NV5 Global Inc
NASDAQ:NVEE

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Earnings Call Transcript

Earnings Call Transcript
2018-Q1

from 0
Operator

Good afternoon everyone and thank you for participating in today's conference call to discuss NV5 Financial Results for the First Quarter Ended March 31st, 2018. Joining us today are Dickerson Wright, Chairman and CEO of NV5; Michael Rama, CFO of NV5; and Jenna Carrick, Investor Relations Manager for NV5.

I would now like to turn the call over to Jenna Carrick.

J
Jenna Carrick
Manager, IR

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 United States 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 also be available via the link provided in today's news release and 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 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 2018 and year-to-date financial results and outlook for the rest of the year.

We will then open the call for your questions. Dickerson, please go ahead.

D
Dickerson Wright
Chairman and CEO

Thank you, Jenna and thank you to everyone joining us for the NV5's first quarter 2018 conference call. After the close of the market today, we issued a news release announcing our financial results for the first quarter ended March 31st, 2018.

We are once again pleased to announce another excellent quarter. Our first quarter 2018 was our most successful first quarter to-date. Notably, we saw a double-digit organic growth of 10% for the quarter. We also see year-over-year increases in revenue, EBITDA, net income, and earnings per share.

Specifically, total revenues increased 47%, EBITDA increased 101%, net revenue increased 89%, adjusted earnings per share increased 51%. All of which were increases in the first quarter 2018 over the same quarter in 2017.

Now, I'd like to take a few minutes to highlight some of our accomplishments for the quarter in an illustrative way. We have developed this year within our infrastructure protocol a national power generational platform to facilitate our expansion into new markets and geographies for organic growth. We have hired 16 additional engineering and technical personnel to add to our revenue growth.

Our East Coast infrastructure organization has also been very active, with new large contract awards with the City of New York and the New Jersey Department of Transportation. We have also begun work on some long-delayed contracts and projects.

Our engineering design group has been selected to provide design and administrative services for bridge replacement and repair as a result of the expense of flooding in Northern California in 2017. Our building technology and sciences group also continues to grow. We are awarded a five-year contract with a large public agency for project commissioning services in Texas.

Our Asia operations have also been active. We were recently selected as the energy consultant for a high-profile zero carbon building in Hong Kong. Our Asia team was also selected to provide energy optimization services worldwide for a five-star international hotel chain.

We also continue to be active on the merger and acquisition front. Our pipeline of acquisition opportunities is robust, including a number of additional opportunities for the balance of the year.

We acquired in the first quarter Butsko Engineering to further support our national energy platform. In Hong Kong, we acquired CSA consultancy, a well-established and well-known MEP design and technology firm. This acquisition further densifies our service lines in Asia. These are just some of our high-level highlights for the beginning of 2018.

I would now like to turn the call over to our Chief Financial Officer, Michael Rama, for a more detailed overview of the financial results for the first quarter ended March 31st, 2018 and our outlook for the balance of 2018. Michael?

M
Michael Rama
VP and CFO

Thank you, Dickerson and good afternoon everyone. First, I will review the results of the company's first quarter ended March 31st, 2018 and then I will provide an outlook for the remainder of 2018.

Gross revenues in the first quarter of 2018 were $94.5 million, a 48% increase compared to gross revenues of $64.1 million in the first quarter of 2017. Net revenues for the first quarter of 2018 were $77.2 million, an increase of 45% from the first quarter of 2017.

EBITDA for the first quarter of 2018 was $10.1 million or 13% of net revenues, an increase of 101% from $5 million or 9% of net revenues in the first quarter of last year. Net income in the first quarter of 2018 was $4.3 million, an increase of 89% compared to net income of $2.3 million in the first quarter of 2017.

First quarter 2018 adjusted earnings per share; that is excluding the impact of amortization of intangible assets from acquisitions, was $0.59 per share versus $0.39 per share in the first quarter of 2017, an increase of 51%.

First quarter 2018 GAAP earnings per share was $0.39 per share versus $0.21 per share in the first quarter of 2017. Our first quarter 2018 adjusted and GAAP earnings per share reflects the weighted average shares outstanding of 10.9 million shares for the first quarter of 2018 compared to the weighted average shares outstanding of 10.7 million shares for the first quarter of 2017.

As of March 31st, 2018, our cash and cash equivalents were $17.2 million compared to $18.8 million as of December 30th, 2017. At March 31st, 2018, the company reported backlog of $309 million, an increase of 37% from $225 million as of the end of the first quarter of 2017. Our backlog is an estimate of revenues to be recognized over a rolling 12-month period.

Now, moving on to our outlook for 2018. We are raising our 2018 guidance for revenues and earnings per share. We expect full year 2018 revenues to range from $380 million to $415 million, which represents an increase of 14% to 25% from 2017 gross revenues of $333 million.

Net revenues is expected to range from $304 million to $332 million, which represents an increase of 13% to 24% from 2017 net revenues of $268 million. We expect full year 2018 adjusted earnings per share will range from $3 to $3.30 per share, an increase of 26% to 39%. We expect full year 2018 GAAP earnings per share will range from $2.26 to $2.54 per share. This guidance excludes anticipated acquisitions for the remainder of 2018.

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

Operator

Thank you. [Operator Instructions]

Our first question comes from Mike Shlisky with Seaport Global.

M
Michael Shlisky
Seaport Global

Good afternoon guys.

D
Dickerson Wright
Chairman and CEO

Hi Mike, how are you?

M
Michael Shlisky
Seaport Global

Good. Thank you. I wanted to start with the organic growth, 10%, and certainly, nothing wrong with that in the quarter, best you've seen in a couple of years. I'm curious to see if you can tell us your thoughts to just whether that's a sustainable rate for the rest of the year or there was anything unusual happening here in the first quarter as far as the growth rate goes?

D
Dickerson Wright
Chairman and CEO

Well, I think we should expect to be in the high single-digits on organic growth, from mid to high singles-digit for the rest of the year. I think -- as you've been hearing me say for a number of quarters, Mike that we were continuing to have projects in the New York area delayed.

And so when those projects started, which was a pent-up backlog, as well as the other growth we had, that's what we really saw as a significant increase in the organic growth. Not just in that territory, but we've had a number of projects in the west and in New York and projects, as you know, with the hurricanes and floodings that were delayed. So, all of those projects began as well as our normal course of work. So, that positively impacted organic growth.

M
Michael Shlisky
Seaport Global

And that's a great -- a follow-on question then about the weather. Do you -- so you had some things that might be pent-up from previous quarters that hadn't been done and started in the first quarter here.

Were there any projects then in the first quarter that have been delayed further either because there are no personnel available or there were other weather issues like a very long winter in parts of the country that now are going to be Q2 projects rather than Q1?

D
Dickerson Wright
Chairman and CEO

Weather is always -- our revenue, Mike, I wish it was linear, but it's not a linear -- and our clients really drive us, and so we do have some projects that we've been awarded. And for some reason or another, it goes to a political process whether it be a state agency or a municipality. So, there's always a little lag on some of those. So, we do think that we will have some spillover on those projects.

Unfortunately, right now, I can't point to anything that's weather-related. But I don't want to jinx this now with the hurricane season coming up in the south. So, the -- we do think there'll be some delayed projects that are starting, particularly with our state public agencies and municipalities.

M
Michael Shlisky
Seaport Global

Okay. Looking at the history of the model here. I think your topline does look pretty linear to me and I'm pretty sure they're upward for most of the last couple of years here.

D
Dickerson Wright
Chairman and CEO

Thank you.

M
Michael Shlisky
Seaport Global

Going on to the next question. In your M&A pipeline, given that you've gotten so big over the last couple of years, has the average size of the candidate [ph] that you're looking at grown recently to kind of goose the growth rate between here and 2020?

D
Dickerson Wright
Chairman and CEO

You mean the average size of the projects that we're going after or that we're winning, is that question?

M
Michael Shlisky
Seaport Global

No, the average size of your -- no, I meant the average size of the possible firm you might buy in your M&A pipeline.

D
Dickerson Wright
Chairman and CEO

Yes. Thank you. That's a very astute question. As you know, when we first began, we were looking at revenue companies in the $1 million to $5 million range and now we're starting to look at things at least closer to $10 million in revenue and we look for some opportunities that are much larger than that. But we're careful. We're careful with that we don't get too many air pockets in the pipeline. So, if we really focus on a very large acquisition, tie up a lot of time in due diligence, we still want to be nimble enough to continue not to have delays in the acquisitions.

And these things are not an even flow. There's -- sometimes, we're very active with opportunities. Our M&A person is always out there looking. We always have -- and I don't see any slowdown in the deal flow, but I do see our deals getting a little bit larger. And I would look now to that baseline being closer to $10 million on the smaller deals rather than the $5 million that it was previously.

M
Michael Shlisky
Seaport Global

Okay. One last one for me. I was kind of wanting to dive into the organic growth a bit more in the quarter. Could you give me a sense as to what kinds of services are providing the most growth in the current quarter and maybe in the Q2 as well?

D
Dickerson Wright
Chairman and CEO

Well, you noticed in my prepared remarks earlier, our energy division is really -- we're looking at that now. We've been so successful in California that we have now given the resources to expand that. So, we're seeing a lot of growth in the energy generation group, what we called our power group.

So, we look at a lot of growth there, and then we also see that we're really starting to get some solid traction in our municipalities. We are with almost 300 municipalities around the country.

And so as the funding goes and as they get more tax revenue coming in from a better economy, there seems to be more projects that way. But we tend to see more of the growth coming from the public sector, although, we're starting to see an awful lot of work in the -- a growing piece in the private sector.

M
Michael Shlisky
Seaport Global

Okay, that's great color. I'll hop back in queue. Thank you.

Operator

Thank you. Our next question comes from Jeff Martin with Roth Capital Partner.

J
Jeff Martin
ROTH Capital Partners

Thanks. Hi Dick, hi Mike.

D
Dickerson Wright
Chairman and CEO

Hi Jeff.

M
Michael Rama
VP and CFO

Hey Jeff.

J
Jeff Martin
ROTH Capital Partners

I was wondering if you could comment on the proposal activity on each of the coasts and possibly by vertical. You touched on that a little bit with the last question with the power group and the municipalities. But are there specific verticals that you're seeing a lot of demand for? Are there other areas that are a little slower? Just some general insight into how the demand environment is out there.

D
Dickerson Wright
Chairman and CEO

Well, from a macro picture, Jeff. The verticals are all a little different in the proposal activity. For our construction quality assurance vertical, that's more of a mass market and that's very much dependent on very fast-paced projects. So, many proposals go out.

As we get to the larger projects, we have what we call in the public sector, large transportation projects, very, very large infrastructure projects. We have what we call a go/no go decision. So, for that infrastructure protocol, a lot of technical writing has to be done. And so we are very careful about -- we will not approach those projects unless we have a very good surety that we're going to win it or we know of the project going ons. So, are no go is about 60% to 70% assurance on those. So, they tend to be lesser proposal activity.

Then as we start to get more in our hospitality and private sector work, a lot of that is dependent on the growth in the resort and gaming industry. I was just reading something someone sent me today that Macau, for example in gaming revenue, is up almost 33% over the same period last year.

Well, those always have a great impact on us because those proposals are more relationship-driven. We are embedded there. We're asked to improve on in indoor air quality. We're asked to improve on energy efficiency. So, those are more relationship-driven proposal.

But the overall activity, I can say that we keep learning, we put that one foot in front of the other. But our business development group is pretty well-seasoned in each of the verticals. Although, they approach it differently.

J
Jeff Martin
ROTH Capital Partners

That's helpful. And then on the M&A deal front, are you seeing more competition? Are you seeing higher multiples being sought? How's the environment there? And is it tougher to get deals? Is it the same? Is it -- your value proposition is still compelling? Just some insight there would be helpful.

D
Dickerson Wright
Chairman and CEO

Well, I think our -- what we have seen, we see a lot more people in this space, but we still see companies that like to play at M&A and really devote their resources to it. So, as you know, we have a built-in legal staff, where we try to do a lot of our due diligence in-house. We do a lot of the accounting and finance valuation and due diligence in-house.

So, -- but yes, the market is getting -- sellers are becoming more and more representation with brokers. The impact on valuation has likely, but I don't think they factored in the real benefits of the tax. So, if we're still paying about six times EBITDA, trailing EBITDA, for many companies. And sometimes, it can creep to seven. But with the tax benefits, that really is running at five to five and a half times.

So, it's -- the environment is a little better. Although, it's certainly -- there's certainly more and more competition out there. But we still say no to many deals that we have a luxury of saying no to many things that we have as opportunities. But we still have that 10 to 12 to 15 deals going on at any one time and we always try to be in due diligence in three or four of those.

J
Jeff Martin
ROTH Capital Partners

Okay. And then I want to make sure I understand correctly your brief mention of some projects delays on state agency and municipality side. Is that something that is different from before? Is that something that is potentially impacting Q2? Some perspective there would be helpful.

D
Dickerson Wright
Chairman and CEO

Yes. No, it's nothing different as before. Anytime you're dealing with political agencies, it's always a little bit longer, it's always a little bit more through the approval process and so that is continuing.

So, what I said there, that is not -- that is just what we've experienced over the year. So, dealing with public agencies is always a little bit of more of a delay than dealing with a private agency.

Where we do get impacted and what we just can't control is the degree of how weather can affect things. Sometimes, projects -- big construction projects, where we have for infrastructure, our CQA Group can be delayed quite a bit because weather.

Although, if there's damages, then our environmental group will pick up, but really not enough to offset that. So, it hasn't changed, and I just -- and what we like to say is our quarters are stronger in the second and third if we don't have any major impact like the floodings and hurricanes that we had in Q2 and Q3 last year.

J
Jeff Martin
ROTH Capital Partners

Okay. And then if you were to break down the 10% organic growth. You mentioned New York was a big contributor to that. Are there other major contributors to that? And then secondarily, is your cross-selling initiative contributing into that as well? Thanks.

M
Michael Rama
VP and CFO

Yes, Jeff, I'll pick up on that. We're seeing it also, improvements in organic growth, in our west as well and just from the new wins and all that -- and the cross-selling. As you know, we're -- we have a dedicated person that's involved for -- with cross-selling initiatives on a weekly basis and that has definitely spurred the organic growth in our west and as well as what's going in northeast.

J
Jeff Martin
ROTH Capital Partners

Great. Thanks for taking my questions guys. Good quarter.

M
Michael Rama
VP and CFO

Thank you.

D
Dickerson Wright
Chairman and CEO

Thank you.

Operator

Thank you. Our next question comes from Rob Brown with Lake Street Capital.

R
Rob Brown
Lake Street Capital

Good afternoon.

D
Dickerson Wright
Chairman and CEO

Good afternoon Rob.

R
Rob Brown
Lake Street Capital

Hi. I am wondering if you can expand a little more on the building energy business, sort of what's the growth rate in that market and what's sort of the opportunity there you see. And I guess, is that some of your acquisition pipeline in that area?

D
Dickerson Wright
Chairman and CEO

Well, we certainly like to identify acquisitions in that energy area because it's much more stable. There's not as many peak and valley in the revenue stream. So, we're looking at -- we have some specific, which, under NDA, I can't say. But we have -- we are really focused on acquisitions in that energy space.

What we try to do, though, in our power group, is to really have a national approach. We've been so successful in some areas. And so what we do through the cross-selling and what we do through the education process is to develop a national approach to these -- to the big utilities. And so it's relationship-driven. It's -- and -- but we really feel it cannot be a provincial approach.

So, what is driving that is a couple of things. The economy has picked up, so therefore the use or the needs for energy has grown. Also, the alternative energy has been a very good spot for us, where people are now -- big utilities are now making those approaches to alternative energy and not as much traditional.

Also, the administration has been -- and we'd seen some benefit of this current administration because there has been a speeding up of the process of permitting for many of the energy and power plants. So, we see that as an opportunity for us. And the permitting process is helping them in the permitting process, but second, having more opportunities for projects to begin.

R
Rob Brown
Lake Street Capital

Okay. Good. And then maybe turning to the operating expense structure and, I guess, if you want, operating margins. Is this operating expense structure sort of at the level it can stay at? And then what's your operating margin kind of view in the next couple of years working in-situ?

M
Michael Rama
VP and CFO

Yes, Rob, as -- from a scale basis, we're seeing the scalability of the operations and the organizations as we headed the acquisitions from last year. Right now our operating expenses as a percentage of revenues is around 38% for this quarter. Was over -- it was close to 42% Q1 2017. So, it's the scale, it's the densification, it's the cross-selling that are all starting to oil into the whole operations.

R
Rob Brown
Lake Street Capital

Okay. And then last question just on the backlog. Is there a way to characterize sort of what makes up the backlog or is it across your whole business? Or are there certain verticals that are driving that backlog and backlog growth?

D
Dickerson Wright
Chairman and CEO

That's up. Well, we -- in looking how we record backlog, we have a person that just really works that, and it's -- we measure at where -- from each of the business unit. So, where I'm really starting to see a specific growth in backlog, we see an awful lot of good opportunities in our CQA Group. We see a lot of backlog growth in the infrastructure growth both in the east and the west. And then in the transportation, we're starting to see more of the backlog growth. So, it's pretty much spread out.

I can say this, too, our natural gas transportation -- transmission business is starting to pick up again now and so we're starting to see some awards in that area. Although, that's -- margins aren't -- the operating margin is lower, we're still -- we're starting to see more volume in the natural gas transmission pipeline work.

R
Rob Brown
Lake Street Capital

Okay, great. Thank you. I'll turn it over.

Operator

Thank you. Our next question comes from Scott Blumenthal with Emerald Advisers.

D
Dickerson Wright
Chairman and CEO

Hi Scott.

S
Scott Blumenthal
Emerald Research

Afternoon Mike.

D
Dickerson Wright
Chairman and CEO

Good afternoon.

S
Scott Blumenthal
Emerald Research

Dick -- I guess, this is totally a good question for Mike.

D
Dickerson Wright
Chairman and CEO

Go ahead. We like those. We like Mike having those questions.

S
Scott Blumenthal
Emerald Research

Mike, I saw the sub-consultant numbers, their percentage of overall sales came down a little bit. And I was wondering -- well, obviously, you're able to staff a little bit more for internally. I'm just wondering, as you catch-up on some of the work that kind of had been pushed out, like Dick mentioned, New York, you're going to need to lean on sub-consultants a little bit more? Or do you think you can staff the projects with what you've got now?

M
Michael Rama
VP and CFO

Yes. Well, good observation. We're always monitoring the sub-consultants that we use and if we need to lean on. Again, our cross-selling initiatives are strong. We're trying to use -- internally utilize our internal people and I think the blend between what we have now is pretty representative what is that and we don't expect any significant deviation from there.

S
Scott Blumenthal
Emerald Research

Okay. So, as you get a little bit busier, I guess, as you move up the utilization scale, do you think at this point you got enough people? Or I mean, I know you're always looking for them. But based upon what you have in the backlog, Dick, do you think you'll be able to kind of keep sub-consultant costs at a level where they were this quarter? Or you -- might that creep up a little bit?

D
Dickerson Wright
Chairman and CEO

Well, I hope we can, Scott. I think there may be some creep. On very, very large projects, that we need to staff, of course. The client doesn't wait for us to staff the project internally. We have to support this construction schedule.

There is always a need -- and our recruiting group is very, very active. There is always a need for people. But I don't think we -- I think I am cautiously optimistic that the backlog, we can support with the staff we have now. And I think the sub-consultants will range anywhere from 19%, and it can go up to high as 23% or 24% depending on the mix of work that we get.

And then also some of these bigger public projects have the DBE/MBE requirements, where there is a percentage that we would normally sub out anyway. So, if there's any creep, it could be either statutory or it could be just a support to the construction schedule. But I don't see more of a -- then maybe a 5% swing either way.

S
Scott Blumenthal
Emerald Research

Okay. That's really helpful. Thank you. And Mike, can you maybe talk through a couple other things that were in the other tossed bucket this quarter?

M
Michael Rama
VP and CFO

In the other direct costs?

S
Scott Blumenthal
Emerald Research

Yes.

M
Michael Rama
VP and CFO

It's typically reimbursed expensed, travel that the -- that our people are utilizing on clients, travel, entertainment and whatever else non-sub-related. But we're able to pass through those expenses from our employees, the guys working on the jobs.

S
Scott Blumenthal
Emerald Research

Okay. So, that number is going to be an indicator or continue to be an indicator of how much activity you have internally?

M
Michael Rama
VP and CFO

Yes, absolutely, and we look at that bucket between sub-consultants and direct -- other direct costs kind of collectively when we look at our overall mix of, we'll call it, pass-throughs. Because in essence, it's -- they're both considered pass-throughs. So, we look at that as a collective measure on how it is as a percentage of the revenue. Obviously, we want that number to be as low as possible, but we like to -- but we do monitor that -- those two metrics together.

S
Scott Blumenthal
Emerald Research

Okay. Good. That's helpful. And Mike, did you give an estimate on what you expect the tax rate to be?

M
Michael Rama
VP and CFO

We talked about it last quarter, but we're expecting at 25%. That's where we're estimating. Right now, I think the quarter was around 24%, and that's just some mix between what's happening with our Asia operations and the -- as well as the U.S.

S
Scott Blumenthal
Emerald Research

Okay. And I don't know if you caught this or had an opportunity to read this, but I think the Wall Street Journal either today or yesterday had a story about states considering moving the reduced state tax deductibility for employees onto the employer.

I know that you have a meaningful presence in California, and Californians are very creative. So, I was wondering -- any rumblings about that type of thing actually occurring in California, yet? Because I think this mentioned New York.

D
Dickerson Wright
Chairman and CEO

Well, you never know what can happen in California. But I would say like it's -- our competitors in California will have the same issues. So, if there is any changes, it certainly won't be unique to us.

S
Scott Blumenthal
Emerald Research

That's a good point, Dick. And maybe a last one. You have a -- I understand you have a growing successful drone business now and I'm wondering if that's going to require any capital expenditures?

D
Dickerson Wright
Chairman and CEO

Well, it -- I should let Mike answer that. I am one that always is looking to grow and expand the business, and I think we have a company that is Skyscene that does the -- and they have not asked right now. We have two LIDAR for the ground measurement that ties in with our drones. But I have not -- but it's good, Scott. It could very well be that we may have to make a capital expenditure there. We'll just see how the backlog looks.

M
Michael Rama
VP and CFO

It will be a need as well. Obviously, if we have the capital expenditure need, that means we have more work that's coming on that we need to do the work for -- on as well. So, we bought Skyscene those -- that equipment was fairly new. So, just looking at that -- the expectation in the short-term is pretty -- not a big need.

S
Scott Blumenthal
Emerald Research

Okay, sure. Thank you.

D
Dickerson Wright
Chairman and CEO

Okay. Thanks.

M
Michael Rama
VP and CFO

Thank you.

Operator

Thank you. And our final question comes from Robert Maltbie with Singular Research.

R
Robert Maltbie
Singular Research

Hi Dickerson, hi Michael.

D
Dickerson Wright
Chairman and CEO

Hi Bob.

R
Robert Maltbie
Singular Research

Congratulations. Boy, you guys are [Indiscernible]. My first question is, on the last call, Dick, you were guarded -- somewhat not guarded, but I guess enthusiastic in your assessment of one of the strongest environments you'd seen in quite some time. Is it still looking that way to you?

D
Dickerson Wright
Chairman and CEO

Well, yes, I think the political environment seems to be in our favor. I think our -- the state agencies and the municipalities are much more optimistic and so we kind of depend on that. I had just seen a tremendous activity.

And from my anecdotal way, Robert, of looking at this, I look at the business unit. So, we have over 100 profit centers. And when we see continue request for hiring and continue request for growing the company but with initiatives, that kind of gives me a general picture that things are really good. We're not forcing people to lay anybody off right now. So, that's -- so the general environment from my perspective and from the NV5 perspective is good.

R
Robert Maltbie
Singular Research

Terrific. And I didn't see this, so I -- before I assume it really wasn't any factor, many companies are showing -- and this quarter in fact is on fire. So, many kind of a one-off effect to the tax cuts, where, obviously, there's more net income, less taxed away. In terms of NV, it wouldn't be the impact here, if any? And can you equate that to the underlying ongoing growth that you're expecting?

M
Michael Rama
VP and CFO

The impact on the quarter, if we were to take in the old rules or old tax laws, if you will, and apply to the first quarter, is about $0.05 share delta between old tax regulations in the current environment. So, obviously, had a positive impact for our quarter. But that was the impact for -- and we took all -- during the fourth quarter 2017, any -- from a book standpoint, any revaluation of our deferred taxes got taken care through the fourth quarter and any provisional adjustments that we looked at and booked during that fourth quarter were reviewed currently and had no changes to that currently. So, that's the impact that goes on the quarter.

R
Robert Maltbie
Singular Research

Sure. And regarding the acquisition pipeline, is that included in your guidance for 2018?

D
Dickerson Wright
Chairman and CEO

No. The guidance we gave assumes -- does not assume that we're going to do any acquisition. So, -- the acquisitions, if we do have anything made, it'll be additive to what the guidance is.

R
Robert Maltbie
Singular Research

Okay. And regarding--

D
Dickerson Wright
Chairman and CEO

The guidance assumes no acquisition.

R
Robert Maltbie
Singular Research

Okay. And let's see, two final questions. Regarding your financing of growth for the next two, three years, what does it look like there?

D
Dickerson Wright
Chairman and CEO

Well, I think we're simple people. We like -- we watch our cash flow very, very closely. We positive cash flow each of the quarters. We're really looking at our accounts receivable and improving the day sales outstanding, reducing that amount.

So, we have -- to give you an example, we have grown, but we have not really increased our borrowings from our credit facility. In fact, we've reduced them. I think one of the spikes, we paid $42 million in cash for the acquisition of Bock & Clark. And I think after all of those acquisitions and growth since then, I think our credit facility is actually less than it was at that -- than the $42 million now. So, most of it is coming from cash flow, Robert.

R
Robert Maltbie
Singular Research

Okay. And finally--

M
Michael Rama
VP and CFO

I want to jump in a little at that. If you will -- if you look at our balance sheet, we're very slow and very low levered. As Dick mentioned, we're -- our EBITDA to debt ratio is around 1.2 times, so still very low levered. So, we have a credit facility with capacity available and figured our balance sheet is strong enough to handle it.

R
Robert Maltbie
Singular Research

Okay. And finally, regarding international, I guess, growth opportunities, is that important factor for NV moving ahead longer term?

D
Dickerson Wright
Chairman and CEO

Not really. Our -- what we're doing in Asia is really simply what we're doing in the States, and that is to densify existing platforms. So, if our President of the BTS Group and our Asia people look for an opportunity that would really support their platforms like CSA was really a wonderful acquisition for us. Because in China, they have various bans depending on your size that you can quote on, on projects. So, that get us -- got us in like -- I think it's called ban two that we're in now. But the -- we're not looking to put a flag down somewhere in Europe and say let's expand in this area. It's really where we have an opportunity, where we have a foothold. That's where we'll grow.

So, we're in Asia really because of the JBA acquisition. They've had very, very successful offices in Hong Kong and Macau. So, -- and knowing the management and visiting there, and we felt comfortable that they could easily support an acquisition that would strengthen their platform. So, it's really -- Robert, I think it's more opportunistic than it is to -- for us creating things in international areas.

R
Robert Maltbie
Singular Research

I see. Well, that does it for me. Thank you, Dickerson and Michael. And congratulations on a great quarter.

D
Dickerson Wright
Chairman and CEO

Thank you.

Operator

Ladies and gentlemen, that concludes the question-and-answer portion of our call. I would now like to turn the call back over to management for any closing remarks.

D
Dickerson Wright
Chairman and CEO

Thank you, operator and thank you, everyone for listening to our quarter. We are very -- we're home proud but humbled of our results and I just wanted to maybe touch on a couple of things.

Our strategy is really detailed. It's one foot in front of the other. We stay with what we know. We want to improve on what we know. We have a seasoned team of managers that are very comfortable in the areas that they know. We still want to approach that client as a valued resource.

So, I get asked questions like, why do we continue to grow up organically? And so a lot of that is we are looking for relationships, not normally just chasing projects. So, -- but when we do get with a client, we really want to be embedded and we want to be involved in every stage of the client's growth.

So, it could be from the initial funding and helping there, ranking for writing -- helping writing the plans and specifications. It could be all the way through site selection and write through the completion and commissioning of the projects.

So, if you look at NV5, you're really going to see us from the very beginning, all the way throughout the projects. So, this really helps. It's relationships and that is our approach. And our approach to acquisitions is very similar. What will really strengthen the service offering? What really helps us in the areas that we want to grow and we want to be stronger?

And then the last thing, I think, is what is -- helps us is scalability. We drive home that our support services, the services that we need to help our people in the various offices be in front of the client, be better with those clients. We want that to be scalable. We do not want the -- our administrative costs to rise at the same percentages of our growth. So, every time it's scalable, we can add to the bottom-line.

So, I think we want to continue to be recognized as pure consultants, people that are certifying body that we do. And we want to do this growth without taking big risks, without taking contract, constructability risk. We would like to grow as pure consultants, and so we're doing that. And I just want you to say that we continue to want to have a flat organization, an organization and our people in front of everyone.

So, I would like to take this time -- although, I'm thanking our investors and the investment community for following us, I really once again want to thank the wonderful employees that we have in our company. The company -- they all represent us very well, and we want to do our share to make sure that they can continue to assist the client and develop a relationship with them.

So, I want to thank everyone for listening to the results today and we're proud to -- of the work that our people are doing and we look forward to speaking to you again in the next quarter. Thank you.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect and have a wonderful day.