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NV5 Global Inc
Earnings Call Analysis
Q2-2024 Analysis
NV5 Global Inc
NV5 Global has kicked off the second quarter of 2024 with solid financial performance, reporting a 6% increase in gross revenues, up to $236.3 million from $222.6 million in the same quarter last year. This increase reflects healthy demand across its infrastructure, geospatial, and buildings segments, indicating positive momentum as the company prepares for a robust second half of the year.
The company demonstrated an impressive gross profit increase of 12%, totaling $123.3 million, while gross margins expanded by 270 basis points, reaching 52.2%. This improvement was notably driven by gains in the geospatial and infrastructure sectors, despite facing some nonrecurring costs related to recent acquisitions, which temporarily affected net income.
NV5 is enhancing its revenue guidance for 2024, now projecting gross revenues between $944 million and $950 million, reflecting a strong operational performance and expansion in demand for services. This upward adjustment aligns with expectations of 6% to 10% organic growth for the second half of the year as well.
As of Q2, the adjusted EBITDA rose 10% over the previous year to $38.5 million, with margins expanding to 16.3%. Despite generating cash from operations of $8.2 million year-to-date, the Q2 working capital needs resulted in a cash burn of $11.3 million. Nevertheless, the company maintains a low net leverage ratio of 1.5x, which should bolster its position for future growth.
NV5's infrastructure segment led revenue generation, accounting for $101 million in Q2. Continued investments in technologies such as undergrounding initiatives within the utilities market are creating new growth opportunities. In geospatial services, innovations in software and extensive sensor utilization are expected to drive additional revenue growth, supported by a backlog increase of 5% since Q1.
The company has two significant acquisitions underway in the utilities and water resources sectors, aimed at strengthening its staffing and operational capabilities. When finalized, these acquisitions will add approximately 400 technical personnel to NV5's workforce and further enhance its service offerings, particularly in areas yielding recurring revenue.
Looking long-term, NV5 has set a target to achieve $1 billion in run-rate revenue by entering 2025. Furthermore, the management is optimistic about the significant growth potential in the data center segment, aiming to scale from the current $40 million run rate to $400 million within the next five years.
Overall, NV5 showcases a diversified business model that's less susceptible to economic fluctuations, driven by mandatory infrastructure needs amid global population growth. The company appears well-positioned to capitalize on the accelerating demand for its services both in domestic and international markets, leveraging innovation and strategic acquisitions to enhance its competitive edge.
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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 2024 ended July 29, 2024. Joining us today are Dickerson Wright, Executive Chairman of NV5; Edward Codispoti, CFO of NV5; Alex Hockman, CEO of NV5 Infrastructure; Ben Heraud, CEO of NV5 Buildings and Technology; Dan Levine, President, Geospatial at NV5; and Richard Tong, Executive Vice President and General Counsel at NV5. I would now like to turn the call over to Richard Tong.
Thank you, operator. Welcome, everyone, to NV5's Second Quarter 2024 Earnings Call. Before we proceed, I would like to notify all participants that today's presentation can be found on ir.nv5.com and remind everyone that today's discussion contains 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 report on file with the SEC.
During the call, GAAP and non-GAAP financial measures will be discussed. A 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 second quarter 2024 comparisons are being made against the second quarter of 2023. 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 and adjusted EBITDA. NV5 provides non-GAAP financial measures to supplement GAAP measures, as they provide additional insight into 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 on the Investors section of the company's website. You may also find today's presentation, which will be referenced during this call, on the Investors section of the company's website.
We will begin the call with comments from Dickerson Wright, Executive Chairman of NV5, before turning the call over to Edward Codispoti, Chief Financial Officer, for a review of the second quarter results. Dickerson Wright will then provide closing comments before we open the call for your questions. Dickerson, please go ahead.
Thank you, Richard, and we thank everyone joining us for this call today. Although we are very pleased to report a successful second quarter, which we [ flagged ] strong organic growth and profitability, the second quarter results further represented the positioning of NV5 to meet the expected increase demands for the second half of the year. As many of you know and have attended, an Investor Day was held on July 25, which emphasize our position for not only the second half of this year, but our goals for NV5 in the 3 years to come using technology to better deliver these services. Current market conditions confirmed the NV5 positioning of being in a mandatory business. The global population growth has placed tremendous demands on infrastructure and energy production and delivery. We have strengthened all aspects of NV5 infrastructure and energy production and delivery services. This has proven to be a very stable business model during all the economic conditions.
As an example of this, our backlog, which has increased to $877 million for the year, represents an increase of 5% over Q1 '24 and 9% over the second quarter of last year. As you can see on Slide 3, we have presented the combined performance for NV5 in the second quarter of 2024. These totals represent accumulation of 3 segments of our business: Infrastructure, Geospatial and Buildings and Technology. These 3 segments are supported by our 6 service verticals: Construction Quality Assurance, Utility Services, Infrastructure, Environmental Health Sciences, Building and Technology and Geospatial. We will report the second quarter performance of these verticals as well as annual and future goals for each of these segments. We will also convey the competitive advantage of how these verticals work with each other to deliver effective and meaningful results to our clients through a robust cross-selling program of all our offices.
The first segment we would like to discuss is our Infrastructure segment, which will be presented by Alex Hockman, CEO of Infrastructure. We will not only discuss the second quarter results, but how we use technology to deliver these results and the cross-selling support that Infrastructure receives from our other verticals. Alex?
Thank you, Dickerson. Please turn to Slide 5. Infrastructure as a reporting segment generated $101 million in gross revenue in Q2. The 3 verticals that comprise this segment include our business units that provide engineering design and surveying, which accounted for 51% of Q2 revenues. Utilities were 29%, and construction quality assurance services were 20% of Q2 revenue. Of note, revenues generated by our Geospatial and Technology reporting segments associated with Infrastructure as an end market are reported separately.
In 2023, we established key initiatives to focus on targeted growth sectors shown in the lower left of this slide. I will briefly discuss each of these initiatives. If you turn to Slide 6, our sustainable infrastructure addresses many facets of the built world. One of the ways in which we are distinguishing our platform is to be leaders in adopting and enhancing technologies to refine the process from conceptual design through construction and operation phase. And this has resulted in increased profitability and growth. These technologies include the use of scanning, modeling and visualization tools that allow us to create 3D images of in -- infrastructure and the proposed design, which reduce construction costs and delays and allow for the stakeholders to readily understand proposed designs.
Slide 7 provides a summary of our DOT initiatives, which brings our technical people and solutions to all DOT clients to increase organic growth and profitability. Through these initiatives, we are experiencing strong growth in DOTs in North Carolina, California and New Jersey. Last quarter, I mentioned the acquisition of CHW, and with the success of the integration and statewide opportunities, we plan to double the size of our Florida DOT and municipal engineering services by 2028.
One of the unique aspects of our DOT initiative is our ability to integrate our geospatial services to complement our engineering expertise. This differentiator allows us to offer services throughout the CapEx and OpEx phases of an asset. Some recent key wins are a direct result of our DOT initiative, including $60 million in civil program management contracts for Caltrans that have been secured this year. We also recently announced $10 million in North Carolina DOT contracts.
Slide 8 identified several growth drivers in our utility services business. Some key items to note is that $42 billion in grid modernization costs proposed by the 50 largest investor-owned utilities have received approval from regulatory agencies. Other drivers include the growth in renewables, which is forecast to double over the next 20 years, increased electricity demand and the public demand for increased reliability and resiliency. These growth drivers create high demand for our utility services.
On Page 9, you'll see examples of undergrounding. This technique has been proven to be extremely effective in grid hardening transmission lines. NV5 has been involved in designing over 700 miles of undergrounding. And through experience and innovation, the cost of undergrounding a mile of line has decreased over 50% since 2019. Further, our solutions and analysis result in opportunities for all of the infrastructure vertical and our unmatched geospatial capabilities. With NV5's multidisciplinary and integrated service offering to the utility market, we are well positioned to grow with the increased demand and able to provide our services throughout the United States. Dickerson?
Thank you, Alex. The second segment is our Geospatial Services. Dan Levine, the President of our Geospatial segment, will discuss how this vertical provides key services to our clients. But it also delivers advanced technology to support our core business. Dan, please go ahead.
Thanks, Thanks, Dickerson. If you would please turn to Slide 11. I'm going to spend a few minutes talking about the Geospatial sector results for Q2 as well as some of the emerging trends in our markets and technologies we use and how these are creating competitive advantages for us across all sectors of NV5. So Q2 gross revenue totaled $72 million, driven in large part by continued strength in the utilities market. We have a strong and growing backlog in the utility sector with several large wins in the quarter, including 2 totaling over $13 million from both the Southeast and SoCal regions and a larger contract pending from the Northeast region.
Additionally, our aircraft and sensor utilization continued to set records for us in flight times and miles flown. These are revenue drivers for both our data acquisition and our data analytics services. I had mentioned in the Q1 earnings call that we expected to start seeing contracts flowing from the federal government towards the end of Q2 and into Q3 as a result of the continuing resolution being resolved in late March. This is exactly what we've experienced in May and June and ongoing through today, with over $35 million in federal contract awards from just 4 agencies in both defense and [ zone ] sectors.
Finally, during May and June, we were able to book over $8 million in contracts for our Hydrospatial business, creating a positive turn in that sector for us. If you please turn to Slide 12. The Geospatial business is at core, a technology-driven business. And 1 of the things about technologies is that it is constantly changing. This keeps us sticky with our existing clients, as they always want the next best thing. As the largest geospatial services business in the market, we have inherent advantages. NV5 Geospatial has a large and diverse portfolio requiring and supporting the development of expertise in new and advancing technologies. This allows us to maintain our early adopter position in the spaces we are active in and provides access to new markets that benefit through leveraging our technologies. These technology advantages are in the form of [ Lance ] and [ Air Centers ] and the ability to combine the multiple sensor types into a single collection system.
Additionally, our commercial software with over 0.5 million users worldwide is built on 18 patents. These and the thousands of bespoke solutions we use internally for data production and analysis and externally by creating specific enduring solutions for our customers keep us ahead of our competition as well. If you please turn to Slide 13. Not only does that help the Geospatial business directly, but the technologies and expertise we developed for that business applies directly to our Infrastructure and Building Technologies businesses. We are experiencing an increasing level of cross-selling and project work through leveraging geospatial technologies across the sectors. Examples include using our [ scan to ban ] equipment and expertise to support that building technologies is doing for data centers and bringing that into airports and other facilities. We are actively supporting a power team and infrastructure with data for asset management assessments. And we are seeing several areas in both transportation and water, where geospatial technologies are able to expand our client base and the work we do in these sectors.
This phenomenon goes both ways, as the deep domain expertise in the power, water and transportation areas of the business is directly supporting geospatial team's ability to win work where we were not even attempted to win in the past. If you please turn to Slide 14. I wanted to speak for a moment specifically about our software capabilities. The NV ecosystem is a recognized leading software package that provides scientific image processing capabilities to our customers. Traditionally, that has been used by scientists and academia and large research agencies. Our software was embedded on the Hubble Telescope, for example.
It is also becoming a key component to some of the medical imaging analysis automation. X-rays and MRIs are being read from computer algorithms largely driven by our software. Our Software-as-a-Service platform is enhancing our traditional capabilities, allowing nonscientists to perform similar analyses, but to do it over and over again. This capability is being used by large oil companies worldwide to auto-detect issues with their assets for transportation applications, assessing subsidence along roads and railways, and finally, the DoD and intelligence communities are using this more and more as a force multiplier for detecting and assessing activities in parts of the world experiencing rising tensions. Work traditionally performed by banks of analysts. The NV software platform is a unique differentiator for NV5. Back to you, Dickerson.
Thank you, Dan. Our third segment is our Buildings & Technologies segment. This segment has seen significant organic growth domestically and internationally. The demand for energy delivery and efficiency is increasing. Ben Heraud, our CEO of Buildings and Technology who leads this group, will speak about our second quarter results and how we are using technology and analytics to meet this ever-increasing demand. Ben, please go ahead.
Thank you, Dickerson. Let's turn to Slide 16. Our Buildings & Technologies segment delivered $64 million in the second quarter of 2024, which represents 18% growth over the second quarter of 2023. Some of the areas that are driving this growth are data centers, clean energy and building digitization.
Please turn to Slide 17. To show our strong commitment towards the continued growth of our services associated with data centers, we have set a 5-year target of $400 million in revenue, which is 10x our current volume. We will achieve this by continuing to grow with our largest base of hyperscale clients, leveraging our strong expertise to win new clients and expanding the services we provide within the sector. We have won over $25 million in mission-critical and data center awards in the first half of 2024. And the pipeline for new opportunities continues to be strong in our data center business.
We have also seen strong growth in our Digital Twin services for data centers, which we deliver in concert with our Geospatial business. A key factor to limiting the growth of the data center market and the domestic market is the availability of power, and according to recent studies, over 30% of data center capacity is unused due to a lack of sufficient energy. NV5 is uniquely positioned to address this issue and are currently leveraging multiple service lines to help our clients unlock this unused capacity, including energy efficiency, power delivery, MEP design and commissioning.
On Slide 18, another challenge facing this sector are complexities that AI servers are bringing to the operation of these facilities. Large and unexpected spikes and load cause heat load issues. NV5 is at the forefront of solving these problems with our clients utilizing cutting edge technology and expertise. With the use of software, this service is highly profitable, scalable and recurring.
On Slide 19, our building digitization service is a great example of how we are leveraging technology to engage multiple NV5 services to support our clients. Working with our geospatial and surveying teams, we are able to create highly functional Digital Twins to improve our buildings operation, reduce energy costs and carbon emissions. This service is deployed for the entire life cycle of a facility and puts us in a very strong position to bring all the NV5 services to our clients over a long time period. Back to you, Dick.
Thank you, Ben. Let's see how we've done cumulatively in Q2 of 2024 when we put all 3 segments that you've just listened to together and what we can then anticipate for the balance of the year. Let's listen to Ed Codispoti, our Chief Financial Officer, as he addresses our financial results.
Thank you, Dickerson, and good afternoon, everyone. If you would please turn to Slide 21 of the presentation, I'll review our 2024 second quarter financial results. Our gross revenues in the second quarter grew 6% to $236.3 million compared to $222.6 million in the second quarter of the prior year. Our gross profit was $123.3 million compared to $110.3 million in the prior year, an increase of 12%. Gross margins expanded 270 basis points from 49.5% in the second quarter of last year to 52.2% in the second quarter of this year, largely driven by Geospatial and our Infrastructure segment. When looking at our operating results, please keep in mind that in the second quarter of last year, we had a $6.5 million reversal of contingent consideration related to acquisitions. Additionally, in the second quarter of this year, we had nonrecurring costs related to our VIS acquisition. .
Our depreciation and amortization increased $2.7 million, and our interest expense increased $1 million quarter-over-quarter. As a result, our net income was $7.9 million compared to $15.4 million in the second quarter of last year, and our GAAP diluted EPS was $0.50 versus $1 per share in the prior year period. When you strip out this noise and look at results from an adjusted EBITDA perspective, we increased our results 10% over last year. Adjusted EBITDA was $38.5 million in the second quarter of this year versus $35 million in the same quarter last year. This represented a margin expansion of 60 basis points, as our margin increased to 16.3%. Our adjusted EPS was $1.24 per share in this second quarter compared to $1.29 per share in the same period last year. Please keep in mind that in the second quarter, we experienced a ramp-up in our business. If you recall, we had a very strong cash flow quarter in Q1, as we generated $19.6 million of cash from operations.
In Q2, our cash flow was affected by working capital needs as revenue ramps up. We used $11.3 million of cash from operations in the second quarter. Therefore, year-to-date, we have generated cash from operations of $8.2 million. Our net leverage remains low at 1.5x. We feel confident in the strength of our balance sheet and believe it positions us well for future growth. I'll now turn it back over to Dickerson.
Thank you, Ed. Please turn to Slide 22 to discuss some of our merger and acquisition activity currently ongoing at NV5. We have reached an agreement to acquire 2 businesses in the utility operations and maintenance business and in the water resources sector. The first company will expand our services to utilities, providing operations and maintenance nationwide, which is a recurring revenue business. This acquisition will enhance our staffing capabilities for utilities and energy delivery services.
The second company we have agreed to acquire is a California wastewater resources company that will strengthen our water services. The combined acquisitions will result in approximately 400 additional technical personnel to our existing platform. Please turn to Slide 23. We have had a very successful first half of the year. However, the year is not over. We must continue to stay focused on the delivery of growth and profitability to our investors. As a result, we are raising our guidance for gross revenues to $944 million to $950 million for the full year of 2024. Our full year guidance for GAAP EPS is $2.87 to $2.93. And for adjusted EPS, our full year guidance is $5.13 to $5.20 per share. This is a direct result of our services that are not dependent on economic conditions, but are dependent on global population growth, which we have, and increasing demands on our infrastructure. And this is evidenced by our increased backlog and including in our Geospatial business. Thank you.
[Operator Instructions] Your first question comes from the line of Tim Mulrooney with William Blair.
Dickerson, I appreciate the extra color on the 2 pending acquisitions. That's helpful. My question is, is your full year guide -- the guidance raise, is that primarily related to the expected contribution from these -- your pending acquisitions? Or is it more related to an improved outlook on the organic side of the business?
Tim, it's the latter. We don't include these -- haven't included these acquisitions nor do we include any of the acquisitions ongoing that we expect in our guidance. So the guidance is just as we see a very strong second half from operations. And operations, we do not include in the budget or the guidance pending acquisitions or acquisitions that have been completed, which these 2 have and will be added to the second year over and above the guidance that we gave.
Okay. Thank you for clarifying, Dickerson. I think that's important. And then if I could throw 1 at Dan. Dan, I thought in your prepared remarks on the NV ecosystem and solutions you're building here is pretty interesting. I'm curious if you could dig a little deeper here for us, just how big that business is today, what the margin profile looks like? And if you expect that to grow faster than the overall Geospatial business that you'd expect them to be a larger piece of the business over time?
Yes. Sure. Thanks for the question. Right now, it's -- that part of the business is, I think, $40 million total for the year. And -- the margins are starting to grow. They have been historically a little bit lower than we'd like, but they are definitely on the upturn and growing. And as it relates to how that is going to be a bigger or smaller component to the overall percentage of Geospatial, actually starting to see the software and services components growing together as some of the Software-as-a-Service is actually leading to a lot of services. Really is for implementation of the software for our clients, and that's actually growing that part of the business as well.
Our next question comes from the line of Christopher Moore with CGS Securities.
Maybe just a quick follow-up. A follow-up on the guide for fiscal '24. At the midpoint there, roughly, what is the organic growth that's implied at that 947 level?
Well, we always -- and we can expect 6% to 10%. You can see our year-to-date, it's been 7% organic growth as I presented on the consolidated slide. But our anticipation is we'll continue at that 6% to 10% organic growth as we look for the second half of the year and also as we integrate these new acquisitions.
Got it. Appreciate it. Backlog up sequentially year-over-year. Just trying to understand kind of how the mix is changing, evolving. Is it much different sequentially year-over-year?
Chris, I'm not quite sure I understand what you mean by sequentially, but we had really -- and we emphasized this at Investor Day -- we are really, really focused on how we can cross-sell within each of those 3 segments and technology. And so we seem to see a greater increase in the Geospatial and the Building Technology business, which is dealing with servers and energy. And then we also see our infrastructure growing because of the increased demand on energy delivery and domestically. So I would say technology is kind of filtered through all of those 3 main segments. And the real focus of our growth has been that we've seen -- we're expecting the second half to be coming from our technology-based Geospatial and in our Building Technology Services segment.
Chris, and if you look at a comparison versus a year ago, it's about a 9% increase in that backlog.
Got it. Got it. Okay. Maybe just last one. The data center, you talked about it at Investor Day and again today, looking to go from $40 million run rate to $400 million in 5 years. From where you sit today, I know you don't have a perfect outlook, but is that growth -- does it ramp early? Is it relatively smooth? Is it more back-half loaded? Just trying to understand kind of what you're seeing at this point.
Yes, it's Ben here. I mean we're currently sitting at about 30% organic growth. So it would be a combination. It's about 55% CAGR over that time period of the goal. So I think it will be a combination of acquisition and organic growth. But if we continue on our current trajectory and keep pulling additional services as we are, we'll get a large portion of that through the organic growth and then the remainder through acquisitions, which we're looking at, at the moment.
And from where you sit today on the organic growth side, is it skewed -- I mean is there a lot of that in the next year or 2 where there is -- it's a little bit heavier, or you're looking at that as kind of smoother over these 5 years?
Yes. I mean I would see us continuing at the rate that we are, sort of over that 30%, particularly in the U.S. where we're starting out. We're in earlier stage or expect a higher rate of growth there. The 30% I've been talking about is mostly on the international group. We're expanding into new regions and bringing in new services. So yes, a lot of this will come from the organic growth and depending on how early we can bring those acquisitions in will depend on how much they play into it.
Next question comes from the line of Andrew Wittmann with Robert Baird.
I just had a question, I guess, on the acquisitions that you mentioned that haven't closed yet. I understand that because they haven't closed yet, you're not going to maybe talk too much specifically on each 1 individually. But collectively, can you talk about what purchase price for those acquisitions is and maybe what the annual expected revenue contribution for those 2 acquisitions would be on a combined basis?
Just a couple of things, not to be too technical here. We don't really -- closing is a term we haven't been using lately. The 2 that I've mentioned were absolutely -- we've reached an agreement. We've agreed on valuation. We reached an agreement on many different things that -- that includes both of those. We're under a nondisclosure agreement right now. So I cannot -- I'm not in a position to tell you the valuation of what we paid for these because of -- but you can use whatever math you want, and you can see that we try to be as transparent as possible by saying that there's roughly 400 people that will join the company. Between these 2 acquisitions.
Yes. Okay. We'll wait for that to clear and then check back next quarter maybe. Maybe Ed, just to understand the quarter better. You mentioned there were some onetime costs from the VIS integration. And I was just wondering -- the quantum of that? How much was that in your bridge for your adjusted results, is that added back? Or is that included as a cost penalty? I'm sorry, I just didn't understand how you treated that.
No, the -- those expenses are not added back the ones that I was referring to. So when you think -- when you look at G&A, in the second quarter of last year versus this year, as I mentioned on the call, you had about a $6.7 million reversal in Q2 of last year, right? And then in this year, you had about -- it's roughly about $800,000 or so in integration, IT-type related costs. And half of those are nonrecurring going forward. That was just to prop them up and get them integrated. We also had about $300,000 more of acquisition-related cost, transactional in 1 quarter over the other. That, in particular, is added back, but that was just a $300,000 delta. And then the rest of the increase in G&A is just because of the acquisitions that we've added to the business.
Okay. That's clear. And then I guess maybe 1 for you, too, Ed. Just you talked about quarter being the cash burn, and you talked about the year-to-date progress. I was just wondering, as I was looking at the various accounts in your working capital, looks like the unbilled is the area. Is that a result of the percentage of completion accounting that you're doing on LNG projects? It just looks like the biggest use of cash in the quarter. So I was hoping to understand that account in particular.
Sure. And yes, it is -- a lot of it is driven by the unbilled. So that observation is correct. However, it's really mostly the business in general that's ramping up, but in particular, Geospatial because they had that low when you think back to Q4 and Q1 because of the continuing resolution. As that came back in the second quarter, now you have to resume work and it takes a little bit of time to convert that to cash, right, because you have to go from unbilled to AR and then collections. And so really, that's what's driving it. But it's really just a function of the ramp-up in the business.
Our next question comes from the line of Rob Brown with Lake Street Capital Markets.
I just wanted to follow a little bit on the utility O&M business that you purchased. Is that a kind of a market opportunity that this gets you into that you can expand from? And maybe just some color on the thinking on that vertical [indiscernible] market.
Well, I'll speak in a macro picture and what we're looking for and how we're positioning us. The O&M business is 1 segment that we were not delivering to our utility clients. It tends to be a lot more sticky because the people that are on that -- on those projects tend to stay. So it's more of a reoccurring model, but it gets us visibility into an area that we hadn't done before. But maybe Alex, who will be probably absorbing most of the O&M in the infrastructure sector of the utilities business. I'll let him speak to some of that.
Yes. No, it's a very good point. But 1 thing I just want to be clear on, we have not purchased it yet. We have an agreement to purchase. So don't think that it's already part of the NV5 family. It is -- the acquisition is not closed. But as Dickerson mentioned, it is a new area for us within the utility market. We see it as an area that as was mentioned, is very sticky in that our folks are full time working in the utility operations. So as the planned asset has many, many years of operation, we're able to stack it throughout the duration of the plant being operated.
And just Rob, just maybe to add to that. We would not have announced it in this quarter if we had not reached a real definitive agreement. I think it's on both of those. It's just that there's all types of certain approval and processes that we're going through now. But we have no expectation of those not joining the NV5 team very shortly.
Okay. And just to clarify, so that's why you haven't put it in your guidance and when they formally closed in that way.
Yes. We never really used M&A as our guidance. We want our operations people to deliver the budget that they do. If an acquisition has been with us, then that may be included in the guidance, but no future acquisitions or no acquisitions that -- that we are giving or what we've given in the guidance right now is included at all in the guidance we've given. And we never really know. We have a number of ongoing acquisitions. We never know what specific month they're going to close in or what we can add. And so we'd rather be a little bit conservative in that regard.
Our next question comes from the line of Jeff Martin with ROTH Capital Partners.
Talked about real estate transactions in a while. Given the rate environment appears to be trending in a friendly direction here soon, curious if you could give us an update on real estate transactions?
Okay. I'll mention just an overview, and then that segment is in our Infrastructure group. They've had a very strong quarter, they're really coming back. And certainly, any relief in interest rates always helps their business. But we represent roughly $60 million annually in the -- in regard to the real estate transactional business. But -- they are really on an uptick now, and we think that they're improving. And I think both segments are at budget or above the budget in the real estate transaction group. But maybe Alex will be specifically on that.
Yes. So again, as you've mentioned, we're going to see a significant uptick once the rates -- interest rates come down. That business is very much dependent on 2 different types of business. One is where there is refinance, and the other is when there is actually a real estate transaction that takes place. So we're still seeing a very good business by virtue of the fact that there's a lot of refinances take place. But we'll see that very nice uptick once we get to the point where interest rates become much more attractive for a real estate transaction.
Okay. That's helpful. And then 1 for Ed here. Do you have handy the revenue contributions from acquired companies during the second quarter and the first half of the year? Do you have that handy?
Sure. For the second quarter, the 2024 acquisitions contributed $10.5 million. And for the 6 months, $15.9 million.
Okay. And then if I could squeeze 1 more in real quick. Thoughts on EBITDA margin expectations over the balance of the year? It sounds like mix is helping here, with Geospatial booking some nice contract wins recently in federal back on track. It seems like Geospatial may help the margin mix towards the back half of the year. Curious if you could comment on that?
I think that's accurate. We would expect Geospatial because we expect them to have a stronger second half. We would expect them to lift consolidated margins. For the full year, I would estimate that we'd come close to 17%. I think just when you consider how we're tracking right now, that would be a good estimate.
Jeff, just to -- what pleases me is all 3 of those key segments are -- have improved over -- over the same period of time last year. So we're seeing good organic growth in our Infrastructure business. Of course, Geospatial is really contributing now that -- have a continuing resolution issue resolved. And the explosion that we're seeing in data center work, particularly internationally. So all 3 have really contributed. So I'm actually pleased with all 3 segments of the business over the same period last year.
Certainly good to hear. Thank you. Appreciate it.
Next question comes from the line of Marc Riddick with Sidoti.
Wanted to touch on -- with the growth plans that you have here. I was wondering if you could talk a little bit about it. I think you sort of hinted at this -- at the -- on the Investor Day, but I was wondering if you could talk a little bit about, as we're approaching the -- reaching the $1 billion goal, maybe you could talk about maybe any updated thoughts you may have as to the setting of that next marker, if you will, and the time frame that we might get that?
Very good question, Marc. 2 key things. Obviously, what we said to our people and to our investors is the Investor Day was aspirational. That's our goals, that's what we need that we want to do. And it's certainly different than this call where we're specific on the results that we're doing, and this is what we've actually accomplished.
As far as the $1 billion, we will do the $1 billion. We said that we'll be $1 billion by -- entering 2025 or the end of 2024. That will be done. And we have very -- we feel very strongly that, that is. And of course, it's on the run rate. So it will be $1 billion going into the budget for 2025.
So as far as what our next goal is, these come from grounds up. It is -- it's not me or the people on this call saying what they're going to do, but it's actually coming from all of our operations. So we are now just looking at the information that we've gathered and we will be announcing shortly what our new goal is for 2028. But we're waiting to see what comes from our operations and how they see the business. So we expect significant growth, but that milestone, we haven't released it yet because we're still kind of collating the information.
Okay. Great. And then just a quick follow-up. I was wondering if you're seeing much in the way of a regional differentiation as far as spending patterns? Or is there any particular call-outs like the verticals that we should be thinking about that maybe are surging a little stronger than others at the moment?
Great. Thank you. You're really -- you're talking on some of the concluding comments that I make. But -- no, no, no. I'm happy to say it now, and I got a chance to rehost it, and then maybe I'll say it again later. But we have always positioned our company to being a mandated business. It's not so much dependent on economic conditions. So if they need a big infrastructure project in Iowa, it's not depending on whether the Iowa budget is due. It's -- these are things that are needed. People need to drink clean water, people need to go over bridges. And so we've always wanted to be a mandated business. So this has served very well.
If we're going to regionalize things, I'd rather mention the differentiator that we're seeing in -- between domestic and internationally. Using the data center and their demand for energy. In the U.S., most of the energy is coming from the Public Utility Commission. And usually, they are very careful. They're not -- we don't see any tremendous new power plants being built, so delivery is important. And they actually have more [ tons ] on some areas because of the need for power that they can't deliver.
However, internationally, and especially Ben mentioned on the call the hyperscalers -- they are -- we just -- they just cannot keep up with the demand for data centers and the use of energy, and they don't have -- they're not relying on a public grid to do this. Those hyperscalers are free to develop power and do power as they see. So we see more of a growth in the international market. Then right now, that has taken place domestically.
I appreciate it.
Our next question comes from the line of Michael Feniger with Bank of America.
Just -- Ed, I was just curious on the outlook. As you mentioned like the 17% EBITDA margin, just -- when you kind of think of the gross revenue and the EPS range, any help we should kind of be -- frame what we should be thinking for where EBITDA kind of settles for the year based on that guidance?
We have a goal of 160. I mean that could -- of course, that could vary, but -- and we don't give guidance on adjusted EBITDA, but that's -- I think that's a reasonable number to shoot for.
Okay. Really helpful. And then just on Geospatial, I'm curious, obviously, it seems like you guys flagged the mix impact and how that builds for the rest of the year. Just in terms of backlog and bookings, for Geospatial. Maybe you could keep in mind about the election? Does that have an impact when it comes to Geospatial and how it looks for the federal government? Just curious how to come to think about that as we're in election year.
I'll start, and then maybe anyone is free to join in, particularly, Dan, if you have something. But NV5, we are agnostic as opposed to which way politically they -- is going, but that positions back to what I said earlier. We just want to go in the needs that are required by the whole nation, whether it's whatever political party happens to -- happen to develop. So we to take -- to be power. So we tend to just not be as involved in what the political environment is going to be. We will have to adjust that there's taxes higher or lower or -- but as far as the actual work, we don't see a tremendous difference no matter which party is in power.
I can jump in a little bit, I'm sorry. Yes, we shouldn't see any impact at all this year in our business. And usually, any change in administration takes a couple of years to transition. And it ends up being -- we still have the same amount of work. It just comes from different places because we're a technology and a solution implementer. So we're pretty resilient to [ administration ].
Great. Good to know. And just I'm curious with the M&A picking back up and you guys flagging, is -- are multiples that you're seeing out there in these conversations, are they starting to go higher than maybe they were a few years ago? Or are they still around the same -- same areas? I'm just curious if you could touch on that.
Well, yes. I think they are attending -- you have to be a little bit more creative. They're tending to rise, particularly as private equity gets more involved in this space. But we have the luxury of being publicly traded and using our stock as appreciated very nicely. And sometimes we will be using some of our stock in the acquisitions. And that tends to get to multiple above the traditional 6x as high as 10x. So -- but we have seen an increase in the multiples as more and more people either brokers or the private equity gets involved.
[Operator Instructions] We do have another question came in from Keith Rosenbloom with Cruiser Capital.
I wanted to clarify 1 question earlier, I think, from Chris Moore. If I look at your revenue guidance at the midpoint at 947, that shows a 10% revenue growth rate year-over-year. Is that right?
We think the second half is going to be very strong. I have not -- I am not -- I'm sure that probably the second half is above the 10%.
I heard a different number, and I just think mathematically, it's 10% revenue growth. So I was just making sure I was doing that right. I wanted to ask a question about the data center target. You've got all these really exciting irons in the fire, it seems like in terms of revenue growth. And I'm curious as to what this -- and I appreciate that it's a target. But in terms of the next couple of years and the acceleration of revenue, will this particular line of business contribute to margin enhancement?
Yes. I think the organic growth, we are targeting to -- we see that aspirational goal of $400 million in revenue for the data centers or anything related to that technology group. And that will be a combination of organic growth and through acquisitions. And we have a few acquisitions in the pipeline right now for the data center business. And we need to take advantage of what we've been doing internationally. Keith, we are very well established in some locations -- in the -- that our competitors just are not. I mean we have a very good, strong network. And so I think the growth that you see in data centers will be more internationally for now because of energy demand domestically. But we think that we can get to that aspirational goal of $400 million over a 10-year period, but it's got to be a combination of organic growth and acquisitions.
Keith, just to go back to that previous question, the 10% is total growth, right, in terms of gross revenue projections, if you take the midpoint. The growth rate that we alluded to earlier was an organic number, which was below that.
Right. It was 7% or so.
Exactly.
And then just last -- it's a point to make. I was looking at the 2022 Investor Day. And there, you guys pretty confidently said your target was going to be $1 billion of run rate revenue leaving the fourth quarter of 2024. So it looks like you're on point for your 2022 guidelines and hopefully, this year's Investor Day targets sit there as well.
Well, thank you, Keith, for noticing that. That's correct. I think I remember spending some -- seeing there at the Investor Day, and that is -- we are -- we're -- what you surmised is correct. We -- we are well on that target for the $1 billion run rate.
Yes, you called it out in May of '22. Thanks, Dickerson. Thanks, Al. Thanks, guys. Talk to you soon.
Okay. Thank you.
There are no further questions at this time. Mr. Wright, I turn the call back over to you.
Well, thank you. I think that's our last of the questions. I just had some concluding comments. And then I thought we would speak to each of our segment leaders to see how they see the second half of the year. So if you saw or listened to what we're saying today, we really feel comfortable on the positioning of NV5 and so that we're not so dependent on economic conditions. The need for improved infrastructure, the building of roads, bridges, water, wastewater and energy delivery is really fueled by the population growth of the U.S. and the population growth of the planet. So we are doing things that are needed or mandated. And so we're not as dependent on specific economic conditions.
So we're very encouraged by and enthusiastic about this increased demand for our services. And we think that the back at the end of the second half of '24 will be very strong, and we look for further growth as we've seen for the future. We are really emphasizing how technology gets us that edge. So we'll be -- it will be significant in the delivery of all segments of our services, all of the verticals, technology will play a key role that gives us a specific advantage that does 2 things. We're able to measure and do things over wider geographies, and we can deliver our information to our clients in a faster way than we've been able to traditionally. And this gives us an edge over our competitors.
So you have seen that we feel very strong about the year. So we've increased the guidance that you've seen and that was on Slide deck 23. And this is going to be coming as a -- technology will be a driver of this, and it's going to be a combination of the organic growth and what we're doing in M&A activity. So I want to thank everyone for listening. And before we go into the specific including comments I have, let's just ask how our leaders feel about their sector. So Alex, how do you feel about the second half of the year for the Infrastructure Group segment?
Thanks, Dick. We have several indicators that support our continued growth of the platform. We're seeing strong demand for our differentiated approach in providing interdisciplinary and integrated services. And our cross-selling opportunities are increasing. Our backlog is also increasing. And importantly, our backlog numbers do not include the master services agreements that we have won since we do not include those amounts until we have an executed work order. As such, we have visibility for growth well beyond the next 12 months.
Thank you, Alex. Dan, you received a lot of questions and interest on what we're doing with the Geospatial. So we'll ask specifically, how do you see the second half of the year for the Geospatial Group and the activities that you're doing?
Yes, I see a lot of positive activity going on in the market, in particular. One of the interesting phenomenon we're seeing is the adoption of the digital transformation strategy in transportation and power and specific, they're calling it digital delivery. And this is connecting the data chain and system chain that are used in planning, design and construction through to operations and asset management. And we're good at all of that. And being able to put that together in the market is really exciting.
And then the other phenomenon we've seen and really growing right now is the Digital Twin solutions. Ben talked about the data center work we're doing and the digital twinning there. We're seeing that at scale. We won a contract for [ Sale Morgan ] for more of an outdoor solution. And that kind of activity is accelerating. So we're really excited about that.
Thanks, Dan. Ben, you're doing an awful lot of work with -- in the Building Technology segment. So maybe an overview of how you see this second half of 2024 and after that?
Yes. Yes. Thanks, Dick. I'm really excited about the current and the future growth we're seeing, I think, both in buildings and technology, but also the cross-working that we're doing with the Infrastructure group and Geospatial. We've talked a lot about data centers. I just wanted to touch on some areas where we sort of invested quite a bit of time and effort and are now seeing the results of that. We -- earlier in the year, we expanded into Japan and Indonesia. And that was to meet the needs of some of our existing clients, and then they're asking us to be there. And that's really now starting to pay dividends.
Some other areas that I think are going very, very well. Our clean energy and decarbonization group, we've really started to secure larger contracts with government agencies, school boards and utilities. So really pleased with the work that we've got going there and the downstream work that, that brings with infrastructure. And lastly, the building digitization things that we've been doing with Geospatial, we really formed the group late last year and have been growing it organically, and it's really starting to take off. Just in the last 2 weeks alone, working with Geospatial, we've secured over $2 million worth of contracts in the aviation space. So really, really happy with the progress there. Thanks, Dick.
Well, thank you, everyone. I'm glad to see that our leaders share the enthusiasm. We're looking forward to a very solid performance in the second half of the year. And we have the luxury of doing the acquisitions now that really strengthen each of these segments in each of the verticals as they contribute to the segment. So I want to thank everybody for listening in today to our call, and we look forward to speaking to you again in the third quarter. So thank you very much.
Ladies and gentlemen, this concludes today's conference call. You may now disconnect.