FORM 10-Q
| ☒ | ||||||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
July 1, 2023
| |||||
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
Delaware | 45-3458017 | |||||||||||||
(State or other jurisdiction of |
| |||||||||||||
incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
200 South Park Road, | Suite 350 |
| ||||||||||||
Hollywood, |
| 33021 | ||||||||||||
(Address of principal executive offices) | (Zip Code) | |||||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| Common Stock, $0.01 par value | NVEE | The NASDAQ Stock Market | ||||||||||||
Large accelerated filer |
| Accelerated |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||||||||||||||||
|
|
|
| ||||||||||||||||||||
Emerging growth company |
| ||||||||||||||||||||||
| ||||||||
| Page | ||||||||
| ||||||||
|
| |||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
September 30, 2017 December 31, 2016 Assets Current assets: Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $3,106 and $1,992 as of September 30, 2017 and December 31, 2016, respectively Prepaid expenses and other current assets Total current assets Property and equipment, net Intangible assets, net Goodwill Other assets Total Assets Liabilities and Stockholders’ Equity Current liabilities: Accounts payable Accrued liabilities Income taxes payable Billings in excess of costs and estimated earnings on uncompleted contracts Client deposits Current portion of contingent consideration Current portion of notes payable and other obligations Total current liabilities Contingent consideration, less current portion Notes payable and other obligations, less current portion Deferred income tax liabilities, net Total liabilities Commitments and contingencies Stockholders’ equity: Preferred stock, $0.01 par value; 5,000,000 shares authorized, no shares issued and outstanding Common stock, $0.01 par value; 45,000,000 shares authorized, 10,779,246 and 10,566,528 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively Additional paid-in capital Retained earnings Total stockholders’ equity Total liabilities and stockholders’ equity Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2017 2016 2017 2016 Gross revenues Direct costs (excluding depreciation and amortization): Salaries and wages Sub-consultant services Other direct costs Total direct costs Gross Profit Operating Expenses: Salaries and wages, payroll taxes and benefits General and administrative Facilities and facilities related Depreciation and amortization Total operating expenses Income from operations Interest expense Income before income tax expense Income tax expense Net Income and Comprehensive Income Earnings per share: Basic Diluted Weighted average common shares outstanding: Basic Diluted Common Stock Additional Paid-In Retained Shares Amount Capital Earnings Total Balance, December 31, 2016 Stock compensation Restricted stock issuance, net Stock issuance for acquisitions Payment of contingent consideration with common stock Net income Balance, September 30, 2017 Nine Months Ended September 30, 2017 September 30, 2016 Cash Flows From Operating Activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Provision for doubtful accounts Stock compensation Change in fair value of contingent consideration Loss on disposal property and equipment Excess tax benefit from stock based compensation Deferred income taxes Changes in operating assets and liabilities, net of impact of acquisitions: Accounts receivable Prepaid expenses and other assets Accounts payable Accrued liabilities Income taxes payable Billings in excess of costs and estimated earnings on uncompleted contracts Client deposits Net cash provided by operating activities Cash Flows From Investing Activities: Cash paid for acquisitions (net of cash received from acquisitions) Purchase of property and equipment Net cash used in investing activities Cash Flows From Financing Activities: Proceeds from borrowings from Senior Credit Facility Proceeds from secondary offering Payments of borrowings from Senior Credit Facility Payments of secondary offering costs Payments on notes payable Payments of contingent consideration Excess tax benefit from stock based compensation Proceeds from exercise of unit warrant Net cash provided by financing activities Net (decrease) increase in Cash and Cash Equivalents Cash and cash equivalents – beginning of period Cash and cash equivalents – end of period Nine Months Ended September 30, 2017 September 30, 2016 Supplemental disclosures of cash flow information: Cash paid for interest Cash paid for income taxes Non-cash investing and financing activities: Contingent consideration (earn-out) Notes payable and other obligations issued for acquisitions Stock issuance for acquisitions Payment of contingent consideration and other obligations with common stock $ 15,582 $ 35,666 113,004 75,511 2,860 1,874 131,446 113,051 8,009 6,683 68,374 40,861 97,384 59,380 1,042 1,511 $ 306,255 $ 221,486 $ 17,133 $ 13,509 18,173 17,316 855 1,134 1,869 228 173 106 2,653 564 10,821 10,764 51,677 43,621 125 1,875 67,155 21,632 22,084 6,197 141,041 73,325 - - 108 106 122,576 118,026 42,530 30,029 165,214 148,161 $ 306,255 $ 221,486 July 1, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 28,827 $ 38,541 Billed receivables, net 149,110 145,637 Unbilled receivables, net 107,192 92,862 Prepaid expenses and other current assets 20,501 13,636 Total current assets 305,630 290,676 Property and equipment, net 49,392 41,640 Right-of-use lease assets, net 38,628 39,314 Intangible assets, net 243,579 160,431 Goodwill 526,848 400,957 Other assets 3,751 2,705 Total assets $ 1,167,828 $ 935,723 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 55,578 $ 57,771 Accrued liabilities 52,735 44,313 Billings in excess of costs and estimated earnings on uncompleted contracts 37,195 31,183 Other current liabilities 2,072 1,597 Current portion of contingent consideration 4,149 10,854 Current portion of notes payable and other obligations 14,800 15,176 Total current liabilities 166,529 160,894 Contingent consideration, less current portion 1,897 4,481 Other long-term liabilities 28,526 29,542 Notes payable and other obligations, less current portion 209,241 39,673 Deferred income tax liabilities, net 20,487 6,893 Total liabilities 426,680 241,483 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.01 par value; 5,000,000 shares authorized, no shares issued and outstanding — — Common stock, $0.01 par value; 45,000,000 shares authorized, 15,890,908 and 15,523,300 shares issued and outstanding as of July 1, 2023 and December 31, 2022, respectively 159 155 Additional paid-in capital 497,035 471,300 Accumulated other comprehensive income (loss) (191) — Retained earnings 244,145 222,785 Total stockholders’ equity 741,148 694,240 Total liabilities and stockholders’ equity $ 1,167,828 $ 935,723 $ 91,263 $ 60,091 $ 239,058 $ 160,888 28,219 20,274 75,235 53,744 12,663 8,854 33,719 22,246 3,635 3,307 10,276 8,209 44,517 32,435 119,230 84,199 46,746 27,656 119,828 76,689 23,090 14,096 62,847 40,575 7,362 4,415 19,931 12,640 3,547 2,066 9,162 5,803 3,788 1,604 9,542 4,285 37,787 22,181 101,482 63,303 8,959 5,475 18,346 13,386 (524 ) (81 ) (1,042 ) (221 ) 8,435 5,394 17,304 13,165 (2,523 ) (1,990 ) (4,803 ) (4,847 ) $ 5,912 $ 3,404 $ 12,501 $ 8,318 $ 0.58 $ 0.34 $ 1.23 $ 0.94 $ 0.55 $ 0.33 $ 1.16 $ 0.90 10,211,114 9,941,517 10,155,751 8,826,090 10,785,630 10,353,793 10,744,619 9,215,365 Three Months Ended Six Months Ended July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022 Gross revenues $ 222,638 $ 202,732 $ 406,955 $ 392,885 Direct costs: Salaries and wages 57,079 47,704 105,463 93,681 Sub-consultant services 39,690 40,479 67,304 75,305 Other direct costs 15,569 15,309 27,890 30,833 Total direct costs 112,338 103,492 200,657 199,819 Gross profit 110,300 99,240 206,298 193,066 Operating expenses: Salaries and wages, payroll taxes, and benefits 58,949 47,283 111,621 97,049 General and administrative 11,551 14,494 29,472 30,881 Facilities and facilities related 5,823 5,195 11,197 10,381 Depreciation and amortization 13,539 9,668 24,585 19,602 Total operating expenses 89,862 76,640 176,875 157,913 Income from operations 20,438 22,600 29,423 35,153 Interest expense (3,648) (887) (5,229) (1,801) Income before income tax expense 16,790 21,713 24,194 33,352 Income tax expense (1,377) (4,445) (2,834) (7,442) Net income $ 15,413 $ 17,268 $ 21,360 $ 25,910 Earnings per share: Basic $ 1.03 $ 1.17 $ 1.43 $ 1.76 Diluted $ 1.00 $ 1.13 $ 1.39 $ 1.70 Weighted average common shares outstanding: Basic 15,014,106 14,736,167 14,948,796 14,714,745 Diluted 15,451,788 15,232,157 15,421,535 15,211,835 Comprehensive income: Net income $ 15,413 $ 17,268 $ 21,360 $ 25,910 Foreign currency translation losses, net of tax (191) — (191) — Comprehensive income $ 15,222 $ 17,268 $ 21,169 $ 25,910 STATEMENTSTATEMENTS OF CHANGES IN STOCKHOLDERS’STOCKHOLDERS’ EQUITY 10,566,528 $ 106 $ 118,026 $ 30,029 $ 148,161 - - 2,743 - 2,743 163,016 2 (2 ) - - 47,982 - 1,746 - 1,746 1,720 - 63 - 63 - - - 12,501 12,501 10,779,246 $ 108 $ 122,576 $ 42,530 $ 165,214 Three Months Ended Common Stock Additional
Paid-In
CapitalAccumulated Other Comprehensive Income (Loss) Retained
EarningsShares Amount Total Balance, April 2, 2022 15,495,451 $ 155 $ 457,894 $ — $ 181,454 $ 639,503 Stock-based compensation — — 4,172 — — 4,172 Restricted stock issuance, net 41,683 — — — — — Net income — — — — 17,268 17,268 Balance, July 2, 2022 15,537,134 $ 155 $ 462,066 $ — $ 198,722 $ 660,943 Balance, April 1, 2023 15,708,193 $ 157 $ 490,981 $ — $ 228,732 $ 719,870 Stock-based compensation — — 4,359 — — 4,359 Restricted stock issuance, net 182,715 2 (2) — — — Reclassification of liability-classified awards to equity-classified awards — — 1,697 — — 1,697 Other comprehensive income (loss) — — — (191) — (191) Net income — — — — 15,413 15,413 Balance, July 1, 2023 15,890,908 $ 159 $ 497,035 $ (191) $ 244,145 $ 741,148 Six Months Ended Common Stock Additional
Paid-In
CapitalAccumulated Other Comprehensive Income (Loss) Retained
EarningsShares Amount Total Balance, January 1, 2022 15,414,005 $ 154 $ 451,754 $ — $ 172,812 $ 624,720 Stock-based compensation — — 8,961 — — 8,961 Restricted stock issuance, net 110,610 1 (1) — — — Stock issuance for acquisitions 12,519 — 1,352 — — 1,352 Net income — — — — 25,910 25,910 Balance, July 2, 2022 15,537,134 $ 155 $ 462,066 $ — $ 198,722 $ 660,943 Balance, December 31, 2022 15,523,300 $ 155 $ 471,300 $ — $ 222,785 $ 694,240 Stock-based compensation — — 9,571 — — 9,571 Restricted stock issuance, net 246,263 3 (3) — — — Stock issuance for acquisitions 121,345 1 14,470 — — 14,471 Reclassification of liability-classified awards to equity-classified awards — — 1,697 — — 1,697 Other comprehensive income (loss) — — — (191) — (191) Net income — — — — 21,360 21,360 Balance, July 1, 2023 15,890,908 $ 159 $ 497,035 $ (191) $ 244,145 $ 741,148 $ 12,501 $ 8,318 9,542 4,285 445 246 2,743 1,704 56 88 2 2 - (155 ) 320 88 (17,031 ) (7,795 ) (13 ) 372 (1,827 ) 2,892 (3,251 ) 476 (279 ) 96 1,641 (78 ) 822 147 5,671 10,686 (60,241 ) (24,388 ) (1,591 ) (566 ) (61,832 ) (24,954 ) 47,000 - - 51,319 (5,000 ) - - (4,172 ) (5,360 ) (4,156 ) (563 ) (296 ) - 155 - 1,008 36,077 43,858 (20,084 ) 29,590 35,666 23,476 $ 15,582 $ 53,066 Six Months Ended July 1, 2023 July 2, 2022 Cash flows from operating activities: Net income $ 21,360 $ 25,910 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 27,205 22,058 Non-cash lease expense 6,784 6,265 Provision for doubtful accounts 607 594 Stock-based compensation 10,728 9,615 Change in fair value of contingent consideration (7,514) (518) Gain on disposals of property and equipment (408) (61) Deferred income taxes (7,673) (3,014) Amortization of debt issuance costs 365 370 Changes in operating assets and liabilities, net of impact of acquisitions: Billed receivables 10,882 15,152 Unbilled receivables (9,842) (3,801) Prepaid expenses and other assets (4,691) (511) Accounts payable (8,164) (4,349) Accrued liabilities and other long-term liabilities (5,698) (6,309) Billings in excess of costs and estimated earnings on uncompleted contracts (7,606) (6,867) Contingent consideration (1,307) — Other current liabilities 474 (276) Net cash provided by operating activities 25,502 54,258 Cash flows from investing activities: Cash paid for acquisitions (net of cash received from acquisitions) (186,242) (4,670) Proceeds from sale of assets 295 48 Purchase of property and equipment (10,239) (10,379) Net cash used in investing activities (196,186) (15,001) Cash flows from financing activities: Borrowings from Senior Credit Facility 180,000 — Payments on notes payable (5,131) (6,218) Payments of contingent consideration (793) (1,597) Payments of borrowings from Senior Credit Facility (13,000) (35,000) Net cash provided by (used in) financing activities 161,076 (42,815) Effect of exchange rate changes on cash and cash equivalents (106) — Net decrease in cash and cash equivalents (9,714) (3,558) Cash and cash equivalents – beginning of period 38,541 47,980 Cash and cash equivalents – end of period $ 28,827 $ 44,422 $ 843 $ 255 $ 4,962 $ 4,642 $ 908 $ - $ 9,371 $ 9,333 $ 1,746 $ 1,075 $ 62 $ 162 Six Months Ended July 1, 2023 July 2, 2022 Non-cash investing and financing activities: Contingent consideration (earn-out) $ 325 $ 6,579 Notes payable and other obligations issued for acquisitions $ 7,404 $ 2,933 Stock issuance for acquisitions $ 14,471 $ 1,352 Reclassification of liability-classified awards to equity-classified awards $ 1,697 $ — Finance leases $ 232 $ 644
the calendar quarter end. Goodwill and Intangible Assets There were no indicators, events or changes in circumstances that would indicate intangible assets were impaired during the six months ended July 1, 2023. See Note Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2017 2016 2017 2016 Numerator: Net income – basic and diluted Denominator: Basic weighted average shares outstanding Effect of dilutive non-vested restricted shares and units Effect of issuable shares related to acquisitions Effect of warrants Diluted weighted average shares outstanding liabilities acquired. 2017 2016 Acquisitions Acquisitions Cash Accounts receivable Property and equipment Prepaid expenses Other assets Intangible assets: Customer relationships Trade name Customer backlog Non-compete Favorable (unfavorable) lease Total Assets Liabilities Deferred tax liabilities Net assets acquired Consideration paid (Cash, Notes and/or stock) Contingent earn-out liability (Cash and stock) Total Consideration Excess consideration over the amounts assigned to the net assets acquired (Goodwill) the fiscal year ended December 31, 2022: identified intangibles. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2017 2016 2017 2016 Gross revenues Net income Basic earnings per share Diluted earnings per share income tax effect of these adjustments. September 30, December 31, 2017 2016 Billed Unbilled Contract retentions Less: allowance for doubtful accounts Accounts receivable, net September 30, December 31, 2017 2016 Office furniture and equipment Computer equipment Survey and field equipment Leasehold improvements Accumulated depreciation Property and equipment – net September 30, 2017 December 31, 2016 Gross Carrying Amount Accumulated Amortization Net Amount Gross Carrying Amount Accumulated Amortization Net Amount Customer relationships Trade name Customer backlog Favorable lease Non-compete Total respectively. Amortization expense was September 30, December 31, 2017 2016 Deferred rent Payroll and related taxes Professional liability reserve Benefits Accrued vacation Unreognized tax benefits Other Total September 30, December 31, 2017 2016 Senior Credit Facility Note Payable Other Obligations Uncollateralized promisory notes Total Notes Payable and Other Obligations Current portion of notes payable and other obligations Notes payable and other obligations, less current portion Period ending September 30, 2018 2019 2020 2021 2022 Total September 30, December 31, 2017 2016 Contingent consideration, beginning of the year Additions for acquisitions Reduction of liability for payments made Increase of liability related to re-measurement of fair value Total contingent consideration, end of the period Current portion of contingent consideration Contingent consideration, less current portion Note Number of Unvested Restricted Shares of Common Stock and Restricted Stock Units Weighted Average Grant Date Fair Value Unvested shares as of December 31, 2016 Granted Vested Forfeited Unvested shares as of September 30, 2017 July 1, 2023. The total fair value of restricted shares vested during the six months ended July 1, 2023 and July 2, 2022 was $20,851 and $7,296, respectively. The 2022 and federal credits. management, and MEP & technology design practices; and Geospatial Solutions ("GEO"), which includes the Company's geospatial solution practices. The following tables set forth summarized financial information concerning our reportable segments: the calendar quarter end. Acquisitions On -– Organization and Nature of Business Operationsprofessional and technical engineeringtechnology, conformity assessment, and consulting solutions to public and private sector clients in the infrastructure, energy,utility services, construction, real estate, environmental, and environmental markets.geospatial markets, operating nationwide and abroad. The Company’s clients include the U.S. federal,Federal, state and local governments, and the private sector. NV5 Global provides a wide range of services, including, but not limited to:● Utility services ● MEP & technology design ● LNG services ● Commissioning ● Engineering ● Building program management ● Civil program management ● Environmental health & safety ● Surveying ● Real estate transaction services ● Construction quality assurance ● Energy efficiency & clean energy services ● Code compliance consulting ● 3D geospatial data modeling ● Forensic services ● Environmental & natural resources ● Litigation support ● Robotic survey solutions ● Ecological studies ● Geospatial data applications & software planning, design, consulting, permitting, inspection and field supervision, testing inspection and certification, management oversight, forensic engineering, litigation support, condition assessment and compliance certification.- –Summary of Significant Accounting PoliciesNV5 Global, Inc.the Company and those of its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.allall adjustments necessary to present fairly the financial position and results of operations of the Company as of the dates and for the periods presented. Accordingly, these statements should be read in conjunction with the consolidated financial statements and notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The accompanying consolidated balance sheet as of December 31, 2016 has been derived from those financial statements.2022 (the “2022 Form 10-K”). The results of operations and cash flows for the interim periods presented are not necessarily indicative of the results to be expected for any future interim period or for the full 20172023 fiscal year.Fiscal Year Effective March 7, 2017, the Audit CommitteeEstimatesassumptions are evaluated periodicallyaccounted for as one single contract and adjusted when necessary.whether the combined or single contract should be accounted for as more than one performance obligation. The more significant estimates affecting amounts reportedmajority of the Company's contracts have a single performance obligation as the promise to transfer the individual goods or services that is not separately identifiable from other promises in the consolidated financial statements relatecontracts and therefore, is not distinct.fair value estimates usedestimated total direct costs for performance obligations because it depicts the transfer of control to the customer. Contract costs include labor, sub-consultant services, and other direct costs.accountingtime is recognized when the customer obtains control of the asset, which is generally upon delivery and acceptance by the customer of the reports and/or analysis performed.business combinations includingwhich work authorizations have been received are included in performance obligations. Performance obligations include only those amounts that have been funded and authorized and does not reflect the valuationfull amounts the Company may receive over the term of identifiable intangible assetssuch contracts. In the case of non-government contracts and contingent consideration, fair value estimatesproject awards, performance obligations include future revenue at contract or customary rates, excluding contract renewals or extensions that are at the discretion of the client. For contracts with a not-to-exceed maximum amount, the Company includes revenue from such contracts in determiningperformance obligations to the fair valueextent of the Company’s reporting units for goodwill impairment assessment,remaining estimated amount.percentage-of-completion method, allowances for uncollectible accountsConsolidated Balance Sheet. The liability “Billings in excess of costs and provision for income taxes.Concentrationestimated earnings on uncompleted contracts” represents billings in excess of Credit RiskTrade receivable balances carried by the Company are comprised of accounts from a diverse client base across a broad range of industries and are not collateralized. However, approximately 32% and 35% of the Company’s gross revenues for the nine months ended September 30, 2017 and 2016, respectively, are from California-based projects. The Company does not have any clients individually representing more than 10% of gross revenues during the nine months ended September 30, 2017 and 2016. Furthermore, approximately 57% and 71% of the Company’s accounts receivable as of September 30, 2017 and December 31, 2016, respectively, are for public and quasi-public projects. Management continually evaluates the creditworthiness ofrecognized on these and future clients and provides for bad debt reserves as necessary.Fair Value of Financial InstrumentsA financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of valuation hierarchy are defined as follows:Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.The Company considers cash and cash equivalents, accounts receivable, accounts payable, income taxes payable, accrued liabilities and debt obligations to meet the definition of financial instruments. As of September 30, 2017 and December 31, 2016, the carrying amount of cash and cash equivalents, accounts receivable, accounts payable, income taxes payable and accrued liabilities approximate their fair value due to the relatively short period of time between their origination and their expected realization or payment. The carrying amounts of debt obligations approximate their fair values as the terms are comparable to terms currently offered by local lending institutions for arrangements with similar terms to industry peers with comparable credit characteristics.The Company applies the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations, in the accounting for its acquisitions, which requires recognition of the assets acquired and the liabilities assumed at their acquisition date fair values, separately from goodwill. Goodwillcontracts as of the acquisition datereporting date. This liability is measuredgenerally classified as current. During the excessthree and six months ended July 1, 2023 the Company performed services and recognized $6,616 and $25,046, respectively, of consideration transferred and the net of the acquisition date fair values of the tangible and identifiable intangible assets acquired andrevenue related to its contract liabilities assumed. The allocation of the purchase price to identifiable intangible assets (customer relationships, customer backlog, trade name and non-compete) is based on valuations performed to determine the fair values of such assetsthat existed as of the acquisition dates. Generally, the Company engages a third-party independent valuation specialist to assist in management’s determination of fair values of tangible and intangible assets acquired and liabilities assumed. The fair values of earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. The Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability on the consolidated balance sheet. Changes in the estimated fair value of contingent earn-out payments are included in General and Administrative expenses on the Consolidated Statements of Net Income and Comprehensive Income.NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)Several factors are considered when determining contingent consideration liabilities as part of the purchase price, including whether (i) the valuation of the acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (ii) the former owners of the acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of other key employees. The contingent earn-out payments are not affected by employment termination.We review and re-assess the estimated fair value of contingent consideration liabilities on a quarterly basis, and the updated fair value could differ materially from the initial estimates. The Company measures contingent consideration recognized in connection with business combinations at fair value on a recurring basis using significant unobservable inputs classified within Level 3, as defined in the accounting guidance. The Company uses a probability-weighted discounted cash flow approach as a valuation technique to determine the fair value of the contingent consideration liabilities on the acquisition date and at each reporting period. The significant unobservable inputs used in the fair value measurements are projections over the earn-out period, and the probability outcome percentages that are assigned to each scenario. Significant increases or decreases to either of these inputs in isolation could result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent consideration liabilities. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate on the acquisition date and amount paid will be recorded in earnings (see Note 10). Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in income from operations.company’scompany’s tangible and identifiable intangible assets and liabilities.include:include macroeconomic and industry conditions, cost factors, overall financial performance, and other relevant entity-specific events. If the entity determines that this threshold is met, then performing the two-stepCompany applies a one-step quantitative test and record the amount of goodwill impairment test is unnecessary. The two-step impairment test requires a comparisonas the excess of the carrying value of the assets and liabilities associated with a reporting unit, including goodwill, with theunit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The Company determines fair value through multiple valuation techniques, and weights the results accordingly. NV5 Global is required to make certain subjectiveSubjective and complex judgments are required in assessing whether an event of impairment of goodwill has occurred, including assumptions and estimates used to determine the fair value of its reporting units. If the carrying value of a reporting unit exceeds the fair value of the reporting unit, the Company would calculate the implied fair value of its reporting unit goodwill as compared to the carrying value of its reporting unit goodwill to determine the appropriate impairment charge, if any. The Company has elected to perform its annual goodwill impairment review onas of August 1 of each year. The Company historically conducts its annual impairment tests on the goodwill using the quantitative method of evaluating goodwill.non-compete agreements.developed technology. Amortizable intangible assets are amortized on a straight-line basis over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the assets may be impaired. If an indicator of impairment exists, the Company compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then impairment, if any, is measured as the difference between fair value and carrying value, with fair value typically based on a discounted cash flow model.78, NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)Earnings per ShareBasic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resultedThere have been no material changes in the issuance of common stock that then sharedCompany's significant accounting policies described in the earnings ofaudited financial statements included in the Company. In accordance with the FASB ASC 260, Earnings per Share, the effect of potentially dilutive securities is not considered during periods of loss or if the effect is anti-dilutive. The weighted average number of shares outstanding in calculating basic earnings per shareCompany's Annual Report on Form 10-K for the three and nine monthsyear ended September 30, 2017 and 2016 exclude 560,689 and 434,082 non-vested restricted shares, respectively, issued since 2010. These non-vested restricted shares are not included in basic earnings per share until the vesting requirement is met. The weighted average number of shares outstanding in calculating diluted earnings per share for the three and nine months ended September 30, 2017 and 2016 includes, if outstanding, non-vested restricted shares and units, issuable shares related to acquisitions, and the warrants associated with the Company’s initial public offering. In calculating diluted earnings per share for the three and nine months ended September 30, 2017 and 2016, there were no potentially anti-dilutive securities.The following table represents a reconciliation of the net income and weighted average shares outstanding for the calculation of basic and diluted earnings per share for the three and nine months ended September 30, 2017 and 2016: $ 5,912 $ 3,404 $ 12,501 $ 8,318 10,211,114 9,941,517 10,155,751 8,826,090 311,677 203,997 305,392 209,032 146,958 102,810 170,768 55,551 115,881 105,469 112,708 124,692 10,785,630 10,353,793 10,744,619 9,215,365 In January 2017,FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350) Simplifyingweighted average number of common shares outstanding during the Test for Goodwill Impairment. This ASU eliminates Step 2period, excluding unvested restricted shares. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the goodwill impairment test and simplifies howCompany. The effect of potentially dilutive securities is not considered during periods of loss or if the amounteffect is anti-dilutive.an impairment loss is determined. The update is effective for public companiesshares outstanding in the beginning of fiscal year 2020 and shall be applied on a prospective basis. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the impact of this ASU to be material to its consolidated financial statements.In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. This ASU clarifies guidance for cash flow classification to reduce current and potential future diversity in practice. The update is effective for public companies in the beginning of fiscal 2018. The amendments should be applied using a retrospective transition method to each period presented. For items that are impractical to apply the amendments retrospectively, they shall be applied prospectively as of the earliest date practicable. Early adoption is permitted. The Company does not expect the impact of this ASU to be material to its consolidated financial statements.In March 2016, FASB issued Accounting Standards Update 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies the accounting for share-based payment award transactions including: income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The Company adopted the requirements of ASU 2016-09 on January 1, 2017 on a prospective basis, which resulted in a decrease in income tax expense of approximately $974calculating basic earnings per share for the ninesix months ended September 30, 2017. ASU 2016-09 requires excess tax benefits be presented withinJuly 1, 2023 and July 2, 2022 exclude 688,377 and 739,919 non-vested restricted shares, respectively. During the statement of cash flows as an operating activity rather than as a financing activitythree and excess tax benefits to be excluded from the assumed future proceedssix months ended July 1, 2023, there were 111,584 and 41,536 weighted average securities, respectively, which are not included in the calculation of diluted shares.Three Months Ended Six Months Ended July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022 Numerator: Net income – basic and diluted $ 15,413 $ 17,268 $ 21,360 $ 25,910 Denominator: Basic weighted average shares outstanding 15,014,106 14,736,167 14,948,796 14,714,745 Effect of dilutive non-vested restricted shares and units 413,856 481,815 447,546 481,379 Effect of issuable shares related to acquisitions 23,826 14,175 25,193 15,711 Diluted weighted average shares outstanding 15,451,788 15,232,157 15,421,535 15,211,835 In February 2016, FASB issued ASU 2016-02, Leases. ASU 2016-02 requires lessees to recognize, in the balance sheet, a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset over the lease term. The amendments in this accounting standard update are to be applied using a modified retrospective approach and are effective for fiscal years beginning after December 15, 2018. We are currently evaluating the requirements of ASU 2016-02 and its impact on the consolidated financial statements.In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to acustomer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This ASU was originally effective for annual reporting periods beginning after December 15, 2016 and early adoption is permitted as of the original effective date. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. In July 2015, FASB voted to approve a one-year deferral of the effective date to December 31, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016. As a result, ASU 2014-09 will become effective for us in the first quarter of our fiscal year ending December 31, 2018. The Company has begun its assessment and is evaluating the areas of impact on its consolidated financial statements. The Company has decided to adopt this standard under the modified retrospective approach. Currently, the Company has identified various revenue types by services, contracts, clients and billings. The Company is reviewing its contracts in the various revenue types in order to isolate those that will be significantly impacted as well as to identify the relevant revenue types for disaggregated disclosure. After the assessment is complete, the Company can estimate potential impacts, if any, of the new standard as well as the impact of adopting ASU 2014-09 on the Company's consolidated net income, financial position, cash flows, disclosures, information technology systems and internal controls. 4 5– Business AcquisitionsSeptemberApril 6, 2017, the Company acquired all of the outstanding interests in Marron and Associates, Inc. (“Marron”), a leading environmental services firm with offices in Albuquerque and Las Cruces, New Mexico. Marron provides environmental planning, natural and cultural resources, environmental site assessment, and GIS services. Marron primarily serves public and private clients throughout the Southwest, including the New Mexico Department of Transportation, Bureau of Land Management, Bureau of Indian Affairs, Federal Highway Administration, U.S. Department of Agriculture, U.S. Fish and Wildlife Service, and U.S. Forest Service. The purchase price of this acquisition is up to $990 including $400 in cash, $300 in promissory notes (bearing interest at 3.0%), payable in three installments of $100, due on the first, second and third anniversaries of September 6, 2017, the effective date of the acquisition (see Note 9), $67 of the Company’s common stock (1,510 shares) as of the closing date of the acquisition and $133 in stock or a combination of cash and shares of the Company’s stock, at its discretion, payable in two equal installments, due on the first and second anniversaries of September 6, 2017.The purchase price also included an interest bearing earn-out of $90 promissory note, subject to the achievement of certain agreed upon metrics for calendar year 2017. The Company internally determined the preliminary fair values of tangible and intangible assets acquired and liabilities assumed. We expect to finalize the purchase price allocation with respect to this transaction by the end of the fourth quarter of 2017. The note and the earn-out are due to a related party individual who became an employee of the Company upon the acquisition.On June 6, 2017,2023, the Company acquired all of the outstanding equity interests in Richard D. Kimball Co., Inc.the Visual Information Solutions commercial geospatial technology and software business ("RDK"VIS"), an established leader in from L3Harris. VIS is a provider of subscription-based software solutions for the provisionanalysis and management of energy efficiencysoftware applications and mechanical, electric and plumbing (MEP) services based in Boston, Massachusetts. In addition to MEP and fire protection services, RDK offers commissioning services, technology design services, and energy and sustainability services, including Whole Building Energy Modeling and ASHRAE Level Energy Audits, Green Building Certification, Energy Code Consulting, Carbon Emissions Management, and Renewable Energy Management. RDK primarily serves commercial, healthcare, science and technology, education, government, and transportation clients.Analytics as a Service (AaaS) solutions. The Company acquired VIS for a cash purchase price of $75,682. The purchase price and other related costs associated with the transaction were financed through the Company's amended and restated credit agreement (the "Second A&R Credit Agreement") with Bank of this acquisition is up to $22,500, subject to customary closing working capital adjustments, including $15,000 in cash, $5,500 in promissory notes (bearing interest at 3.0%)America, N.A. and other lenders party thereto. See Note 10, payable in four installments of $1,375, duefor further detail on the first, second, third and fourth anniversaries of June 6, 2017 (see Note 9), $667 of the Company’s common stock (18,072 shares) as of the closing date of the acquisition, and $1,333 in stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in two equal installments, due on the first and second anniversaries of June 6, 2017.Second A&R Credit Agreement. In order to ultimately determine the fair values of tangible and intangible assets acquired and liabilities assumed, for RDK, wethe Company engaged aan independent third-party independent valuation specialist to assist in the determination of fair values. However,The final determination of the fair value of assets and liabilities will be completed within the one-year measurement period as required by ASC 805. The acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the relevant acquisition date, including intangible assets, accounts receivable, certain fixed assets, and the fair value of this report, the valuation was not final. We expect to finalize the purchase price allocation with respect to this transaction by the end of the fourth quarter of 2017.NV5 Global, Inc.other assets and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)May 4, 2017,February 22, 2023, the Company acquired all of the outstanding equity interests in Holdrege & Kull, Consulting EngineersContinental Mapping Acquisition Corp. and Geologists (“H&K”Continental Mapping Holdings, LLC and its subsidiaries, including Axim Geospatial, LLC (collectively "Axim"), a full-service geotechnical engineering firm basedprovider of comprehensive geospatial services and solutions addressing critical mission requirements for customers across the defense and intelligence and state and local government sectors. The aggregate purchase price of the acquisition was $141,010, including $120,106 in Northern California. H&K provides services to public, municipalcash, a $7,404 promissory note, and special district, industrial, and private sector clients.$13,500 of the Company's common stock. The purchase price and other related costs associated with the transaction were financed through the Company's Second A&R Credit Agreement with Bank of this acquisition is up to $2,200 including $1,000 in cash, $600 in promissory notes (bearing interest at 3.0%)America, N.A. and other lenders party thereto. See Note 10, Notes Payable and Other Obligations, payable in four installments of $150, duefor further detail on the first, second, third and fourth anniversaries of May 4, 2017, the effective date of the acquisition (see Note 9), and $100 of the Company’s common stock (2,628 shares) as of the closing date of the acquisition. The purchase price also included an interest bearing earn-out of $500 promissory note, subject to the achievement of certain agreed upon metrics for calendar year 2017. The earn-out promissory note is payable in four installments of $125, due on the first, second, third and fourth anniversaries of May 4, 2017. The earn-out of $500 was recorded at its estimated fair value of $405, based on a probability-weighted approach valuation technique used to determine the fair value of the contingent consideration on the acquisition date. The note and the earn-out are due to a related party individual.Second A&R Credit Agreement. In order to ultimately determine the fair values of tangible and intangible assets acquired and liabilities assumed, for H&K, wethe Company engaged aan independent third-party independent valuation specialist to assist in the determination of fair values. However,The final determination of the fair value of assets and liabilities will be completed within the one-year measurement period as required by ASC 805. The acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the relevant acquisition date, including intangible assets, accounts receivable, certain fixed assets, and the fair value of this report, the valuation was not final. We expect to finalize theother assets and liabilities acquired.allocation with respect to this transaction byfor the endthree acquisitions was $3,315, including $2,900 in cash, $90 of the fourth quarterCompany's common stock, and a potential earn-out of 2017.On May 1, 2017, the Company acquired all of the outstanding equity interests in Lochrane Engineering, Inc. (“Lochrane”), an Orlando, Florida based civil engineering firm, which specializes in the provision of services on major roadway projects, and its major clients include the Florida Department of Transportation and Florida’s Turnpike Enterprise. The purchase price of this acquisition is up to $4,940 including $2,690$340 payable in cash, $2,200 in promissory notes (bearing interest at 3.0%), payable in four installments of $550, due on the first, second, third and fourth anniversaries of May 1, 2017, the effective date of the acquisition (see Note 9), $17 of the Company’s common stock (441 shares) as of the closing date of the acquisition, and $33 in stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in two equal installments, due on the first and second anniversaries of May 1, 2017. Included in the $2,200 promissory notes, is an earn-out of $550, subject to the achievement of certain agreed upon metrics for calendar year 2017. The earn-out of $550 is interest bearing and waswhich has been recorded at itsan estimated fair value of $413, based on a$325. A probability-weighted approach valuation techniquewas used to determine the fair value of the contingent consideration onearn-out, which is a generally accepted valuation technique that embodies all significant assumption types. The final determination of the fair value of assets and liabilities will be completed within the one-year measurement period as required by ASC 805. The 2023 acquisitions will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the relevant acquisition date. date, including intangible assets and accounts receivable. noteCompany completed five acquisitions during 2022. The aggregate purchase price of all five acquisitions was $14,220, including $5,882 of cash, $1,606 of promissory notes, $433 of the Company's common stock, and potential earn-outs of up to $15,850 payable in cash and stock, which was recorded at an estimated fair value of $6,299. An option-based model was used to determine the earn-out are due tofair value of the earn-outs, which is a related party individual.generally accepted valuation technique that embodies all significant assumption types. In order to ultimately determine the fair values of tangible and intangible assets acquired and liabilities assumed, for Lochrane, wethe Company engaged aan independent third-party independent valuation specialist to assist in the determination of fair values. However,The final determination of the fair value of assets and liabilities will be completed within the one-year measurement period as required by ASC 805. The 2022 acquisitions will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, of this report, the valuation was not final. We expect to finalize the purchaseincluding intangible assets, accounts receivable, and certain fixed assets. Purchase price allocation with respect to this transaction by the endadjustments recorded during 2023 were immaterial.On May 20, 2016, the Company acquired Dade Moeller & Associates, Inc., a North Carolina corporation ("Dade Moeller"). Dade Moeller provides professional services in radiation protection, health physics, and worker safety to government and commercial facilities. Dade Moeller's technical expertise includes radiation protection, industrial hygiene and safety, environmental services and laboratory consulting. This acquisition expanded the Company’s environmental, health and safety services and allows the Company to offer these services on a broader scale within its existing network. The purchase price of this acquisition was $20,000 including $10,000 in cash, $6,000 in promissory notes (bearing interest at 3.5%), payable in four installments of $1,500, due on the first, second, third and fourth anniversaries of May 20, 2016, the effective date of the acquisition (see Note 9), $1,000 of the Company’s common stock (36,261 shares) as of the closing date of the acquisition, and $3,000 in stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in three installments of $1,000, due on the first, second and third anniversaries of May 20, 2016.On February 1, 2016, the Company acquired Sebesta, Inc. (“Sebesta”), a St. Paul, Minnesota-based mechanical, electrical and plumbing (“MEP”) engineering and energy management company. Primary clients include federal and state governments, power and utility companies, and major educational, healthcare, industrial and commercial property owners throughout the United States. The purchase price of this acquisition was $14,000 paid from cash on hand. This acquisition expanded the Company’s MEP engineering and energy and allows the Company to offer these services on a broader scale within its existing network. In addition, this acquisition strengthens the Company’s geographic diversification and allows the Company to continue expanding its national footprint.NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)Thedatesdate for the acquisitions closed during 2017the six months ended July 1, 2023 and 2016: $ 315 $ 128 20,906 20,221 1,750 4,301 968 1,336 337 841 29,998 26,188 2,224 1,922 1,116 3,898 1,703 1,259 - (225 ) 59,317 59,869 (11,272 ) (12,250 ) (15,567 ) (7,892 ) 32,478 39,727 70,712 76,011 908 1,417 71,620 77,428 $ 39,142 $ 37,701 2023 2022 VIS Axim Other Total Total Cash $ 7,027 $ 5,419 $ — $ 12,446 $ — Billed and unbilled receivables, net 5,042 13,937 487 19,466 1,794 Right-of-use assets 2,113 1,622 189 3,924 632 Property and equipment 118 2,870 — 2,988 1,510 Prepaid expenses 1,505 1,543 17 3,065 — Other assets — 155 — 155 — Intangible assets: Customer relationships 33,394 52,206 859 86,459 3,606 Trade name 2,958 2,266 33 5,257 268 Customer backlog 868 3,920 186 4,974 459 Developed technology 4,222 1,942 — 6,164 — Non-compete 25 580 93 698 298 Total Assets $ 57,272 $ 86,460 $ 1,864 $ 145,596 $ 8,567 Liabilities (16,439) (13,668) (188) (30,295) (5,623) Deferred tax liabilities (7,105) (14,223) — (21,328) — Net assets acquired $ 33,728 $ 58,569 $ 1,676 $ 93,973 $ 2,944 Consideration paid (Cash, Notes and/or stock) $ 75,682 $ 141,010 $ 2,990 $ 219,682 $ 7,921 Contingent earn-out liability (Cash and stock) — — 325 325 6,299 Total Consideration $ 75,682 $ 141,010 $ 3,315 $ 220,007 $ 14,220 Excess consideration over the amounts assigned to the net assets acquired (Goodwill) $ 41,954 $ 82,441 $ 1,639 $ 126,034 $ 11,276 acquired of $2,294 and $0 during the nine months ended September 30, 2017Intangible Assets, for further information on fair value adjustments to goodwill and 2016, respectively, was assigned to the INF reportable segment. Goodwill acquired of $36,848 and $15,793 during the nine months ended September 30, 2017 and 2016, respectively, was assigned to the Building, Technology, & Sciences (BTS) (formerly known as Building, Energy & Sciences (BES)) reportable segment. Goodwill of approximately $1,077 and $15,199 from acquisitions during the nine months ended September 30, 2017 and 2016, respectively, is expected to be deductible for income tax purposes. for the three and nine months ended September 30, 2017 include the results of operations from any business acquired from their respective dates of acquisition. The following table presents the results of operations of businesses acquired during 2017 from their respective dates of acquisition to September 30, 2017. For both the three and nine months ended September 30, 2017, the results include gross revenues of $21,316 and $35,524, respectively, and income before income taxes of $3,905 and $6,847, respectively. The consolidated financial statements of the Company for the three and ninesix months ended September 30, 2016 includeJuly 1, 2023. The revenue and earnings of the fiscal 2022 acquisitions included in the Company's results of operations fromsince the businesses acquired during 2016 from their respectiveacquisition dates of acquisitionare not material to September 30, 2016. For the threeCompany's consolidated financial statements and nine months ended September 30, 2016, the results include gross revenues of $12,363 and $27,481, respectively, and income before income taxes of $1,108 and $2,560, respectively. Included in generalhave not been presented.Three Months Ended Six Months Ended July 1, 2023 July 1, 2023 Gross revenues $ 29,589 $ 37,064 Income before income taxes $ 4,904 $ 5,631 expenseexpenses for the three and ninesix months ended September 30, 2017 is $315July 1, 2023 and $892, respectively, ofJuly 2, 2022 include acquisition-related costs pertaining to the Company’sCompany's acquisition activities. Acquisition-related costs were not material to the Company's consolidated financial statements.ninesix months ended September 30, 2017July 1, 2023 and July 2, 2022 as if Dade Moeller, B&Cthe fiscal 2023 and RDK2022 acquisitions had occurred asat the beginning of January 1, 2016.fiscal year 2022. The pro forma information provided below is compiled from thepre-acquisition financial statements of Dade Moeller, B&Cinformation and RDK, which includes pro forma adjustments for amortization expense, adjustments to certain expenses, and the income tax impact of these adjustments. The pro forma results are not necessarily indicative of (i) the results of operations that would have occurred had the Dade Moeller, B&C and RDK operations of these acquisitions actually been acquired on January 1, 2016;at the beginning of fiscal year 2022 or (ii) future results of operations: $ 91,263 $ 78,481 $ 262,496 $ 222,089 $ 5,912 $ 4,583 $ 13,541 $ 11,805 $ 0.58 $ 0.45 $ 1.33 $ 1.32 $ 0.55 $ 0.43 $ 1.26 $ 1.25 The Company has determined the supplemental disclosures pursuant to ASC 805-10-50-2h, for the Lochrane, H&K and Marron acquisitionsThree Months Ended Six Months Ended July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022 Gross revenues $ 223,036 $ 231,351 $ 429,754 $ 450,204 Net income $ 15,374 $ 16,998 $ 20,581 $ 25,363 Basic earnings per share $ 1.02 $ 1.14 $ 1.38 $ 1.71 Diluted earnings per share $ 0.99 $ 1.11 $ 1.33 $ 1.65 not materialmade to the Company’s unaudited interim consolidated financial statements both individuallypro forma results to adjust amortization of intangible assets to reflect fair value of identified assets acquired, to record the effects of financing from the Company's Senior Credit Facility, to record the effects of promissory notes issued, and into record the aggregate.5 6– Accounts Receivable, netAccounts receivable, net, $ 81,399 $ 53,756 34,131 23,237 580 510 116,110 77,503 (3,106 ) (1,992 ) $ 113,004 $ 75,511 Billed accounts receivable represents amounts billed to clients that remain uncollected as of the balance sheet date. Unbilled accounts receivable represents recognized amounts pending billing pursuant to contract terms or accounts billed after period end, and are expected to be billed and collected within the next 12 months.July 1, 2023 December 31, 2022 Billed receivables $ 152,530 $ 149,082 Less: allowance for doubtful accounts (3,420) (3,445) Billed receivables, net $ 149,110 $ 145,637 Unbilled receivables $ 109,463 $ 95,104 Less: allowance for doubtful accounts (2,271) (2,242) Unbilled receivables, net $ 107,192 $ 92,862 NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data) 6 7– Property and Equipment, net $ 1,575 $ 1,329 8,530 6,808 1,943 1,426 1,670 1,583 13,718 11,146 (5,709 ) (4,463 ) $ 8,009 $ 6,683 July 1, 2023 December 31, 2022 Office furniture and equipment $ 3,346 $ 3,421 Computer equipment 29,820 25,816 Survey and field equipment 57,126 49,985 Leasehold improvements 6,828 6,546 Total 97,120 85,768 Less: accumulated depreciation (47,728) (44,128) Property and equipment, net $ 49,392 $ 41,640 $760$3,605 and $2,014$6,871 for the three and ninesix months ended September 30, 2017,July 1, 2023, respectively, of which $1,366 and $416$2,620 was included in other direct costs. Depreciation expense was $2,835 and $1,207$5,739 for the three and ninesix months ended September 30, 2016, respectively.Note 7 – GoodwillJuly 2, 2022, respectively, of which $1,223 and Intangible AssetsGoodwillOn August 1, 2017, the Company conducted its annual impairment tests using the quantitative method$2,456 was included in other direct costs.Six Months Ended December 31, 2022 2023 Acquisitions Adjustments Foreign Currency Translation of non-USD functional currency goodwill July 1, 2023 INF $ 90,932 $ 726 $ — $ — $ 91,658 BTS 111,838 913 13 — 112,764 GEO 198,187 124,395 (10) (146) 322,426 Total $ 400,957 $ 126,034 $ 3 $ (146) $ 526,848 September 30, 2017July 1, 2023 and December 31, 20162022 consist of the following: $ 68,799 $ (9,720 ) $ 59,079 $ 38,801 $ (5,746 ) $ 33,055 6,409 (4,477 ) 1,932 4,185 (2,746 ) 1,439 7,723 (3,509 ) 4,214 6,607 (2,284 ) 4,323 553 (134 ) 419 553 (158 ) 395 4,249 (1,519 ) 2,730 2,546 (897 ) 1,649 $ 87,733 $ (19,359 ) $ 68,374 $ 52,692 $ (11,831 ) $ 40,861 Trade names are amortizedJuly 1, 2023 December 31, 2022 Gross
Carrying
AmountAccumulated Amortization Net
AmountGross
Carrying
AmountAccumulated Amortization Net
AmountFinite-lived intangible assets: $ 309,452 $ (100,697) $ 208,755 $ 222,998 $ (87,054) $ 135,944 22,140 (16,996) 5,144 16,883 (15,933) 950 34,391 (29,711) 4,680 29,419 (27,333) 2,086 14,826 (11,995) 2,831 14,110 (11,298) 2,812 39,108 (16,939) 22,169 32,944 (14,305) 18,639 Total finite-lived intangible assets $ 419,917 $ (176,338) $ 243,579 $ 316,354 $ (155,923) $ 160,431 ranging from 1(1 to 3 years. Customer backlog and customer relationships are amortized5 years)straight-linesstraight-line basis over their estimated lives ranging from 1(1 to 9 years. Non-compete agreements are amortized10 years)ranging from 4(1 to 5 years. Favorable lease is amortizedyears)remaining lease termsix months ended July 1, 2023 consist of 9customer relationships, trade name, customer backlog, non-compete, and developed technology with weighted average lives of 12.5 years, 3.7 years, 1.2 years, 3.6 years, and 6.6 years.$3,028$11,300 and $7,528 for$20,334 during the three and ninesix months ended September 30, 2017,July 1, 2023, respectively, and $1,189$8,056 and $3,077 for$16,319 during the three and ninesix months ended September 30, 2016,July 2, 2022, respectively.As 8 9– Accrued Liabilities $ 675 $ 696 3,758 4,518 316 190 4,753 1,673 6,172 5,327 770 770 1,729 4,142 $ 18,173 $ 17,316 July 1, 2023 December 31, 2022 Current portion of lease liability $ 14,238 $ 13,081 Accrued vacation 15,083 12,467 Payroll and related taxes 8,612 6,616 Benefits 4,478 5,160 Accrued operating expenses 7,090 4,540 Other 3,234 2,449 Total $ 52,735 $ 44,313 NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data) 9 10– Notes Payableand Other Obligations $ 42,000 $ - - 278 6,449 6,047 29,527 26,071 77,976 32,396 (10,821 ) (10,764 ) $ 67,155 $ 21,632 Senior Credit FacilityOn December 7, 2016, the Company entered into a Credit Agreement (the “Credit Agreement”) with Bank of America, N.A. (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”). Pursuant to the Credit Agreement, Bank of America agreed to be the sole administrative agent for a five-year $80,000 Senior Secured Revolving Credit Facility (“Senior Credit Facility”) to the Company and, together with PNC Bank, National Association and Regions Bank as the other lenders under the Senior Credit Facility, has committed to lend to the Company all of the Senior Credit Facility, subject to certain terms and conditions. MLPFS has undertaken to act as sole lead arranger and sole book manager for the Senior Credit Facility. In addition, the Senior Credit Facility includes an accordion feature permitting the Company to request an increase in the Senior Credit Facility by an additional amount of up to $60,000. The Senior Credit Facility includes a $5,000 sublimit for the issuance of standby letters of credit and a $15,000 sublimit for swingline loans. The proceeds of the Senior Credit Facility are intended to be used (i) to finance permitted acquisitions, (ii) for capital expenditures, and (iii) for general corporate purposes.Borrowings under the Credit Agreement are at variable rates which are, at our option, tied to a Eurocurrency rate equal to LIBOR (London Interbank Offered Rate) plus an applicable rate or a base rate denominated in U.S. dollars. Interest rates are subject to change based on our Consolidated Senior Leverage Ratio (as defined in the Credit Agreement).The Senior Credit Facility contains certain financial covenants, including a maximum leverage ratio of 3.0:1 and minimum fixed charge coverage ratio of 1.20:1. Furthermore, the Senior Credit Facility also contains financial reporting covenant provisions and other covenants, representations, warranties, indemnities, and events of default that are customary for facilities of this type. July 1, 2023 December 31, 2022 Senior credit facility $ 200,750 $ 33,750 Uncollateralized promissory notes 21,665 18,492 Finance leases 3,001 3,465 Other obligations 933 1,814 Debt issuance costs, net of amortization (2,308) (2,672) Total notes payable and other obligations 224,041 54,849 Current portion of notes payable and other obligations 14,800 15,176 Notes payable and other obligations, less current portion $ 209,241 $ 39,673 September 30, 2017July 1, 2023 and December 31, 2016, the Company is in compliance with these financial and reporting covenants. As of September 30, 2017 and December 31, 2016, the outstanding balance on the Senior Credit Facility was $42,000 and $0, respectively.Note PayableThe note held by the seller of Nolte Associates Inc. (the “Nolte Note”) matured on July 29, 2017. The Nolte Note interest rate was prime rate plus 1%, subject to a maximum rate of 7.0%. As of September 30, 2017 and December 31, 2016, the actual interest rate was 4.25%. Under the terms of the Nolte Note, as amended, the Company paid quarterly principal installments of approximately $100 plus interest. The Nolte Note was unsecured and the Company was permitted to make periodic principal and interest payments. As of September 30, 2017 and December 31, 2016, the outstanding balance on the Nolte Note was $0 and $278, respectively.NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)Other ObligationsOn September 6, 2017, the Company acquired all of the outstanding equity interest in Marron. The purchase price allowed for the payment of $133 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in two equal installments, due on the first and second anniversaries of September 6, 2017. The outstanding balance of this obligation was $133 and $0 as of September 30, 2017 and December 31, 2016, respectively.On June 6, 2017, the Company acquired all of the outstanding equity interest in RDK. The purchase price allowed for the payment of $1,333 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in two equal installments, due on the first and second anniversaries of June 6, 2017. The outstanding balance of this obligation was $1,333 and $0 as of September 30, 2017 and December 31, 2016, respectively.On November 30, 2016, the Company acquired all of the outstanding equity interests of Hanna. The purchase price allowed for the payment of $1,200 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in two installments of $600, due on the first and second anniversaries of November 30, 2016. The outstanding balance of this obligation was $1,200 as of September 30, 2017 and December 31, 2016.On October 26, 2016, the Company acquired all of the outstanding equity interests of JBA. The purchase price allowed for the payment of $2,600 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in two installments of $1,300, due on the first and second anniversaries of October 26, 2016. The outstanding balance of this obligation was $2,600 as of September 30, 2017 and December 31, 2016.On May 20, 2016, the Company acquired all of the outstanding equity interests of Dade Moeller. The purchase price allowed for the payment of $3,000 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in three installments of $1,000, due on the first, second and third anniversaries of May 20, 2016. The outstanding balance of this obligation was $2,000 and $3,000 as of September 30, 2017 and December 31, 2016, respectively.Uncollateralized Promissory NotesOn September 6, 2017, the Company acquired all of the outstanding interests in Marron. The purchase price included an uncollateralized $300 promissory note bearing interest at 3.0% (the “Marron Note”) payable in three installments of $100, due on the first, second and third anniversaries of September 6, 2017. The outstanding balance of the Marron Note was $300 and $0 as of September 30, 2017 and December 31, 2016, respectively.On June 6, 2017, the Company acquired all of the outstanding equity interest in RDK. The purchase price included an uncollateralized $5,500 promissory note bearing interest at 3.0% (the “RDK Note”) payable in four installments of $1,375, due on the first, second, third and fourth anniversaries of June 6, 2017. The outstanding balance of the RDK Note was $5,500 and $0 as of September 30, 2017 and December 31, 2016, respectively.On May 4, 2017, the Company acquired all of the outstanding equity interest in H&K. The purchase price included an uncollateralized $600 promissory note bearing interest at 3.0% (the “H&K Note”) payable in four installments of $150, due on the first, second, third and fourth anniversaries of May 4, 2017, the effective date of the acquisition. The outstanding balance of the H&K Note was $600 and $0 as of September 30, 2017 and December 31, 2016, respectively.On May 1, 2017, the Company acquired all of the outstanding equity interest in Lochrane. The purchase price included an uncollateralized $1,650 promissory note bearing interest at 3.0% (the “Lochrane Note”) payable in four installments of $413, due on the first, second, third and fourth anniversaries of May 1, 2017, the effective date of the acquisition. The outstanding balance of the Lochrane Note was $1,650 and $0 as of September 30, 2017 and December 31, 2016, respectively.NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)On December 6, 2016, the Company acquired all of the outstanding interests of CivilSource. The purchase price included an uncollateralized $3,500 promissory note bearing interest at 3.0% (the “CivilSource Note”) payable in four installments of $875, due on the first, second, third and fourth anniversaries of December 6, 2016, the effective date of the acquisition. The outstanding balance of the CivilSource Note was $3,500 as of September 30, 2017 and December 31, 2016, respectively.On November 30, 2016, the Company acquired all of the outstanding interests of Hanna. The purchase price included an uncollateralized $2,700 promissory note bearing interest at 3.0% (the “Hanna Note”) payable in four installments of $675, due on the first, second, third and fourth anniversaries of November 30, 2016, the effective date of the acquisition. The outstanding balance of the Hanna Note was $2,700 as of September 30, 2017 and December 31, 2016, respectively.On October 26, 2016, the Company acquired all of the outstanding interests of JBA. The purchase price included an uncollateralized $7,000 promissory note bearing interest at 3.0% (the “JBA Note”) payable in five installments of $1,400, due on the first, second, third, fourth and fifth anniversaries of October 26, 2016, the effective date of the acquisition. The outstanding balance of the JBA Note was $7,000 as of September 30, 2017 and December 31, 2016, respectively.On September 12, 2016, the Company acquired certain assets of Weir. The purchase price included an uncollateralized $500 promissory note bearing interest at 3.0% (the “Weir Note”) payable in four installments of $125, due on the first, second, third and fourth anniversaries of September 12, 2016, the effective date of the acquisition. The outstanding balance of the Weir Note was $375 and $500 as of September 30, 2017 and December 31, 2016, respectively.On May 20, 2016, the Company acquired all of the outstanding equity interests of Dade Moeller. The purchase price included an aggregate of $6,000 of uncollateralized promissory notes bearing interest at 3.0% (the “Dade Moeller Notes”) payable in four equal payments of $1,500 each due on the first, second, third, and fourth anniversaries of May 20, 2016, the effective date of the acquisition. The outstanding balance of the Dade Moeller Notes was approximately $4,500 and $6,000 as of September 30, 2017 and December 31, 2016, respectively.On July 1, 2015, the Company acquired all of the outstanding equity interests of RBA. The purchase price included an uncollateralized $4,000 promissory notes bearing interest at 3.0% (the “RBA Note”) payable in four equal payments of $1,000 each due on the first, second, third, and fourth anniversaries of July 1, 2015, the effective date of the acquisition. The outstanding balance of the RBA Note was $2,000 and $3,000 as of September 30, 2017 and December 31, 2016, respectively.On June 24, 2015, the Company acquired certain assets of Allwyn. The purchase price included an uncollateralized $500 promissory note bearing interest at 3.5% (the “Allwyn Note”) that is payable in three equal payments of $167 each due on the first, second and third anniversaries of June 24, 2015, the effective date of the acquisition. The outstanding balance of the Allwyn Note was $166 and $333 as of September 30, 2017 and December 31, 2016, respectively.On April 22, 2015, the Company acquired all of the outstanding equity interests of Mendoza. The purchase price included an uncollateralized $3,000 short-term promissory note, based on the collection of acquired accounts receivable and work in process, payable within one year, and an uncollateralized $500 promissory note bearing interest at 3% (the “Mendoza Note”) that is payable in two equal payments of $250 each due on the first and second anniversaries of April 22, 2015, the effective date of the acquisition. The outstanding balance of the Mendoza Note was $0 and $250 as of September 30, 2017 and December 31, 2016, respectively.On January 30, 2015, the Company acquired all of the outstanding equity interests of JLA. The purchase price included an uncollateralized $1,250 promissory note bearing interest at 3.5% (the “JLA Note”) that is payable in four equal payments of $313 each due on the first, second, third, and fourth anniversaries of January 30, 2015, the effective date of the acquisition. The outstanding balance of the JLA Note was $625 and $938 as of September 30, 2017 and December 31, 2016, respectively.On November 3, 2014, the Company acquired certain assets of the Buric Companies. The purchase price included an uncollateralized, 3% interest bearing promissory note in the aggregate principal amount of $300 (the “Buric Note”). The note is payable in three equal payments of $100 due on the first, second and third anniversaries of November 3, 2014, the effective date of the acquisition. The carrying value of the Buric Note was approximately $100 as of September 30, 2017 and December 31, 2016.NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data) On March 21, 2014, the Company acquired all of the outstanding equity interests of NV5, LLC. The purchase price included an uncollateralized $3,000 promissory note bearing interest at 3.0% (the “AK Note”) that is payable in three equal payments of $1,000 each due on the first, second and third anniversaries of March 21, 2014, the effective date of the acquisition. The outstanding balance of the AK Note was $0 and $1,000 as of September 30, 2017 and December 31, 2016. Future contractual maturities of long-term debt as of September 30, 2017 are as follows: $ 10,821 12,257 6,612 46,886 1,400 $ 77,976 As of September 30, 2017 and December 31, 2016,2022, the carrying amount of debt obligations approximates their fair values based on Level 2 inputs as the terms are comparable to terms currently offered by local lending institutions for arrangements with similar terms to industry peers with comparable credit characteristics. 10 11– Contingent Consideration $ 2,439 $ 1,279 908 1,417 (625 ) (458 ) 56 201 2,778 2,439 (2,653 ) (564 ) $ 125 $ 1,875 July 1, 2023 December 31, 2022 Contingent consideration, beginning of the year $ 15,335 $ 8,328 Additions for acquisitions 325 6,299 Reduction of liability for payments made (2,100) (2,264) (Decrease) increase of liability related to re-measurement of fair value (7,514) 2,972 Total contingent consideration, end of the period 6,046 15,335 Current portion of contingent consideration 4,149 10,854 Contingent consideration, less current portion $ 1,897 $ 4,481 11 12– Commitments and ContingenciesNV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)The Company’s office leases are classified as operating leases and rent expense is included in facilities and facilities related expense in the Company’s Consolidated Statements of Net Income and Comprehensive Income. Some lease terms include rent and other concessions and rent escalation clauses which are included in computing minimum lease payments. Minimum lease payments are recognized on a straight-line basis over the minimum lease term. The variance of rent expense recognized from the amounts contractually due pursuant to the underlying leases is included in accrued liabilities in the Company’s consolidated balance sheets. 12 13– Stock-Based CompensationCompany’sCompany's stockholders approved the NV5 Global, Inc. 2011 Equity Incentive Plan, which was subsequently amended and restated in March 2013 (as amended, the “2011 Equity Plan”). The 2011 Equity Incentive Plan expired pursuant to its terms in March 2023, accordingly no further grants were made following the date of such expiration. Prior to such expiration, the Company's Board adopted the NV5 Global, Inc. 2023 Equity Incentive Plan (the "2023 Equity Plan") to replace the 2011 Equity Plan, subject to stockholder approval. On June 13, 2023, the Company's stockholders approved the 2023 Equity Plan. The 2023 Equity Plan provides directors, executive officers, and other employees of the Company with additional incentives by allowing them to acquire ownership interest in the business and, as a result, encouraging them to contribute to the Company’s success. The Company may provide these incentives through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other cash-based or stock-based awards. As of September 30, 2017, 826,305July 1, 2023, 2,145,774 shares of common stock are authorized, reserved, and reservedregistered for issuance under the 20112023 Equity Plan. This reserve automatically increases on each January 1 from 2014 through 2023, by an amount equal to the smaller of (i) 3.5% of the number of shares issued and outstanding on the immediately preceding December 31, or (ii) an amount determined by the Company’s Board of Directors. The restricted shares of common stock granted generally provide for service-based cliff vesting after two to four years following the grant date. A summary of the changes in unvested shares of the restricted stock during the nine months ended year ended September 30, 2017 is presented below.table summarizes the statusactivity of restricted stock awards asduring the six months ended July 1, 2023:Number of Unvested Restricted Shares of Common Stock and Restricted Stock Units Weighted Average
Grant Date Fair
ValueDecember 31, 2022 713,793 $ 81.25 Granted 264,434 $ 107.12 Vested (202,453) $ 47.00 Forfeited (18,171) $ 87.75 July 1, 2023 757,603 $ 99.26 December 31, 2016, and changes during 2017: 502,773 $ 19.35 186,437 $ 37.76 (90,305 ) $ 9.48 (25,336 ) $ 28.79 573,569 $ 26.47 Share-basedSubsidiariesninesix months ended September 30, 2017July 1, 2023 was $1,161$4,902 and $2,743,$10,728, respectively, and $655$4,826 and $1,704 for$9,615 during the three and ninesix months ended September 30, 2016,July 2, 2022, respectively. In connection with the Company's 401(k) Profit Sharing match, stock-based compensation expense during the three and six months ended July 1, 2023 includes $543 and $1,157, respectively, of expense related to the Company's liability-classified awards. Stock-based compensation expense during the three and six months ended July 2, 2022 includes $383 and $654, respectively, of expense related to the Company's liability-classified awards. The total estimated amount of the liability-classified awards for fiscal 2023 is approximately $5,120. The 401(k) Profit Sharing restricted stock awards are issued under the rules of the NV5 Global, Inc. 2023 Equity Incentive Plan and are not issued into the NV5 401(k) Profit Sharing plan. Approximately $9,895$46,313 of deferred compensation, which is expected to be recognized over the remaining weighted average vesting period of 2.61.7 years, is unrecognized at September 30, 2017. 13 14– Income TaxesIn November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes to simplify the presentation of deferred income taxes. The amendments in this update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The Company adopted ASU 2015-17 as of January 1, 2017 and retrospectively applied ASU 2015-17 to all periods presented. JanuaryJuly 1, 2017, the Company reclassified $2,173 of deferred tax assets from "Current assets" to "Non-current liabilities" on the Consolidated Balance Sheets. As of September 30, 20172023 and December 31, 2016,2022, the Company had net non-current deferred income tax liabilities of $22,084$20,487 and $6,197,$6,893, respectively. No valuation allowance against the Company’s deferred income tax assets is needed as of September 30, 2017 and December 31, 2016 as it is more-likely-than-not that the positions will be realized upon settlement. Deferred income tax liabilities primarily relate to intangible assets and accounting basis adjustments where the Company haswe have a future obligation for tax purposes. During the nine months ended September 30, 2017, the Company recorded a deferred tax liability of approximately $15,567 in conjunction with the purchase price allocation of B&C, RDK and H&K as a result of the intangibles acquired in the acquisitions.NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)Company’s consolidatedCompany's effective income tax rate was 29.9%8.2% and 27.8% for11.7% during the three and ninesix months ended September 30, 2017,July 1, 2023, respectively, and 36.9%20.5% and 36.8% for22.3% during the three and ninesix months ended September 30, 2016,July 2, 2022, respectively. The difference between the effective income tax rate and the combined statutory federal and state income tax rate is principallywas primarily due to the federal domestic production activities deduction and research and development credits. Furthermore, during the three and nine months ended September 30, 2017, the Company recorded a reduction in incomerecognition of excess tax expense of $114 and $974, respectively, relating to the income tax benefit received in conjunction with the vesting of restricted stock during the periods. Also contributing to the decreasebenefits from stock-based payments in the effective tax rate for the threesecond quarter of 2023 and nine months ended September 30, 2017, is the lower effective tax rate applicable to the Asia operations purchased in the JBA acquisition at the end of 2016.The California Franchise Tax Board (“CFTB”) is challenging the use of certain research and development tax credits generated for the years 2005 to 2014. Fiscal years 20052019 through 20162022 are considered open tax years in the State of California and 2013 through 2016 in the U.S. federal jurisdiction, state and other stateforeign jurisdictions. During 2016, the Internal Revenue Service informed the Company of its interest to examine the income tax return for the tax year 2014. At September 30, 2017 and December 31, 2016, the Company had $770 of unrecognized tax benefits. IncludedFiscal years 2012 - 2014 are considered open in the balanceState of unrecognized tax benefits at September 30, 2017 and December 31, 2016 were $770 of tax benefits that, if recognized, would affect our effective tax rate.California. It is not expected that there will be a significant change in the unrecognized tax benefits inwithin the next 12 months. 1415– Reportable Segments(“ (“Topic No. 280”). The Company’sCompany's Chief Executive Officer, who is the chief operating decision maker and("CODM"), organized the Company into twothree operating and reportable segments: Infrastructure (INF)("INF"), which includes ourthe Company's engineering, civil program management, utility services, and construction quality assurance practices; and Building, Technology & Sciences (BTS) (formerly Building, Energy & Sciences (BES)("BTS"), which includes ourthe Company's environmental health sciences, clean energy consulting, buildings and environmental practices as well as buildings program management. The Company accounts for inter-segment revenues and transfers as if the sales and transfers were to third parties. All significant intercompany balances and transactions are eliminated in consolidation.NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)Three Months Ended Six Months Ended July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022 Gross revenues INF $ 96,728 $ 102,639 $ 184,938 $ 202,600 BTS 54,032 61,331 106,878 121,785 GEO 71,878 38,762 115,139 68,500 Total gross revenues $ 222,638 $ 202,732 $ 406,955 $ 392,885 Segment income before taxes INF $ 16,745 $ 19,206 $ 33,726 $ 35,457 BTS 8,113 12,622 16,531 25,435 GEO 14,814 11,034 21,835 16,138 Total Segment income before taxes 39,672 42,862 72,092 77,030 (22,882) (21,149) (47,898) (43,678) Total income before taxes $ 16,790 $ 21,713 $ 24,194 $ 33,352 Prior period segment financial information presentedDisaggregated revenues include the elimination of inter-segment revenues which has been recastallocated to reflecteach segment. The Company believes this best depicts how the reorganized reporting structure that occurred duringnature, amount, timing and uncertainty of its revenues and cash flows are affected by economic factors. Gross revenue, classified by the fourth quartermajor geographic areas in which the Company's customers were located, were as follows:Three Months Ended July 1, 2023 Six Months Ended July 1, 2023 INF BTS GEO Total INF BTS GEO Total United States $ 96,728 $ 46,560 $ 68,218 $ 211,506 $ 184,938 $ 90,946 $ 110,442 $ 386,326 Foreign — 7,472 3,660 11,132 — 15,932 4,697 20,629 Total gross revenues $ 96,728 $ 54,032 $ 71,878 $ 222,638 $ 184,938 $ 106,878 $ 115,139 $ 406,955 Three Months Ended July 2, 2022 Six Months Ended July 2, 2022 INF BTS GEO Total INF BTS GEO Total United States $ 102,639 $ 54,603 $ 38,245 $ 195,487 $ 202,600 $ 107,521 $ 67,462 $ 377,583 Foreign — 6,728 517 7,245 — 14,264 1,038 15,302 Total gross revenues $ 102,639 $ 61,331 $ 38,762 $ 202,732 $ 202,600 $ 121,785 $ 68,500 $ 392,885 Three Months Ended July 1, 2023 Six Months Ended July 1, 2023 INF BTS GEO Total INF BTS GEO Total Public and quasi-public sector $ 77,332 $ 15,998 $ 61,641 $ 154,971 $ 147,062 $ 33,945 $ 97,409 $ 278,416 Private sector 19,396 38,034 10,237 67,667 37,876 72,933 17,730 128,539 Total gross revenues $ 96,728 $ 54,032 $ 71,878 $ 222,638 $ 184,938 $ 106,878 $ 115,139 $ 406,955 Three Months Ended July 2, 2022 Six Months Ended July 2, 2022 INF BTS GEO Total INF BTS GEO Total Public and quasi-public sector $ 80,054 $ 15,635 $ 31,644 $ 127,333 $ 159,258 $ 30,896 $ 54,634 $ 244,788 Private sector 22,585 45,696 7,118 75,399 43,342 90,889 13,866 148,097 Total gross revenues $ 102,639 $ 61,331 $ 38,762 $ 202,732 $ 202,600 $ 121,785 $ 68,500 $ 392,885 Three Months Ended July 1, 2023 Six Months Ended July 1, 2023 INF BTS GEO Total INF BTS GEO Total Cost-reimbursable contracts $ 93,185 $ 38,670 $ 70,274 $ 202,129 $ 177,042 $ 79,294 $ 113,501 $ 369,837 Fixed-unit price contracts 3,543 15,362 1,604 20,509 7,896 27,584 1,638 37,118 Total gross revenues $ 96,728 $ 54,032 $ 71,878 $ 222,638 $ 184,938 $ 106,878 $ 115,139 $ 406,955 Three Months Ended July 2, 2022 Six Months Ended July 2, 2022 INF BTS GEO Total INF BTS GEO Total Cost-reimbursable contracts $ 98,604 $ 39,006 $ 38,638 $ 176,248 $ 194,326 $ 78,492 $ 68,283 $ 341,101 Fixed-unit price contracts 4,035 22,325 124 26,484 8,274 43,293 217 51,784 Total gross revenues $ 102,639 $ 61,331 $ 38,762 $ 202,732 $ 202,600 $ 121,785 $ 68,500 $ 392,885 (1) Includes amortization of intangibles of $3,028 and $1,189 for the three months ended September 30, 2017 and 2016, respectively, and $7,528 and $3,077 for the nine monthsForeign currency translation adjustments balance, December 31, 2022 ended September 30, 2017 and 2016, respectively.— Other comprehensive income (loss) (191) Foreign currency translation adjustments balance, July 1, 2023 $ (191) “our” “our,”“us,”or “NV5 Global”) should be read in conjunction with the financial statements included elsewhere in this Quarterly Report and the audited financial statements for the year ended December 31, 2016,2022, included in our Annual Report on Form 10-K (File No. 001-35849).10-K. This Quarterly Report contains, in addition to unaudited historical information, forward-looking statements, which involve risk and uncertainties. The words “believe,” “expect,” “estimate,” “may,” “will,” “could,” “plan,” or “continue”“continue,” and similar expressions are intended to identify forward-looking statements. Our actual results could differ materially from the results those anticipated in such forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, those discussed under the headings “Risk Factors” in our Annual Report on Form 10-K forthe year ended December 31, 20162022and this Quarterly Report on Form 10-Q, if any. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to (and we expressly disclaim any obligation to) revise or update any forward-looking statement, whether as a result of new information, subsequent events, or otherwise (except as may be required by law), in order to reflect any event or circumstance which may arise after the date of this Quarterly Report on Form 10-Q.Amounts presentedarein thousands, except per share data.professional and technical engineeringtechnology, conformity assessment, and consulting solutions to public and private sector clients. We focus on the infrastructure, energy,utility services, construction, real estate, and environmental markets. We primarily focus on the following business service verticals: construction quality assurance, infrastructure, energy, program management, and environmental solutions. Our primary clients include U.S. federal,Federal, state, municipal, and local government agencies, and military and defense clients. We also serve quasi-public and private sector clients from the education, healthcare, energy,utility services, and public utilities, including schools, universities, hospitals, health care providers, and insurance providers, large utility service providers, and largeproviders.small energy producers.Acquisition, Developments and ChallengesAcquisition.SeptemberApril 6, 2017, the Company acquired all of the outstanding equity interests in Marron and Associates, Inc. (“Marron”), a leading environmental services firm with offices in Albuquerque and Las Cruces, New Mexico. Marron provides environmental planning, natural and cultural resources, environmental site assessment, and GIS services. Marron primarily serves public and private clients throughout the Southwest, including the New Mexico Department of Transportation, Bureau of Land Management, Bureau of Indian Affairs, Federal Highway Administration, U.S. Department of Agriculture, U.S. Fish and Wildlife Service, and U.S. Forest Service. The purchase price of this acquisition is up to $990, paid with a combination of cash at closing, stock and future note payments.On June 6, 2017, the Company acquired all of the outstanding equity interests in Richard D. Kimball Co., Inc. ("RDK"), an established leader in the provision of energy efficiency and mechanical, electric and pluming (MEP) services based in Boston, Massachusetts. In addition to MEP and fire protection services, RDK offers commissioning services, technology design services, and energy and sustainability services, including Whole Building Energy Modeling and ASHRAE Level Energy Audits, Green Building Certification, Energy Code Consulting, Carbon Emissions Management, and Renewable Energy Management. RDK primarily serves commercial, healthcare, science and technology, education, government, and transportation clients. The aggregate purchase price paid by us is up to $22,500, paid with a combination of cash at closing, stock and future note payments.On May 4, 2017, the Company acquired all of the outstanding equity interests in Holdrege & Kull, Consulting Engineers and Geologists (“H&K”), a full-service geotechnical engineering firm based in Northern California. H&K provides services to public, municipal and special district, industrial, and private sector clients. The purchase price of this acquisition is up to $2,200, paid with a combination of cash, stock and future note payments.On May 1, 2017,2023, we acquired all of the outstanding equity interests in Lochrane Engineering, Inc. (“Lochrane”the Visual Information Solutions commercial geospatial technology and software business ("VIS") from L3Harris. VIS is a provider of subscription-based software solutions for the analysis and management of software applications and Analytics as a Service (AaaS) solutions. We acquired VIS for a cash purchase price of $75,682. The purchase price and other related costs associated with the transaction were financed through our amended and restated credit agreement (the "Second A&R Credit Agreement") with Bank of America, N.A. and other lenders party thereto. See Note 10, Orlando, Florida based civil engineering firm which specializesindependent third-party valuation specialist to assist in the provisiondetermination of services on major roadway projectsfair values. The final determination of the fair value of assets and its major clients includeliabilities will be completed within the Florida Departmentone-year measurement period as required by ASC 805. The acquisition will necessitate the use of Transportationthis measurement period to adequately analyze and Florida’s Turnpike Enterprise. The aggregate purchase price paid by us is up to $4,940, paid with a combinationassess the factors used in establishing the asset and liability fair values as of cash at closingthe relevant acquisition date, including intangible assets, accounts receivable, certain fixed assets, and future note payments.the fair value of other assets and liabilities acquired. April 14, 2017, the CompanyFebruary 22, 2023, we acquired all of the outstanding equity interests in Bock & Clark Corporation (“B&C”Continental Mapping Acquisition Corp. and Continental Mapping Holdings, LLC and its subsidiaries, including Axim Geospatial, LLC (collectively "Axim"), an Akron, Ohio based surveying, commercial zoning,a provider of comprehensive geospatial services and environmental services firm. We believe thatsolutions addressing critical mission requirements for customers across the acquisition of B&C will expand our cross-selling opportunities within our infrastructure engineering, surveying,defense and program management groupsintelligence and with our financialstate and transactional real estate clients.local government sectors. The aggregate purchase price consideration paid by the Company in connection withof the acquisition was $42,000, subject$141,010, including $120,106 in cash, a $7,404 promissory note, and $13,500 of our common stock. The purchase price and other related costs associated with the transaction were financed through our Second A&R Credit Agreement with Bank of America, N.A. and other lenders party thereto. See Note 10, Notes Payable and Other Obligations, of the Notes to customary closing working capital adjustments, funded entirely in cash.
Tax credit.
We are currently under examination byConsolidated Financial Statements included elsewhere herein for further detail on the CFTB about certain researchSecond A&R Credit Agreement. In order to determine the fair values of tangible and development tax credits generated for the years 2005intangible assets acquired and liabilities assumed, we engaged an independent third-party valuation specialist to 2014. Fiscal years 2005 through 2016 are considered open tax yearsassist in the Statedetermination of Californiafair values. The final determination of the fair value of assets and 2013 through 2016liabilities will be completed within the one-year measurement period as required by ASC 805. The acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the U.S. federal jurisdictionasset and other state jurisdictions. At September 30, 2017 and December 31, 2016, we had $770 of unrecognized tax benefits related to this matter.
Backlog.
accounts receivable. Critical Accounting Policies and Estimates 10-K. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2017 2016 2017 2016 Gross revenues Less sub-consultant services and other direct costs Net revenues (1) Direct salary and wages costs Gross profit Operating expenses Income from operations Interest expense Income tax expense Net income Three July 2, 2022 $2,641. Profit a percentage of gross revenues was primarily driven by the mix of business in our real estate transactional services and our LNG business. $1,590. Expense Income taxes rate. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2017 2016 2017 2016 Gross revenues INF BTS Segment income before taxes INF BTS Statements included elsewhere in this Quarterly Report on Form 10-Q. Months Ended July 2, 2022 Six Months Ended July 2, 2022 Segment gross revenues. the Senior Credit Facility in 2026. payments. $181,572. payments on our Senior Credit Facility of $22,000 during the six months ended July 1, 2023. relevant existing interest period ("LIBOR Transition"). Borrowings under the Second A&R Credit Agreement 2022. and/or Regulation D promulgated thereunder. XBRL Instance Document XBRL Taxonomy Extension Schema Document XBRL Taxonomy Extension Calculation Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document XBRL Taxonomy Extension Definition Linkbase DocumentAs of September 30, 2017, we had approximately $274,500 of gross revenue backlog expected to be recognized over the next 12 months compared to gross revenue backlog of approximately $220,800liability fair values as of December 31, 2016. the relevant acquisition date, including intangible assets, accounts receivable, certain fixed assets, and the fair value of other assets and liabilities acquired.includehave completed three other acquisitions during 2023. The aggregate purchase price of the three acquisitions was $3,315, including $2,900 in backlog only those contracts forcash, $90 of our common stock, and a potential earn-out of up to $340 payable in cash and common stock, which funding has been providedwas recorded at an estimated fair value of $325. A probability-weighted approach was used to determine the fair value of the earn-out, which is a generally accepted valuation technique that embodies all significant assumption types. The final determination of the fair value of assets and work authorizations have been received. We cannot guarantee that the revenue projected in our backlogliabilities will be realized or, if realized,completed within the one-year measurement period as required by ASC 805. The 2023 acquisitions will resultnecessitate the use of this measurement period to adequately analyze and assess the factors used in profits. In addition, project cancellations or scope adjustments may occur, from time to time, with respect to contracts reflected in our backlog. For example, certain of our contracts withestablishing the U.S. federal governmentasset and other clients are terminable at the discretionliability fair values as of the client, with or without cause. These types of backlog reductions could adversely affect our revenuerelevant acquisition date, including intangible assets and margins. Accordingly, our backlog as of any particular date is an uncertain indicator of our future earnings.. Chief Executive Officer is the chief operating decision maker and operations are organized the Company into twothree operating and reportable segments:(INF), which("INF") – includes our engineering, civil program management, utility services, and construction quality assurance practices; and (BTS) (formerly known as Building, Energy & Sciences (BES)("BTS"), which– includes our environmental health sciences, clean energy consulting, buildings and environmental practices as well as buildings program management. Components of Incomemanagement, and ExpenseRevenuesWe enter into contracts withMEP & technology design practices; andclients that contain two principal types of pricing provisions: cost-reimbursable and fixed-price. The majority ofgeospatial solution practices.contracts are cost-reimbursable contracts that fall under the relatively low-risk subcategory of time and materials contracts.Cost-reimbursable contracts. Cost-reimbursable contracts consistreportable segments, see Note 15, following:• Time and materials contracts are common for smaller scale professional and technical consulting and certification services projects. Under these types of contracts, there is no predetermined fee. Instead, we negotiate hourly billing rates and charge our clients based upon actual hours expended on a project. In addition, any direct project expenditures are passed through to the client and are typically reimbursed. These contracts may have a fixed-price element in the form of an initial not-to-exceed or guaranteed maximum price provision.Cost-plus contracts are the predominant contracting method used by U.S. federal, state, and local governments. These contracts provide for reimbursement of the actual costs and overhead (predetermined rates) we incur, plus a predetermined fee.• Fixed-unit contracts typically require the performance of an estimated number of units of work at an agreed price per unit, with the total payment under the contract determined by the actual number of units performed, over a fixed construction schedule. In most cases, we can bill additional fees if the schedule is modified and lengthened.For the nine months ended September 30, 2017 and 2016, cost-reimbursable contracts represented approximately 95% and 96%, respectively, of our total revenues.Fixed-price contracts. Fixed-price contracts also consist of the following:• Lump-sum contracts typically require the performance of all of the work under the contract for a specified lump-sum fee, subject to price adjustments if the scope of the project changes or unforeseen conditions arise. Many of our lump-sum contracts are negotiated and arise in the design of projects with a specified scope and project deliverables.For the nine months ended September 30, 2017 and 2016, lump-sum contracts represented approximately 5% and 4%, respectively, of our total revenues.Revenues from engineering services are recognized in accordance with the accrual basis of accounting. Revenues under cost-reimbursable contracts are recognized when services are performed or on the percentage-of-completion method. Revenues from fixed-price contracts are recognized on the percentage-of-completion method. Revenues recognized on the percentage-of-completion method are generally measured by the direct costs incurredNotes to date as compared to estimated costs incurred which represents approximately 24% and 14% of revenues recognized during the nine months ended September 30, 2017 and 2016, respectively.Direct Costs of Revenues (excluding depreciation and amortization)Direct costs of revenues consist primarily of that portion of technical and non-technical salaries and wages incurred in connection with fee generating projects. Direct costs of revenues also include production expenses, sub-consultant services, and other expenses that are incurred in connection with our fee generating projects. Direct costs of revenues exclude that portion of technical and non-technical salaries and wages related to marketing efforts, vacations, holidays, and other time not spent directly generating fees under existing contracts. Such costs areConsolidated Financial Statements included in operating expenses. Additionally, payroll taxes, bonuses, and employee benefit costs for all of our personnel, facilities costs, and depreciation and amortization are included in operating expenses since no allocation of these costs is made to direct costs of revenues. We expense direct costs of revenues when incurred.Operating ExpensesOperating expenses include the costs of the marketing and support staffs, other marketing expenses, management and administrative personnel costs, payroll taxes, bonuses and employee benefits for all of our employees and the portion of salaries and wages not allocated to direct costs of revenues for those employees who provide our services. Operating expenses also include facility costs, depreciation and amortization, professional services, legal and accounting fees, and administrative operating costs. We expense operating costs when incurred.Jumpstart Our Business Startups Act of 2012We are an emerging growth company within the meaning of the rules under the Securities Act, and we utilize certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies. For example, we did not have to provide an auditor’s attestation report on our internal controls in our Annual Report on Form 10-K for the year ended December 31, 2016 as otherwise required by Section 404(b) of the Sarbanes-Oxley Act. The JOBS Act also permits us, as an “emerging growth company,” to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have chosen to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards when they are required to be adopted by issuers. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.Thefinancial conditioncritical accounting estimates, see Management’s Discussion and resultsAnalysis of operationsFinancial Condition and Results of Operations that is based upon our financial statements, which have been prepared in accordance with GAAP. During the preparation of these financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of our analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and the impact of such differences may be material to our financial statements. The more significant estimates affecting amounts reportedincluded in the consolidated financial statements relate to the fair value estimates used in accounting for business combinations (including the valuation of identifiable intangible assets) and contingent consideration, fair value estimates in determining the fair value of the Company’s reporting units for goodwill impairment assessment, revenue recognition on the percentage-of-completion method, allowances for uncollectible accounts and provision for income taxes.During the nine months ended September 30, 2017, we did not experience any significant changes in estimates or judgments inherent in the preparation of our consolidated financial statements. A summary of our significant accounting policies is contained in Note 2 to our consolidated financial statements included in our Annual Report on2022 Form 10-K for the year ended December 31, 2016. $ 91,263 $ 60,091 $ 239,058 $ 160,888 (16,298 ) (12,161 ) (43,995 ) (30,455 ) 74,965 47,930 195,063 130,433 (28,219 ) (20,274 ) (75,235 ) (53,744 ) 46,746 27,656 119,828 76,689 37,787 22,181 101,482 63,303 8,959 5,475 18,346 13,386 (524 ) (81 ) (1,042 ) (221 ) (2,523 ) (1,990 ) (4,803 ) (4,847 ) $ 5,912 $ 3,404 $ 12,501 $ 8,318 (1)Net Revenues is not a measure of financial performance under GAAP. Gross revenues include sub-consultant costs and other direct costs which are generally pass-through costs. The Company believes that Net Revenues, which is a non-U.S. GAAP financial measure commonly used in our industry, enhances investors’ ability to analyze our business trends and performance because it substantially measures the work performed by our employees.Three Months Ended Six Months Ended July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022 Gross revenues $ 222,638 $ 202,732 $ 406,955 $ 392,885 Direct costs 112,338 103,492 200,657 199,819 Gross profit 110,300 99,240 206,298 193,066 Operating expenses 89,862 76,640 176,875 157,913 Income from operations 20,438 22,600 29,423 35,153 Interest expense (3,648) (887) (5,229) (1,801) Income tax expense (1,377) (4,445) (2,834) (7,442) Net income $ 15,413 $ 17,268 $ 21,360 $ 25,910 and Nine MonthsMonths Ended September30, 2017 comparedJuly 1, 2023 Compared to the Three and NineMonthsMonths Ended September30, 2016and Net Revenues.approximately $31,172 and $78,170by $19,906, or approximately 51.9% and 48.6%9.8%, for the three and nine months ended September 30, 2017July 1, 2023 compared to the three and nine months ended September 30, 2016. Our consolidated net revenues increased approximately $27,035 and $64,630 or approximately 56.4% and 49.6% for the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016.July 2, 2022. The increases in gross and net revenues are due primarily to organic growth from our existing platform as well as the contribution from various acquisitions completed during the nine months ended September 30, 2017. The increasesincrease in gross revenues for the three and nine months ended September 30, 2017, includeswas primarily due to incremental gross revenues from acquisitions of $21,316$31,633 completed since the second quarter of 2022 and $35,524, respectively, related to acquisitions closed during 2017. The increase in net revenues for the three and nine months ended September 30, 2017, includes net revenues of $17,164 and $27,223, respectively, related to acquisitions closed during 2017. Also contributing to theorganic increases in net revenues for the nine months ended September 30, 2017 is an increased utilizationour geospatial solutions business of our billable employees and reduction of sub-consultants used to perform services in 2017. The growth in revenues was primarily attributable to$1,835. These increases in energy distribution services; construction materials testing and engineering services; and program and construction management services. However, the increases in gross and net revenues during the three and nine months ended September 30, 2017 were partially offset by reductionsdecreases in revenues relatedour real estate transactional services of $8,271 driven by market reactions to increases in interest rates, decreases in our LNG business of $3,048 driven by project delays due to record rainfallcycles, and hurricanes affectingdecreases in our California, Florida and Texas projects. We are currently unawareconstruction quality assurance practices of any long-term delays in current projects and therefore are not anticipating such to influence future revenues. Such revenues could be affected by changes in economic conditions and the impact thereof on our public and quasi-public sector funded projects.Profit.51.2%49.5% and 50.1%49.0% for the three and nine months ended September 30, 2017, respectively, compared to 46.0%July 1, 2023 and 47.7% for the three and nine months ended September 30, 2016,July 2, 2022, respectively. GrossThe increase in gross profit includes direct costs of contracts such as direct labor and all costs incurred in connection with and directly for the benefit of client contracts. The level of direct costs of contracts may fluctuate between reporting periodsmargin was primarily due to a varietychange in the mix of factors, including the amountwork performed. As a percentage of sub-consultant costs we incur during a period. On those projects where we are responsible for subcontract labor or third-party materials and equipment, we reflect the amounts of such items in both gross revenues, sub-consultant services and costs. To the extent that we incur a significant amount of pass-through costs in a period, ourother direct costs decreased 2.1% and 0.5%, respectively. These decreases were partially offset by an increase in direct salaries and wages as a percentage of contracts are likely to increasegross revenues of 2.1%. The decrease in sub-consultant expenses and other direct costs as well..approximately $15,606 and $38,179,$13,222, or 70.4% and 60.3%17.3%, for the three and nine months ended September 30, 2017, respectively,July 1, 2023 compared to the three and nine months ended September 30, 2016.July 2, 2022. The increase in operating expenses for the threeprimarily resulted from increased payroll costs of $11,666 and nine months ended September 30, 2017 include operatingamortization expenses of $17,410$3,244. The increase in payroll costs was primarily driven by an increase in employees as compared to the prior year period primarily driven by our 2022 and $28,677, respectively,2023 acquisitions. The increase in amortization expense was driven by acquisitions. These increases were partially offset by a decrease in general and administrative expenses of $2,943. The decrease in general and administrative expenses was primarily due to earn-out fair value adjustments of $6,655 that decreased the contingent consideration liability related to acquisitions, closed during 2017. During the threepartially offset by increases in information technology costs of $1,184 and nine months ended September 30, 2017, acquisition related expenses were approximately $315 and $892, respectively, compared to approximately $8 and $439 during the three and nine months ended September 30, 2016. Also contributing to the increase in operating costs is the increased amortizationprofessional fees of intangible assets. During the three and nine months ended September 30, 2017, amortization of intangible assets was approximately $3,022 and $7,522, respectively, compared to $1,189 and $3,077 during the three and nine months ended September 30, 2016, respectively. Operating expenses typically fluctuate as a result of changes in headcount (both corporate and field locations) and the amount of spending required to support our professional services activities, which normally require additional overhead costs. expense.$443 and $821$2,761 for the three and nine months ended September 30, 2017, respectively, compartedJuly 1, 2023 compared to the three and nine months ended September 30, 2016.July 2, 2022. The increase in interest expense is due primarily to theresulted from a higher weighted average interest rate and an increase in outstanding borrowings during these periods.our Senior Credit Facility indebtedness.taxes. consolidated effective income tax rate was 29.9%8.2% and 27.8%20.5% for the three and nine months ended September 30, 2017, respectively, compared to a consolidated effective income tax rate of 36.9%July 1, 2023 and 36.8% for the three and nine months ended September 30, 2016,July 2, 2022, respectively. The difference betweendecrease in the effective income tax rate was primarily the result of excess tax benefits from stock-based payments of $2,750 during the three months ended July 1, 2023 as compared to $1,103 during the three months ended July 2, 2022. The decrease in our tax expense resulting on stock-based payments during the three months ended July 1, 2023 was a result of the increase in our stock price as it relates to the value of stock vested during the period.combined statutory federalSix Months Ended July 2, 2022stateorganic increases in our geospatial solutions business of $6,353. These increases were partially offset by decreases in our real estate transactional services of $17,902 driven by market reactions to increases in interest rates, decreases in our LNG business of $9,288 driven by project cycles, and decreases in our construction quality assurance practices of $4,813.is principally due towas 11.7% and 22.3% for the federal domestic production activities deduction and research and development credits. Furthermore, during the three and ninesix months ended September 30, 2017, we recorded a reduction in income tax expense of $114July 1, 2023 and $974 relating to the income tax benefit received in conjunction with the vesting of restricted stock during the period. Also contributing to theJuly 2, 2022, respectively. The decrease in the effective income tax rate forwas primarily the three and nineresult of excess tax benefits from stock-based payments of $2,987 during the six months ended September 30, 2017, isJuly 1, 2023 as compared to $1,193 during the six months ended July 2, 2022. The decrease in our tax expense on stock-based payments during the six months ended July 1, 2023 was a result of the increase in our stock price as it relates to the value of stock vested during the period.rate applicable to the Asia operations purchased in the JBA acquisition at the end of 2016.(dollars(dollars in thousands): $ 49,024 $ 42,713 $ 134,446 $ 118,902 $ 43,262 $ 18,846 $ 107,997 $ 45,637 $ 9,559 $ 7,065 $ 23,749 $ 19,676 $ 6,974 $ 2,704 $ 15,065 $ 5,607 Three Months Ended Six Months Ended July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022 Gross revenues INF $ 96,728 $ 102,639 $ 184,938 $ 202,600 BTS 54,032 61,331 106,878 121,785 GEO 71,878 38,762 115,139 68,500 Total gross revenues $ 222,638 $ 202,732 $ 406,955 $ 392,885 Segment income before taxes INF $ 16,745 $ 19,206 $ 33,726 $ 35,457 BTS $ 8,113 $ 12,622 $ 16,531 $ 25,435 GEO $ 14,814 $ 11,034 $ 21,835 $ 16,138 14 - "Reportable Segments"15, Reportable Segments, of the "NotesNotes to the Consolidated Financial Statements”.and Nine Months ended September30, 2017 comparedMonths EndedJuly 1, 2023 Compared to the Three and NineMonths ended September 30, 2016reportable segment increased approximately $6,311 and $15,544,decreased $5,911, or 14.7% and 13.1%5.8%, respectively, during the three nine months ended September 30, 2017July 1, 2023 compared to the three and nine months ended September 30, 2016.July 2, 2022. The increasesdecrease was primarily due to decreases in our LNG business of $3,048 driven by project cycles and decreases in our construction quality assurance practices of $2,641.and nine months ended September 30, 2017 includes approximately $4,507 and $7,583 related to acquisitions closed during both the three and nine months ended September 30, 2017. The increase in revenues for the three and nine months ended September 30, 2017 reflects increases in energy distribution services, construction materials testing and transportation services, partially offset by reductions in gross revenues related to project delays due to record rainfall and hurricanes affecting our California, Florida and Texas projects.Segment Income before Taxes from INF increased $2,494 and $4,073, or 35.3% and 20.7%, respectively, during the three and nine months ended September 30, 2017July 1, 2023 compared to the three and nine months ended September 30, 2016.July 2, 2022. The decrease was primarily due to decreased gross revenues.werein interest rates.revenues from organic growth, contributions from acquisitions completed in 2017 as well as a reduction of sub-consultants usedgross revenues.perform services.the BTS reportable segment increased approximately $24,416 and $62,360,INF decreased $17,662, or 129.6% and 136.6%8.7%, during the three and ninesix months ended September 30, 2017July 1, 2023 compared to the three and nine months ended September 30, 2016.July 2, 2022. The increasesdecrease was primarily due to decreases in our LNG business of $9,288 driven by project cycles, decreases in our construction quality assurance practices of $4,813, and decreases in our infrastructure services of $2,312.three and ninesix months ended September 30, 2017 includes approximately $16,808 and $27,941 relatedJuly 1, 2023 compared to acquisitions closed during both the three and ninesix months ended September 30, 2017.July 2, 2022. The growth indecrease was primarily due to decreased gross revenues.attributabledue to decreases in our real estate transactional services of $17,902 driven by market reactions to increases in facilities program managementinterest rates. These decreases were partially offset by increases in our energy and environmental services.technology services of $2,743 and increases in our international engineering and consulting services of $2,041.Incomeincome before Taxes taxes from BTS increased $4,270 and $9,458,decreased $8,904, or 157.9% and 168.7%, respectively,35.0% during the three and ninesix months ended September 30, 2017July 1, 2023 compared to the three and ninesix months ended September 30, 2016.July 2, 2022. The decrease was primarily due to decreased gross revenues.werein our geospatial solution services of $6,353.revenues from organic growth, contributions from acquisitions completed in 2017 as well as a reduction of sub-consultants used to perform services.Ourflowflows from operations, lines of credit,borrowing capacity under our Senior Credit Facility, and access to financial markets. Our principal uses of cash are operating expenses, working capital requirements, capital expenditures, repayment of debt, and acquisition expenditures. We believe our sources of liquidity, including cash flowflows from operations, existing cash and cash equivalents and borrowing capacity under our Senior Credit Facility will be sufficient to meet our projected cash requirements for at least the next twelve months. We will monitor our capital requirements thereafter to ensure our needs are in line with available capital resources.Weresources and believe our experienced employeesthat there are no significant cash requirements currently known to us and management team are our most valuable resources. Attracting, training, and retaining key personnel have been and will remain critical to our success. To achieve our human capital goals, we intend to remain focused on providing our personnel with entrepreneurial opportunities to increase client contact within their areas of expertise and to expandaffecting our business withinthat cannot be met from our service offerings.Cash FlowsAsreasonably expected future operating cash flows, including upon the maturity of September 30, 2017, our cash and cash equivalents totaled $15,582 and accounts receivable, net of allowance for doubtful accounts, totaled $113,004, compared to $35,666 and $75,511, respectively, on December 31, 2016. As of September 30, 2017, our accounts payable and accrued liabilities were $17,133 and $18,173, respectively, compared to $13,509 and $17,316, respectively, on December 31, 2016. In addition, as of September 30, 2017, we had notes payable and other obligations and contingent consideration of $77,976 and $2,778, respectively, compared to $32,396 and $2,439, respectively, on December 31, 2016.For the nine months ended September 30, 2017, netamountedwas $25,502 for the six months ended July 1, 2023, compared to $5,671, primarily attributable to$54,258 during the six months ended July 2, 2022. The decrease was a result of decreases in net income and increases in working capital. The changes in our working capital that contributed to decreased cash flows from operations were primarily a result of $12,501, which included non-cash charges of $12,285 from stock based compensation and depreciation and amortization, and decreases of $5,078 in accounts payable of $3,815 and accrued liabilitiesincreases in billed receivables of $4,270, unbilled receivables of $6,041, and prepaid expenses and other assets of $4,180. The increases in billed and unbilled receivables was primarily due to timing of project billing cycles, and the increase in prepaid expenses and other assets resulted from a $5,371 increase in prepaid income taxes, partially offset by an increase of $17,031a $2,189 decrease in accounts receivable. During 2017, we made income tax payments of approximately $4,962. For the nine months ended September 30, 2016, net cash provided by operating activities amounted to $10,686, primarily attributable to net income of $8,318, which included non-cash charges of $5,989 from stock based compensation and depreciation and amortization, and increases of $3,368prepaid insurance. The decrease in accounts payable and accrued liabilities offset by an increaseprimarily related to timing of $7,795 in accounts receivable. During 2016, we made income tax payments of approximately $4,642. Forninesix months ended September 30, 2017,July 1, 2023 and July 2, 2022, net cash used in investing activities amounted to $61,832, primarily resulting from cash used for our acquisitions (net of cash acquired) during 2017 of $60,241totaled $196,186 and the purchase of property and equipment of $1,591 for our ongoing operations.For the nine months ended September 30, 2016, net$15,001, respectively. The increase in cash used in investing activities amounted to $24,954,was primarily resulting froma result of increased cash usedpaid for our acquisitions (net of cash acquired) during 2016 of $24,388 and the purchase of property and equipment of $566 for our ongoing operations.Forninesix months ended September 30, 2017,July 1, 2023 compared to net cash flows used in financing activities of $42,815 during the six months ended July 2, 2022. The increase in cash provided by financing activities amounted to $36,077,was primarily due to proceeds from borrowing under thea result of borrowings on our Senior Credit Facility of $42,000 offset by principal repayments of $5,360 towards long-term debt and $563 towards contingent consideration.For$180,000 during the ninesix months ended September 30, 2016, net cash provided by financing activities amounted to $43,858, primarily due to the net proceeds from the secondary offering of $47,147July 1, 2023 and the unit warrant exercise of $1,008 offset bya decrease in principal repayments of $4,156 towards long-term debt and $296 towards contingent consideration.Financingwe entered into a Credit Agreement (the “Credit Agreement”)and as amended to the Closing Date, with Bank of America, N.A. (“("Bank of America”America"), as administrative agent, swingline lender and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”).letter of credit issuer, the other lenders party thereto, and certain of our subsidiaries as guarantors. Pursuant to the Second A&R Credit Agreement, Bankthe previously drawn term commitments of America agreed to be$150,000 and revolving commitments totaling $215,000 in the sole administrative agent for a five-year $80,000 Senior Secured Revolving Credit Facility (“Senior Credit Facility”aggregate were converted into revolving commitments totaling $400,000 in the aggregate. These revolving commitments are available through August 13, 2026 (the "Maturity Date") to us and together with PNC Bank, National Association and Regions Bank as the other lendersan aggregate amount of approximately $138,750 was drawn under the SeniorSecond A&R Credit Facility, has committedAmendment on the Closing Date to lendrepay previously existing borrowings under the term and revolving facilities prior to ussuch amendment and restatement. Borrowings under the Second A&R Credit Agreement are secured by a first priority lien on substantially all of the Seniorour assets. The Second A&R Credit Facility, subject to certain terms and conditions. MLPFS has undertaken to act as sole lead arranger and sole book manager for the Senior Credit Facility. In addition, the Senior Credit FacilityAgreement also includes an accordion feature permitting us to request an increase in the Seniorrevolving facility under the Second A&R Credit FacilityAgreement by an additional amount of up to $60,000. The Senior$200,000 in the aggregate. As of July 1, 2023 and December 31, 2022, the outstanding balance on the Second A&R Credit Facility includes a $5,000 sublimitAgreement was $200,750 and $33,750, respectively.issuancereplacement of standby letters of credit and a $15,000 sublimit for swingline loans. The proceedsLIBOR (London Interbank Offered Rate), which prior to April 1, 2023, was transitioned to SOFR (Secured Overnight Funding Rate), subject to the completion of the Senior Credit Facility are intended to be used (i) to finance permitted acquisitions, (ii) for capital expenditures, and (iii) for general corporate purposes.arebear interest at variable rates which are, at our option, tied to a Eurocurrency rate equal to LIBOR (London Interbank Offered Rate)or, from and after the LIBOR Transition, either Term SOFR or Daily Simple SOFR, plus in each case an applicable ratemargin, or a base rate denominated in U.S. dollars. Interest rates areremain subject to change based on our Consolidated Senior Leverage Ratio (as defined in theconsolidated leverage ratio. As of July 1, 2023 our interest rate was 6.5%.Agreement).The Senior Credit FacilityAgreement contains certain financial covenants includingthat require us to maintain a maximumconsolidated net leverage ratio (the ratio of 3.0:1 and minimumour pro forma consolidated net funded indebtedness to our pro forma consolidated EBITDA for the most recently completed measurement period) of no greater than 4.00 to 1.00.1.20:1. Furthermore,no less than 1.10 to 1.00 as of the Seniorend of any measurement period. As of July 1, 2023, we were in compliance with the financial covenants.FacilityAgreement contains covenants that may have the effect of limiting our ability to, among other things, merge with or acquire other entities, enter into a transaction resulting in a Change in Control, create certain new liens, incur certain additional indebtedness, engage in certain transactions with affiliates, or engage in new lines of business, or sell a substantial part of their assets. The Second A&R Credit Agreement also contains financial reporting covenant provisions and other covenants, representations, warranties, indemnities, andcustomary events of default, that are customary for facilities of this type. As of September 30, 2017 and December 31, 2016, we areincluding (but not limited to) a default in compliance with these financial and reporting covenants. As of September 30, 2017 and December 31, 2016, the outstanding balance on the Senior Credit Facility was $42,000 and $0, respectively.Note PayableThe note held by the seller of Nolte Associates Inc. (the “Nolte Note”) matured on July 29, 2017. The Nolte Note interest rate was prime rate plus 1%, subject to a maximum rate of 7.0%. As of September 30, 2017 and December 31, 2016, the actual interest rate was 4.25%. Under the terms of the Nolte Note, as amended, we paid quarterly principal installments of approximately $100 plus interest. The Nolte Note was unsecured and we were permitted to make periodic principal and interest payments. As of September 30, 2017 and December 31, 2016, the outstanding balance on the Nolte Note was $0 and $278, respectively.Other ObligationsOn September 6, 2017, we acquired all of the outstanding equity interest in Marron. The purchase price allowed for the payment of $133 in sharesprincipal or, following an applicable grace period, interest, breaches of our common stockcovenants or a combinationwarranties under the Second A&R Credit Agreement, payment default or acceleration of cashcertain indebtedness, certain events of bankruptcy, insolvency or liquidation, certain judgments or uninsured losses, changes in control, and shares of our common stock, at our discretion, payable in two equal installments, due on the first and second anniversaries of September 6, 2017. certain liabilities related to ERISA based plans.outstanding balance of this obligation was $133 and $0 as of September 30, 2017 and December 31, 2016, respectively.On June 6, 2017, we acquired all of the outstanding equity interest in RDK. The purchase price allowed forSecond A&R Credit Agreement limits the payment of $1,333 in shares of our common stock orcash dividends (together with certain other payments that would constitute a combination of cash and shares of our common stock, at our discretion, payable in two equal installments, due on"Restricted Payment" within the first and second anniversaries of June 6, 2017. The outstanding balance of this obligation was $1,333 and $0 as of September 30, 2017 and December 31, 2016, respectively.On November 30, 2016, we acquired allmeaning of the outstandingSecond A&R Credit Agreement and generally including dividends, stock repurchases, and certain other payments in respect to warrants, options, and other rights to acquire equity interests of Hanna. The purchase price allowed forsecurities), unless the payment of $1,200Consolidated Leverage Ratio would be less than 3.25 to 1.00 and available liquidity (defined as unrestricted, domestically held cash plus revolver availability) would be at least $30,000, in shares of our common stock or a combination of casheach case after giving effect to such payment.shares of our common stock, at our discretion, payablecapitalized in two installments of $600, due onconnection with the first and second anniversaries of November 30, 2016. The outstanding balance of this obligation was $1,200 as of September 30, 2017 and December 31, 2016.On October 26, 2016, we acquired allissuance of the outstanding equity interestsSecond A&R Credit Agreement were $3,702. Total amortization of JBA. The purchase price allowed fordebt issuance costs was $171 and $365 during the payment of $2,600 in shares of our common stock or a combination of cashthree and shares of our common stock, at our discretion, payable in two installments of $1,300, due on the first and second anniversaries of October 26, 2016. The outstanding balance of this obligation was $2,600 as of September 30, 2017 and December 31, 2016.On May 20, 2016, the Company acquired all of the outstanding equity interests of Dade Moeller. The purchase price allowed for the payment of $3,000 in shares of our common stock or a combination of cash and shares of our common stock, at our discretion, payable in three installments of $1,000, due on the first, second and third anniversaries of May 20, 2016. The outstanding balance of this obligation was $2,000 and $3,000 as of September 30, 2017 and December 31, 2016, respectively.Uncollateralized Promissory NotesOn September 6, 2017, we acquired all of the outstanding interests in Marron and Associates, Inc. (“Marron”), a leading environmental services firm in Albuquerque and Las Cruces, New Mexico. The purchase price included an uncollateralized $300 promissory note bearing interest at 3.0% (the “Marron Note”) payable in three installments of $100, due on the first, second and third anniversaries of September 6, 2017. The outstanding balance of the Marron Note was $300 and $0 as of September 30, 2017 and December 31, 2016, respectively.On June 6, 2017, we acquired all of the outstanding equity interest in RDK. The purchase price included an uncollateralized $5,500 promissory note bearing interest at 3.0% (the “RDK Note”) payable in four installments of $1,375, due on the first, second, third and fourth anniversaries of June 6, 2017. The outstanding balance of the RDK Note was $5,500 and $0 as of September 30, 2017 and December 31, 2016, respectively.On May 4, 2017, we acquired all of the outstanding equity interest in H&K. The purchase price included an uncollateralized $600 promissory note bearing interest at 3.0% (the “H&K Note”) payable in four installments of $150, due on the first, second, third and fourth anniversaries of May 4, 2017, the effective date of the acquisition. The outstanding balance of the H&K Note was $600 and $0 as of September 30, 2017 and December 31, 2016, respectively.On May 1, 2017, we acquired all of the outstanding equity interest in Lochrane. The purchase price included an uncollateralized $1,650 promissory note bearing interest at 3.0% (the “Lochrane Note”) payable in four installments of $413, due on the first, second, third and fourth anniversaries of May 1, 2017, the effective date of the acquisition. The outstanding balance of the Lochrane Note was $1,650 and $0 as of September 30, 2017 and December 31, 2016, respectively.On December 6, 2016, we acquired all of the outstanding interests of CivilSource. The purchase price included an uncollateralized $3,500 promissory note bearing interest at 3.0% (the “CivilSource Note”) payable in four installments of $875, due on the first, second, third and fourth anniversaries of December 6, 2016, the effective date of the acquisition. The outstanding balance of the CivilSource Note was $3,500 as of September 30, 2017 and December 31, 2016, respectively.On November 30, 2016, we acquired all of the outstanding interests of Hanna. The purchase price included an uncollateralized $2,700 promissory note bearing interest at 3.0% (the “Hanna Note”) payable in four installments of $675, due on the first, second, third and fourth anniversaries of November 30, 2016, the effective date of the acquisition. The outstanding balance of the Hanna Note was $2,700 as of September 30, 2017 and December 31, 2016, respectively.On October 26, 2016, we acquired all of the outstanding interests of JBA. The purchase price included an uncollateralized $7,000 promissory note bearing interest at 3.0% (the “JBA Note”) payable in five installments of $1,400, due on the first, second, third, fourth and fifth anniversaries of October 26, 2016, the effective date of the acquisition. The outstanding balance of the JBA Note was $7,000 as of September 30, 2017 and December 31, 2016, respectively.On September 12, 2016, we acquired certain assets of Weir. The purchase price included an uncollateralized $500 promissory note bearing interest at 3.0% (the “Weir Note”) payable in four installments of $125, due on the first, second, third and fourth anniversaries of September 12, 2016, the effective date of the acquisition. The outstanding balance of the Weir Note was $375 and $500 as of September 30, 2017 and December 31, 2016, respectively.On May 20, 2016, we acquired all of the outstanding equity interests of Dade Moeller. The purchase price included an aggregate of $6,000 of uncollateralized promissory notes bearing interest at 3.0% (the “Dade Moeller Notes”) payable in four equal payments of $1,500 each due on the first, second, third, and fourth anniversaries of May 20, 2016, the effective date of the acquisition. The outstanding balance of the Dade Moeller Notes was approximately $4,500 and $6,000 as of September 30, 2017 and December 31, 2016, respectively.Onsix months ended July 1, 2015, we acquired all2023, respectively, and $185 and $370 during the three and six months ended July 2, 2022, respectively.outstanding equity interestsremainder of RBA. The purchase price included an uncollateralized $4,000 promissory notes bearing interest at 3.0% (the “RBA Note”) payable in four equal payments of $1,000 each due on the first, second, third,fiscal 2023, 2024, 2025, and fourth anniversaries2026, respectively. As of July 1, 2015, the effective date of the acquisition. The2023, our weighted average interest rate on other outstanding balance of the RBA Noteobligations was $2,000 and $3,000 as of September 30, 2017 and December 31, 2016, respectively.On June 24, 2015, we acquired certain assets of Allwyn. The purchase price included an uncollateralized $500 promissory note bearing interest at 3.5% (the “Allwyn Note”) that is payable in three equal payments of $167 each due on the first, second and third anniversaries of June 24, 2015, the effective date of the acquisition. The outstanding balance of the Allwyn Note was $166 and $333 as of September 30, 2017 and December 31, 2016, respectively.On April 22, 2015, we acquired all of the outstanding equity interests of Mendoza. The purchase price included an uncollateralized $3,000 short-term promissory note, based on the collection of acquired accounts receivable and work in process, payable within one year, and an uncollateralized $500 promissory note bearing interest at 3% (the “Mendoza Note”) that is payable in two equal payments of $250 each due on the first and second anniversaries of April 22, 2015, the effective date of the acquisition. The outstanding balance of the Mendoza Note was $0 and $250 as of September 30, 2017 and December 31, 2016, respectively.On January 30, 2015, we acquired all of the outstanding equity interests of JLA. The purchase price included an uncollateralized $1,250 promissory note bearing interest at 3.5% (the “JLA Note”) that is payable in four equal payments of $313 each due on the first, second, third, and fourth anniversaries of January 30, 2015, the effective date of the acquisition. The outstanding balance of the JLA Note was $625 and $938 of September 30, 2017 and December 31, 2016, respectively.On November 3, 2014, we acquired certain assets of the Buric Companies. The purchase price included an uncollateralized, 3% interest bearing promissory note in the aggregate principal amount of $300 (the “Buric Note”)3.1%. The note is payable in three equal payments of $100 due on the first, second and third anniversaries of November 3, 2014, the effective date of the acquisition. The carrying value of the Buric Note was $100 as of September 30, 2017 and December 31, 2016. On March 21, 2014, we acquired all of the outstanding equity interests of NV5, LLC. The purchase price included an uncollateralized $3,000 promissory note bearing interest at 3.0% (the “AK Note”) that is payable in three equal payments of $1,000 each due on the first, second and third anniversaries of March 21, 2014, the effective date of the acquisition. The outstanding balance of the AK Note was $0 and $1,000 as of September 30, 2017 and December 31, 2016, respectively.Off-Balance Sheet ArrangementsWe did not have any off-balance sheet arrangements as of September 30, 2017.Effects of InflationBased on our analysis of the periods presented, we believe that inflation has not had a material effect on our operating results. There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition.For information on recently issued accounting pronouncements, see Note 1 of the notes to the unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.CurrentQuarterly Report on Form 10-Q reflect the Company’s current views with respect to future events and financial performance.management’smanagement’s good faith beliefs, expectations and assumptions as of that time with respect to future events. Because forward-looking statements relate to the future, they are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include:●our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;●changes in demand from the local and state government and private clients that we serve;●general economic conditions, nationally and globally, and their effect on the demand and market for our services;●fluctuations in our results of operations;●the government’s funding and budgetary approval process;●the possibility that our contracts may be terminated by our clients;●our ability to win new contracts and renew existing contracts;●our dependence on a limited number of clients;●our ability to complete projects timely, in accordance with our customers’ expectations, or profitability;●our ability to successfully execute our mergers and acquisitions strategy, including the integration of new companies into our business;●our ability to successfully manage our growth strategy;●our ability to raise capital in the future;●competitive pressures and trends in our industry and our ability to successfully compete with our competitors;●our ability to avoid losses under fixed-price contracts;
include, but are not limited to:●the credit and collection risks associated with our clients;●our ability to comply with procurement laws and regulations;●changes in laws, regulations, or policies;●the enactment of legislation that could limit the ability of local, state and federal agencies to contract for our privatized services;●our ability to complete our backlog of uncompleted projects as currently projected;●the risk of employee misconduct or our failure to comply with laws and regulations;●our ability to control, and operational issues pertaining to, business activities that we conduct with business partners and other third parties;●our need to comply with a number of restrictive covenants and similar provisions in our Senior Credit Facility that generally limit our ability to (among other things) incur additional indebtedness, create liens, make acquisitions, pay dividends and undergo certain changes in control, which could affect our ability to finance future operations, acquisitions or capital needs;●significant influence by our principal stockholder and the existence of certain anti-takeover measures in our governing documents; and●other factors identified throughout this Current Report on Form 10-Q, including those discussed under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business.”“ItemItem 1A. Risk Factors”Factors in our Annual Report on Form 10-K for the year ended December 31, 2016.2022. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-Q, 8-K and 10-K reports filed with the SEC. Our Annual Report on Form 10-K filing for the fiscal year ended December 31, 20162022 listed various important factors that could cause actual results to differ materially from expected and historic results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995, as amended. Readers can find them in “Item 1A. Risk Factors” of that filing and under the same heading of this filing. You may obtain a copy of our Annual Report on Form 10-K through our website, www.nv5.com. Information contained on our website is not incorporated into this report. In addition to visiting our website, you may read and copy any document we file with the SEC at the SEC’s Public Reference Room at 100 F. Street, NE, Washington, D.C. 20549 or at www.sec.gov. Please call the SEC at 1-800-SEC-0330 for information on the Public Reference Room.acquisitionacquisitions since these contain fixed interestrates. Our only debt subject to interest rate risk is the Senior Credit Facility which rates are variable, at our option, tied to a Eurocurrency rate equal to LIBOR (London Interbank Offered Rate) or, from and after the LIBOR Transition, either Term SOFR or Daily Simple SOFR, plus in each case an applicable rate or a base rate denominated in U.S. dollars. Interest rates are subject to change based on our Consolidated Senior Leverage Ratio (as defined in the Credit Agreement). As of September 30, 2017, theJuly 1, 2023, there was $200,750 outstanding balance on the Senior Credit Facility was $42,000.Facility. A one percentage point change in the assumed interest rate of the Senior Credit Facility would change our annual interest expense by approximately $420 in 2017.$2,008 annually.wethe Company carried out an evaluation, under the supervision and with the participation of ourits management, including ourthe Company's Chief Executive Officer and its Chief Financial Officer, of the effectiveness of the design and operation of ourthe Company's disclosure controls and procedures (as such term is defined in Rulesrules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, ourthe Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’sCompany's disclosure controls and procedures were effective suchto provide reasonable assurance that the information relating to the Company required to be disclosed by the Company in our SECthe reports that it files or submits under the Exchange Act is (i) is recorded, processed, summarized and reported within the time periods specified inby the SEC’sSecurities and Exchange Commission's rules and forms, and (ii) is accumulated and communicated to the Company’sCompany's management, including ourthe Chief Executive Officer and Chief Financial Officer, as appropriate, to allowin a manner that allows timely decisions regarding required disclosure.Undersupervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of any changes in ourCompany’s internal control over financial reporting (as such term isas defined in Exchange Act Rules 13a-15(f) 13a-15(e) and 15d-15(f) under the Exchange Act)15d-15(e) that occurred during our most recently completed fiscal quarter. Based onthe quarter ended July 1, 2023 that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that there have not been any changes in our internal control over financial reporting during our most recently completed fiscal quarter that has materially affected, or isare reasonably likely to materially affect, ourthe Company’s internal control over financial reporting. 1A. 1A.RISK FACTORS.During the nine months ended September 30, 2017, there2016 filed with the SEC.Duringthree months ended September 30, 2017, weCompany issued 30,100 restricted stock awards (the “RS Grants”) under the following securities that were not registeredCompany’s 2023 Equity Incentive Plan (the “Incentive Plan”) to certain executive officers of the Company. The RS Grants will vest in 2026, subject to earlier vesting and forfeiture on terms and conditions set forth in the applicable award agreement. The issuance of the RS Grants under the Incentive Plan was exempt from registration under the Securities Act:In September 2017, we issued 1,510 sharesAct of our common stock1933, as partial consideration for our acquisition of Marron. These shares were issued in reliance uponamended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering. For a description of these acquisitions, see Note 4, Business Acquisitions, to the consolidated interim financial statements appearing under Part I of this Quarterly Report on Form 10-Q.NumberDescriptionNumber Description 31.1*31.2*32.1**101.INS 101.INS101.SCH 101.SCH101.CAL 101.CAL101.LAB 101.LAB101.PRE 101.PRE101.DEF 101.DEF*Filed herewith.**Furnished herewith. This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filings of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.NV5 GLOBAL, INC.By: /s/ Michael P. Rama/s/ Edward Codispoti Date: November 8, 2017August 10, 2023Michael P. RamaVice President and Edward Codispoti
Chief Financial Officer
(Principal Financial and Accounting Officer)39