southwest; engineering services for a Rocky Mountain and Southwest states energy provider; transmission engineering, consulting services for a Texas utility; and engineering and design services for a utility in the Pacific Northwest.

The wide array of services provided by the power delivery group include engineering and design for natural gas transmission, electrical overhead and underground transmission, distribution, substation projects and fire mitigation projects.

Some of the key contracts secured in Q2 by the power delivery group include $5 million in new projects for a California utility, including engineering design and permit support for a vehicle charging station infrastructure and a replacement of a Tier 4 diesel generator.

In addition, the power delivery group was awarded $10 million in new projects and contract additions with another California utility, including $7 million in engineering services to support fire risk mitigation efforts; and an additional $3 million for services including feasibility studies, fielding and design services for wireless fault indicators and distribution design services for expansion of an existing substation.

The building technologies group secured approximately [$20 billion] in new contracts in Q2, with some significant new wins for MEP and commissioning services. One of these new wins is a $750,000 contract for the remodel of a Las Vegas casino. We were also awarded a $450,000 contract for renovations at a prestigious institution of higher education in Massachusetts. Finally, we were awarded a commissioning project valued at $1.7 million at the Salt Lake City International Airport.

The east and west regions of NV5's infrastructure verticals continue to demonstrate their ability to win large contract awards and expansion of our expertise and services. One notable contract win includes owner's representation, oversight and review of electrical transmission, electrical distribution, landfills, parks and recreation, public works and planning for a city in Northern California, NV5's fees for the broad range of services could exceed $20 million.

NV5 was also selected for a $5 million land surveying project by a Southern California Department of Public Works for projects including water, sewer and wastewater pipeline projects, buildings, bridges, roadway, paving, process facilities and sitework.

In New York, NV5 was awarded $5.5 million in contracts by a Public Works authority for civil and site engineering, traffic engineering and construction management. NV5 was also selected for a $5 million contract to provide design and permitting of a 22-mile section of the greenway project which will connect all other trails within Camden County, New Jersey.

NV5's international team, which specializes in mechanical, electrical, plumbing, fire protection, technology and energy analytics, secured wins for several high-profile projects, including a 3-year contract with Hong Kong government's Architectural Services Department. In Malaysia, NV5 is providing full and partial floor fit-outs for Citibank's Kuala Lumpur office; and MEP and fire services and design review at Safran's Malaysian facility that manufactures carbon disks brakes for commercial aircraft.

In the Middle East and Africa, NV5 was selected to provide a conditional survey of existing MEP, IT and security at the Riyadh mall in Saudi Arabia. In Macau, NV5 was awarded several key contracts at the Wynn Macau, Wynn Palace and MGM Macau, providing a variety of services including MEP and gas engineering, technology and fire services.

I would now like to turn the call over to our Chief Financial Officer, Edward Codispoti, for a more detailed overview of the financial results for the second quarter of 2019 and will provide our outlook for full year 2019.

Ed?

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Edward H. Codispoti, NV5 Global, Inc. - CFO [5]

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Thank you, Alex, and good afternoon, everyone. First, I'll review the company's results for the second quarter 2019, and then I'll provide our outlook for full year 2019.

Total revenues for the quarter were $128.9 million, an increase of 23% year-over-year. Gross revenues under GAAP for the quarter were $128 million, also an increase of 23% year-over-year. Net revenues for the second quarter of 2019 were $99.5 million, an increase of 18% compared to net revenues of $84.2 million in the second quarter of 2018. EBITDA for the second quarter of 2019 was $15.8 million or 16% of net revenues, an increase of 20% from $13.2 million or 16% of net revenues in the second quarter of last year.

Net income in the second quarter of 2019 was $8.8 million, an increase of 15% compared to $7.6 million in the second quarter of last year. Second quarter 2019 adjusted EPS was $1, an increase of 10% from $0.91 in the second quarter of 2018. And as we typically define it, adjusted EPS excludes the impact of amortization of intangible assets from acquisitions.

Our second quarter 2019 adjusted and GAAP EPS reflects weighted average shares outstanding of 12.5 million shares compared to the weighted average shares outstanding of 11 million shares in the second quarter of last year. The increase in weighted shares outstanding reflects the issuance of 1.27 million shares of common stock from our secondary offering in August of 2018.

As of June 29, 2019, our cash and cash equivalents were $44.4 million compared to $16 million as of June 30, 2018. And during the quarter, we drew $10 million from our credit facility in order to fund anticipated acquisitions as of June 29, 2019. Cash flows from operating activities during the 6 months ended June 29, 2019, were $17.4 million compared to cash flows of $10.8 million during the 6 months ended June 30, 2018. At June 29, 2019, we reported backlog expected to be recognized over the next 12 months of $450.9 million, an increase of 43% from $314.6 million as of June 30, 2018.

We are raising 2019 guidance for revenues. We expect full year 2019 revenues to range from $530 million to $545 million, which represents an increase of 27% to 30% when compared to gross revenues of $418 million in 2018. Net revenues are expected to range from $413 million to $430 million, which represents an increase of 24% to 29% from 2018 net revenues of $334 million. We expect full year 2019 adjusted earnings per share will range from $3.81 to $4.08 per share, an increase of 18% to 26% over 2018 adjusted EPS. We now expect full year 2019 GAAP earnings per share will range from $2.57 per share to $2.84 per share.

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

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question will come from Rob Brown of Lake Street Capital Markets.

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Robert Duncan Brown, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [2]

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You talked a little bit about some project delays in the quarter. Could you give us some color on that and how much of that flowed into the back part of the year?

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Dickerson Wright, NV5 Global, Inc. - Chairman & CEO [3]

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Rob, I don't know -- hi, this is Dick, and good afternoon. Of course, I'm here with our team. I don't know if I heard the first part of your question. Was it concerning what specific project delays that we had?

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Robert Duncan Brown, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [4]

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Yes. I think you might have mentioned maybe some delays in the quarter and just wondering what they were and how much might flow into the back half of the year when they move forward.

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Dickerson Wright, NV5 Global, Inc. - Chairman & CEO [5]

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Yes. Well, some of the projects that were just extended, I know in Central Valley, California, some of our program management with our DOT contracts were delayed, and we're just extended that, we had hoped would begin at the beginning of the first quarter and had started later in the quarter. So we could not recognize all of that revenue.

And there were miscellaneous, other projects that were expected and that is why -- our performance is very close to budget, but we were expecting these projects to start a little sooner in the quarter than they did.

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Robert Duncan Brown, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [6]

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Okay. Okay. Great. And then on your power business, you named a number -- or you talked about a number of projects that were ongoing and active, and just wanted to kind of step back and kind of get into how much is that market growing. And you seem to be getting good traction there. Do you feel like you've reached a critical mass in that market? Or are there other pieces you can add that can really accelerate that growth?

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Dickerson Wright, NV5 Global, Inc. - Chairman & CEO [7]

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Well, Rob, I'm very optimistic, and I feel we've just touched the surface there. That initiative, our ENERGY 2021 Initiative, is going very well. We continue to win more projects. In some -- there's some delays in announcements because we have to -- many, we have to get client approval. But the project -- the initiative, I should say, is going very well.

As far as some specific projects that we're working on that we can announce, I'll defer to Alex. Perhaps you can maybe want to mention some of the power generation projects? Maybe particularly the one that we just announced.

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Alexander A. Hockman, NV5 Global, Inc. - President, COO & Director [8]

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Well, I think in particular with respect to power growth, it's also the geographic coverage. So we're nowhere near critical mass. There's huge upside for expansion. As we mentioned, we are now working with the power utility in Texas, and that's relatively new. We're expanding our market share in the Rocky Mountain region and also in the Pacific Northwest.

And we have a group that also is not [part of] power delivery, but does some power distribution in the Northeast, and there's a tremendous opportunity for growth in that market. So it is a service that has been able to grow organically at a very large rate, and we see that in the foreseeable future to continue.

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Dickerson Wright, NV5 Global, Inc. - Chairman & CEO [9]

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Rob, just some more color. We recently announced the acquisition of WHP which, I mentioned in the narrative, a design firm with key offices in the Northwest. And that now gives us the opportunity in Portland where we had 2 people. We'll relocate them into their more established offices, and we now have an opportunity to approach clients such as Portland General Electric. We also, through WHP, now have a broader and deeper contract with Pacific Gas and Electric, which we were not doing as much as we wanted to.

So we really think 2 ways. We think with the power initiative that we can be optimistic, of course, on organic growth, and we can use the platform for that growth, the new acquisitions we made.

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Robert Duncan Brown, Lake Street Capital Markets, LLC, Research Division - Senior Research Analyst [10]

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Okay. Great. And then last question on your M&A strategy. I think you talked a little bit about maybe focusing on more strategic pieces. Just to clarify sort of your thinking for the back part of the year. Has this been bigger acquisitions? Or is it different areas? Or maybe some clarity on what you're thinking is there.

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Dickerson Wright, NV5 Global, Inc. - Chairman & CEO [11]

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Okay. Great. Yes, thank you. You listened very closely. We now have -- we've recently made and -- unfortunately, these -- the acquisitions happened and we're opportunistic and some go on back-to-back and quicker. You know we've made 6 this year. We are going to integrate. We have some integration now, which is extremely important to us, of these companies that we made.

But we now are still open selectively. We're open selectively for reoccurring revenue acquisitions for the second half of the year, high EBITDA, high barrier of entry acquisitions, many in the technology space. Some that will give us more opportunity in the GIS surveying space that -- the spatial surveying and aerial surveying work that we think some opportunities that would really expand our surveying capabilities and aerial survey.

So we're looking at opportunities there for the second half of the year, and we will always be open for acquisitions. We -- as you saw, we're cash flowing very nicely, and we have the opportunity to be opportunistic when we see a target.

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Operator [12]

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Our next question comes from Jeff Martin with ROTH Capital Partners.

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Jeffrey Michael Martin, ROTH Capital Partners, LLC, Research Division - Director of Research & Senior Research Analyst [13]

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Dick, wanted to get some perspective about -- around that guidance revision relative to the acquisitions that were made subsequent to the end of the first quarter. I would've thought that guidance would've come up a little bit more. Wondering what the -- what bridges the gap to perhaps what could have been higher guidance.

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Dickerson Wright, NV5 Global, Inc. - Chairman & CEO [14]

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As far as on the earnings and on revenue, both, Jeff? Is that the question?

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Jeffrey Michael Martin, ROTH Capital Partners, LLC, Research Division - Director of Research & Senior Research Analyst [15]

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Yes.

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Dickerson Wright, NV5 Global, Inc. - Chairman & CEO [16]

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Okay. Well, on revenue, we tend to be conservative, and that also applies to our EPS guidance and adjusted EPS guidance because we know that from what we see now, we have some integration to do. We -- of these other companies, and it's important that we really focus on the long term and what their long-term contribution is rather than to immediately look for scalability. So we tended to be conservative on the revenue guidance and on the EPS because we wanted to allow for a very conservative period for integration. But the guidance that we gave was conservative, and obviously there's an upside to that.

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Jeffrey Michael Martin, ROTH Capital Partners, LLC, Research Division - Director of Research & Senior Research Analyst [17]

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Okay. And then is the use of subconsultants in the quarter what you would consider a normal level given that the current book of business today seems a bit higher than its run in the past? Kind of last 2 quarters now with that and other direct costs have been running in the 22% range or so. Wondering if that's kind of a new norm, or if there's some anomalous items in those numbers in the last 2 quarters.

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Dickerson Wright, NV5 Global, Inc. - Chairman & CEO [18]

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Well, the -- in our core business and in the cross-selling, obviously the core business is business that is mostly public client base where there is certain DBE requirements. And so we try to do as much of that work we can internally while still meeting those requirements.

However, we have 2 really growing and successful pieces of our business that use subconsultants that there's a significant markup on those subconsultants, and that is our CHI, which is the LNG conversion business, where they do have subconsultants. Those subconsultants work very well, and we have a high-margin markup. We're not limited. Whereas with a public client base, we're limited to the amount that we can mark up.

The other is our reoccurring revenue company that we acquired which does the surveys -- ALTA surveys and does the existing property, and they were known as Bock & Clark. They're now NV5. They also have a larger subcontractor base. So as they grow, and they're doing very well, as they grow, we probably will say the new norm is going to be a little bit higher than the 20%. We were shooting to be under that. There were some times that we were when we -- when they were not -- or we didn't own them or they did not have as big a piece of the business that they have now.

But I would think now I would look for -- although we're still working on that cross-selling and keeping our work done internally by our employees the most we possibly can, we don't -- we still want to encourage the growth of the -- of our survey -- reoccurring ALTA survey business and with the LNG conversion business where subconsultants are used at a high markup.

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Jeffrey Michael Martin, ROTH Capital Partners, LLC, Research Division - Director of Research & Senior Research Analyst [19]

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Okay. And then not to pick about the P&L here, but I wanted to talk about G&A a little bit. It ran almost 11% of net revenue. In the past, that's generally running in the 8% to 9.5% range. Was curious if there were any anomalous items in the G&A line in the quarter.

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Dickerson Wright, NV5 Global, Inc. - Chairman & CEO [20]

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I think that is something we are looking at. We are really addressing that, the G&A piece. So I'm -- perhaps Ed or Alex may have more specificity in certain things that we're addressing and what that is and why it's higher in the quarter.

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Edward H. Codispoti, NV5 Global, Inc. - CFO [21]

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So this is Ed Codispoti. Part of the reason for the increase in G&A has to do with, as you know, we had the material weakness that we announced at the beginning of the year. So along with that, we have what I would call temporary increases in professional fees on the part of the auditors and the entity that assists us with internal audit. And so that's an overage that we'll see this year as we remediate, and hopefully we'll be able to temper that going forward.

And then a lot of -- the rest of that increase has to do with just the -- as we bolt on these acquisitions going forward, that there's going to be increase in G&A. And of course, we're going to try -- and we will -- take advantage of scale as we move forward into the future.

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Jeffrey Michael Martin, ROTH Capital Partners, LLC, Research Division - Director of Research & Senior Research Analyst [22]

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Okay. Is it possible to quantify the temporary elements of that professional fees and overages and -- specific to Q2? And then do you have an estimate for the balance of the year on that?

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Edward H. Codispoti, NV5 Global, Inc. - CFO [23]

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I don't have an estimate for you for the balance of the year. I could tell you that -- what I -- and I don't -- let's see, we've -- go ahead.

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Dickerson Wright, NV5 Global, Inc. - Chairman & CEO [24]

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Yes, without -- I noticed we had an -- so Richard and I were just -- we had an additional expense of $430,000 from our Deloitte auditors because there's extra work on that. We also have the -- another consultant that works on the [Deloitte thing]. So I don't expect to see that expense to continue. That did hit, and we are amortizing those costs over the subsequent quarters. But they are due to run out in the end, and I think we're well underway at addressing the material weakness.

So those are the expenses that you saw hit in the second quarter that raised the indirect costs. And we know that we will have some additional expenses, but those are mostly amortized now for the rest of the year. They will not -- I don't feel they will be as much as we've experienced in the second quarter.

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Jeffrey Michael Martin, ROTH Capital Partners, LLC, Research Division - Director of Research & Senior Research Analyst [25]

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Okay. Okay. And then final question, can you give us an update on how your large projects in the Northeast are going? Those are projects that -- my understanding is they are well underway and they're moving along nicely now after having experienced some delays a couple of years ago.

Just kind of give perspective in light of your comments at the start of the call that you're experiencing some other project delays there. I guess it's interesting to see how those eventually come along.

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Dickerson Wright, NV5 Global, Inc. - Chairman & CEO [26]

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I'll let Alex address that. I did say though it's in the West. The -- from what I see and have been involved, we are doing very well in our Northeast work.

But Alex could answer that specifically.

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Alexander A. Hockman, NV5 Global, Inc. - President, COO & Director [27]

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Yes. So the Northeast is not experiencing the delays. The Northeast is actually ahead of budget. So those projects are moving along quite nicely. We saw a little bit of a slowdown on project starts in California, particularly with the proposition to -- regarding Senate Bill One. But since that did not pass and the funding is remaining in place, those projects are just delayed and now they will ramp up in Q3 and Q4.

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Operator [28]

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(Operator Instructions) Our next question comes from Lisa Springer with Singular Research.

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Lisa Springer, Singular Research, LLC - Research Analyst [29]

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In the conversation about M&A, you mentioned one of your focuses will be acquisitions that can build recurring revenues. I wonder if you can comment on what percentage of revenues right now is recurring and where you might want to take that over the next couple of years.

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Dickerson Wright, NV5 Global, Inc. - Chairman & CEO [30]

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That's a great question, Lisa. That is -- that answer can be given in 15 different ways. If it's reoccurring clients, we have about 92% of our work in our core businesses with existing clients. So many people classify that as reoccurring revenue.

What we like to say on reoccurring revenue is more subscription-based, and most of our Energenz piece, which is a small piece of our business, about $5 million in fees, almost 100% of that is reoccurring revenue. Much of the work that I mentioned with the high subconsultant [market] is reoccurring revenue.

So it's really by -- I cannot quantify that by percentage. But I can tell you that by client, we have a tremendous amount of reoccurring revenue.

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Operator [31]

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

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Dickerson Wright, NV5 Global, Inc. - Chairman & CEO [32]

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Thank you. Well, once again, we are very pleased to report another successful quarter. I'm often asked by investors: what is the key to our success? In fact, I've had a couple of investors recently say -- actually say, what is your -- what is the NV5 secret sauce? And I was reflective on that, and I think a one-word answer is, and you hear it so much, but it's our culture. So I'd like to define what our culture is.

We at NV5 are truly we. It's not a culture of us and them. We're all in it together. And the link is that our key employees -- so employees that deliver that service to our clients -- are truly engaged. They feel part of something. They feel like they are shareholders and have an opportunity to grow with the company. And I think that is a culture of inclusion.

So we know that our people, that we try our best to have our people to be part of what we're doing so that when we approach a client, they know that they have the support of NV5 and that they are doing something that they are being recognized for and they have an opportunity to grow as NV5 grows.

But that is just not with our -- and the key thing, and I mentioned this earlier about integration -- that is just not with our existing employees, but it's all those companies that join us through acquisition. We want to be sure that they are welcome, they are included, they feel they're part of NV5. And we spend a tremendous amount of time of being proactive in meeting with all our people.

So I think I'd leave it with the 3 key principles, now that I thought about it, that really maybe perhaps can differentiate us from other companies and maybe really doing it, not so much saying it.

One word is we are united. We are -- NV5 is one firm. It is a firm that each of our business or service lines feel that they're equally important to the success of NV5. So whatever the vertical, whatever the service line, they know what they are doing in that unit is very, very important to the overall success of our company. So they feel united, they're part of it.

The second thing we try to encourage is growing together. We try to instill a culture of organic growth, growing their client base, growing their service line. And so we encourage, we encourage through a flat organization. We encourage ideas. We encourage recommendations. We incur from anyone what can we do to support you better so that you, when you're in front of our clients and are -- you are having this thought of growing, growing your business, growing your service line into organic growth.

And the last thing is we want to engage everyone. So we are proactive. We try our best to have direct and free contact with our employees and our leadership. We like to talk to everyone. And often many people hear me say, it doesn't cost a nickel to smile. Just be encouraging. So we try to really promote at NV5 a flat organization where everyone is important and whether it be through our existing employees who have been with us for many years or all of those new companies that join us. They all have a key role in the success of NV5.

So we -- hopefully, that -- we will continue to follow that. We appreciate our, certainly, our shareholder base and the support that all of you listening to this call had and the support that you're giving our company. So I want to thank everyone for listening today. We look forward to a very good balance of the year, and we encourage you just to continue to follow what we're doing. And I appreciate so much the opportunity to speak to you today and at times when we meet. Thank you.

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Operator [33]

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Ladies and gentlemen, this concludes today's conference. Thank you for joining, and have a wonderful day.