FORM 10-Q
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| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
July 2, 2022
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| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
Delaware | 45-3458017 | |||||||||||||
(State or other jurisdiction of |
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incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
200 South Park Road, | Suite 350 |
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Hollywood, |
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| Common Stock, $0.01 par value | NVEE | The NASDAQ Stock Market | ||||||||||||
Large accelerated filer |
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| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||||||||||||||||
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Emerging growth company |
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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 2, 2022 January 1, 2022 Assets Current assets: Cash and cash equivalents $ 44,422 $ 47,980 Billed receivables, net 139,959 153,814 Unbilled receivables, net 93,486 89,734 Prepaid expenses and other current assets 13,159 12,442 Total current assets 291,026 303,970 Property and equipment, net 39,557 32,729 Right-of-use lease assets, net 40,595 44,260 Intangible assets, net 178,383 188,224 Goodwill 394,760 389,916 Other assets 2,639 2,844 Total assets $ 946,960 $ 961,943 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 52,310 $ 55,954 Accrued liabilities 51,135 50,461 Billings in excess of costs and estimated earnings on uncompleted contracts 22,625 29,444 Other current liabilities 1,454 1,551 Current portion of contingent consideration 9,772 5,807 Current portion of notes payable and other obligations 18,932 20,734 Total current liabilities 156,228 163,951 Contingent consideration, less current portion 3,020 2,521 Other long-term liabilities 30,564 34,304 Notes payable and other obligations, less current portion 73,839 111,062 Deferred income tax liabilities, net 22,366 25,385 Total liabilities 286,017 337,223 Commitments and contingencies 0 0 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, 15,537,134 and 15,414,005 shares issued and outstanding as of July 2, 2022 and January 1, 2022, respectively 155 154 Additional paid-in capital 462,066 451,754 Retained earnings 198,722 172,812 Total stockholders’ equity 660,943 624,720 Total liabilities and stockholders’ equity $ 946,960 $ 961,943 $ 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 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Gross revenues $ 202,732 $ 179,503 $ 392,885 $ 332,598 Direct costs: Salaries and wages 47,704 45,025 93,681 86,485 Sub-consultant services 40,479 29,978 75,305 53,225 Other direct costs 15,309 13,114 30,833 22,912 Total direct costs 103,492 88,117 199,819 162,622 Gross profit 99,240 91,386 193,066 169,976 Operating expenses: Salaries and wages, payroll taxes and benefits 47,283 44,213 97,049 87,164 General and administrative 14,494 13,367 30,881 24,915 Facilities and facilities related 5,195 5,038 10,381 10,135 Depreciation and amortization 9,668 10,216 19,602 19,656 Total operating expenses 76,640 72,834 157,913 141,870 Income from operations 22,600 18,552 35,153 28,106 Interest expense (887) (1,568) (1,801) (3,886) Income before income tax expense 21,713 16,984 33,352 24,220 Income tax expense (4,445) (3,346) (7,442) (5,102) Net income and comprehensive income $ 17,268 $ 13,638 $ 25,910 $ 19,118 Earnings per share: Basic $ 1.17 $ 0.95 $ 1.76 $ 1.40 Diluted $ 1.13 $ 0.91 $ 1.70 $ 1.35 Weighted average common shares outstanding: Basic 14,736,167 14,419,671 14,714,745 13,648,247 Diluted 15,232,157 14,965,188 15,211,835 14,196,035 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
CapitalRetained
EarningsShares Amount Total Balance, April 3, 2021 14,933,927 $ 149 $ 415,895 $ 131,145 $ 547,189 Stock-based compensation — — 4,094 — 4,094 Restricted stock issuance, net 189,520 2 (2) — — Stock issuance for acquisitions — — (85) — (85) Proceeds from secondary offering, net of costs 241,935 3 21,147 — 21,150 Net income — — — 13,638 13,638 Balance, July 3, 2021 15,365,382 $ 154 $ 441,049 $ 144,783 $ 585,986 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 Six Months Ended Common Stock Additional
Paid-In
CapitalRetained
EarningsShares Amount Total Balance, January 2, 2021 13,270,131 $ 133 $ 268,271 $ 125,665 $ 394,069 Stock-based compensation — — 7,790 — 7,790 Restricted stock issuance, net 203,056 2 (2) — — Purchases of common stock tendered by employees to satisfy the required withholding taxes related to stock-based compensation (580) — (52) — (52) Stock issuance for acquisitions 35,737 — 3,060 — 3,060 Proceeds from secondary offering, net of costs 1,854,838 19 161,773 — 161,792 Payment of contingent consideration with common stock 2,200 — 209 — 209 Net income — — — 19,118 19,118 Balance, July 3, 2021 15,365,382 $ 154 $ 441,049 $ 144,783 $ 585,986 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 $ 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 2, 2022 July 3, 2021 Cash flows from operating activities: Net income $ 25,910 $ 19,118 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 22,058 21,936 Non-cash lease expense 6,265 4,884 Provision for doubtful accounts 594 583 Stock-based compensation 9,615 7,790 Change in fair value of contingent consideration (518) 235 Gain on disposals of property and equipment (61) (581) Deferred income taxes (3,014) (2,988) Amortization of debt issuance costs 370 454 Changes in operating assets and liabilities, net of impact of acquisitions: Billed receivables 15,152 36,727 Unbilled receivables (3,801) (7,238) Prepaid expenses and other assets (511) (4,208) Accounts payable (4,349) (2,446) Accrued liabilities (6,309) (4,187) Billings in excess of costs and estimated earnings on uncompleted contracts (6,867) (8,158) Other current liabilities (276) 307 Net cash provided by operating activities 54,258 62,228 Cash flows from investing activities: Cash paid for acquisitions (net of cash received from acquisitions) (4,670) (21,652) Proceeds from sale of assets 48 460 Purchase of property and equipment (10,379) (4,028) Net cash used in investing activities (15,001) (25,220) Cash flows from financing activities: Proceeds from common stock offering — 172,500 Payments on notes payable (6,218) (5,325) Payments of contingent consideration (1,597) (413) Payments of borrowings from Senior Credit Facility (35,000) (145,082) Payments of common stock offering costs — (10,522) Purchases of common stock tendered by employees to satisfy the required withholding taxes related to stock-based compensation — (52) Net cash (used in) provided by financing activities (42,815) 11,106 Net (decrease) increase in cash and cash equivalents (3,558) 48,114 Cash and cash equivalents – beginning of period 47,980 64,909 Cash and cash equivalents – end of period $ 44,422 $ 113,023 $ 843 $ 255 $ 4,962 $ 4,642 $ 908 $ - $ 9,371 $ 9,333 $ 1,746 $ 1,075 $ 62 $ 162 Six Months Ended July 2, 2022 July 3, 2021 Non-cash investing and financing activities: Contingent consideration (earn-out) $ 6,579 $ 3,294 Notes payable and other obligations issued for acquisitions $ 2,933 $ 11,174 Stock issuance for acquisitions $ 1,352 $ 3,060 Accrued common stock offering costs $ — $ 186 Finance leases $ 644 $ 248 Payment of contingent consideration with common stock $ — $ 209
hotel projects were delayed. As U.S. and international economies have reopened and with increased vaccine availability, real estate transactional services have recovered, however the Company is unable to predict the ultimate impact that it may have on its business, future results of operations, financial position, or cash flows. The extent to which the Company's operations may be impacted by the COVID-19 pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted. The Company intends to continue to monitor the impact of the COVID-19 pandemic on its business closely. 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 2, 2022. 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 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 January 1, 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 customer relationships, trade name, customer backlog, and non-compete with weighted average lives of 8.2 years, 2.0 years, 0.5 years, and 3.8 years, 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 settlement on May 28, 2022, and the plaintiffs provided notice to the proposed settlement class. The Court held a fairness hearing on June 23, 2022, and it issued an order granting final approval of the settlement on June 24, 2022. 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 2, 2022. The total fair value of restricted shares vested during the six months ended July 2, 2022 and July 3, 2021 was $7,296 and $12,426, respectively. The 2021 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: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2017 2016 2017 2016 Gross revenues INF BTS Elimination of inter-segment revenues Total gross revenues Segment income before taxes INF BTS Total Segment income before taxes Corporate (1) Total income before taxes the calendar quarter end. us. On April economies. We 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 2021 $3,062. Profit our real estate transactional business, driven by organic growth and an acquisition, and cyclical trends in our LNG business. Income taxes $23,090 and a decrease in interest expense of $2,085, partially offset by increases in payroll costs of $9,885, general and administrative expenses of $5,966, and a higher effective income tax 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 the unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Months Ended July 3, 2021 of $4,272. our LNG business. Segment Income before Taxes from BTS increased the six months ended July 3, 2021. The increase was primarily due to increased gross revenues. the Senior Credit Facility in 2026. Geospatial business. payments on our Senior Credit Facility of $145,082 and made common stock public offering cost payments to our underwriters of $10,522. $98,750, respectively. Cautionary Statement about Forward-Looking Statements 10-Q. January 1, 2022. 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 Document-– Organization and Nature of Business Operations“Company”“Company,” or “NV5 Global”) is a provider of professional and technical engineeringtechnology, conformity assessment, and consulting solutions to public and private sector clients in the infrastructure, energy,utility services, construction, real estate, and environmental markets.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 ● Testing, inspection & consulting (TIC) ● 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, inspectionthe calendar quarter end.field supervision, testing inspectioneconomies. The Company is closely monitoring the impact of the outbreak of COVID-19 on all aspects of its business. Some of the Company's services were affected, primarily its Geospatial segment, real estate transactional services and certification, management oversight, forensic engineering, litigation support, condition assessmenthospitality-related services. In particular, due to COVID-19 restrictions, some of the Company's casino 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 datesDecember 31, 2016. The accompanying consolidated balance sheet as of December 31, 2016 has been derived from those financial statements.January 1, 2022 (the “2021 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 20172022 fiscal year.Fiscal Year Effective March 7, 2017,Audit Committeeproper revenue recognition method, the Company evaluates whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. The majority of our Boardthe 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 contracts and therefore, is not distinct.Directorscontrol to the customer. Contract costs include labor, sub-consultant services, and other direct costs.Boardmajority of Directors approved a changethe balance over the next 24 months. Contracts for which work authorizations have been received are included in our fiscal year-endperformance obligations. Performance obligations include only those amounts that have been funded and financial accounting cycle. With effect from January 1, 2017,authorized and does not reflect the full amounts the Company commenced reporting its financialmay receive over the term of such contracts. In the case of non-government contracts and project 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 performance obligations to the extent of the remaining estimated amount.a 52/53 week fiscal year endinguncompleted contracts (contract liabilities) on the Saturday closest to December 31st (whether or notConsolidated Balance Sheet. The liability “Billings in the following calendar year), with interim calendar quarters endingexcess of costs and estimated earnings on the Saturday closest to the enduncompleted contracts” represents billings in excess of such calendar quarter (whether or not in the following calendar quarter). As such, in calendar year 2017, the first fiscal quarter endedrevenues recognized on April 1, 2017, the second fiscal quarter ended on July 1, 2017, the third fiscal quarter ended on September 30, 2017, and the fiscal year will end on December 30, 2017.Use of EstimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. These estimates and assumptions are based on management’s most recent assessment of underlying facts and circumstances using the most recent information available. Actual results could differ significantly from these estimates and assumptions, and the differences could be material.NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)Estimates and assumptions are evaluated periodically and adjusted when necessary. The more significant estimates affecting amounts reported 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.Concentration 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 of 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 2, 2022 the Company performed services and recognized $6,068 and $22,078, 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.performing the two-stepCompany may apply 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 subjective and complex judgments 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 goodwillonas 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 January 2017,October 2021, the FASB issued ASU 2017-04, Intangibles-GoodwillNo. 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Other (Topic 350) Simplifying the Test for Goodwill Impairment.Contract Liabilities from Contracts with Customers ("ASU 2021-08"). This ASU eliminates Step 2 of the goodwill impairment test and simplifies how the amount of an impairment loss is determined. The update is effective for public companies 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 simplifiesimproves 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 resultedacquired revenue contracts with customers in a decreasebusiness combination by addressing diversity in income tax expense of approximately $974 for the nine months ended September 30, 2017.practice and resulting inconsistencies. This ASU 2016-09 requires excess tax benefits be presented within the statement of cash flows as an operating activity rather than asentity to recognize and measure contract assets and contract liabilities acquired in a financing activity and excess tax benefits to be excludedbusiness combination in accordance with ASC 606, the assumed future proceeds in the calculation of diluted shares.NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)In February 2016, FASB issued ASU 2016-02, LeasesContracts with Customers2016-02 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 are2021-08 is effective for fiscal years beginning after December 15, 2018. We are currently evaluating the requirements2022, including interim periods within those fiscal years. Early adoption 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 adoption2021-08 is permitted, as of the original effective date. Companies may use either a full retrospectiveincluding adoption in an interim period. The standard should be applied prospectively to business combinations occurring on 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.Note 4 – Business AcquisitionsOn September 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 amendments. The Company is currently evaluating the impact of ASU 2021-08 and does not expect it will have a material impact to its financial statements.9), $674 –Earnings per ShareCompany’sCompany. The effect of potentially dilutive securities is not considered during periods of loss or if the effect is anti-dilutive.Three Months Ended Six Months Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Numerator: Net income – basic and diluted $ 17,268 $ 13,638 $ 25,910 $ 19,118 Denominator: Basic weighted average shares outstanding 14,736,167 14,419,671 14,714,745 13,648,247 Effect of dilutive non-vested restricted shares and units 481,815 515,913 481,379 520,824 Effect of issuable shares related to acquisitions 14,175 29,604 15,711 26,964 Diluted weighted average shares outstanding 15,232,157 14,965,188 15,211,835 14,196,035 (1,510 shares) as(the "Firm Shares") at a price of $93.00 per share. The shares were sold pursuant to an effective registration statement on Form S-3 (Registration No. 333-237167). In addition, the Company also granted the underwriters a 30-day option to purchase 241,935 additional shares (the "Option Shares") of its common stock at the public offering price. On March 15, 2021, the Company closed on the Firm Shares, for which it received net proceeds of approximately $140,693 after deducting the underwriting discount and estimated offering expenses payable by the Company. On April 13, 2021, the underwriters exercised the Option Shares and the Company received net proceeds of $21,150 after deducting the underwriting discount and estimated offering expenses payable by the Company.closing dateCompany's common stock, and potential earn-outs of up to $15,500 payable in cash and common stock, which has been recorded at an estimated fair value of $6,579. An option-based model was used to determine the fair value of the acquisition and $133 in stock orearn-outs, which is 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, the Company acquiredgenerally accepted valuation technique that embodies 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 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. The purchase price 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%), payable in four installments of $1,375, due 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.significant assumption types. 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 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 relevant acquisition date, 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.including intangible assets, accounts receivable, and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)On May 4, 2017, thecertain fixed assets. 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.completed 8 acquisitions during 2021. The aggregate purchase price of this acquisition isall 8 acquisitions was $100,449, including $69,501 of cash, $19,028 of promissory notes, $6,787 of the Company's common stock, and potential earn-outs of up to $2,200 including $1,000$25,700 payable in cash $600 in promissory notes (bearing interest at 3.0%), 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 (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 $500which was recorded at itsan estimated fair value of $405, based on a probability-weighted approach valuation technique$5,133. An option-based model was used to determine the fair value of the contingent consideration on the acquisition date. The note and the earn-out are due toearn-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 H&K, wethe Company engaged aan independent third-party independent valuation specialist to assist in the determination of fair values. However, asThe final determination of the date 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.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 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 was recorded at its estimated fair value of $413, 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. In order to ultimately determine the fair values of tangible and intangible assets acquired and liabilities assumed for Lochrane, we engaged a third-party independent valuation specialist to assist inwill be completed within the determination of fair values. However,one-year measurement period as ofrequired by ASC 805. The 2021 acquisitions will necessitate the dateuse of this report,measurement period to adequately analyze and assess the valuation was not final. We expect to finalize the purchase price allocation with respect to this transaction by the endOn May 20, 2016,Company acquired Dade Moeller & Associates, Inc., a North Carolina corporation ("Dade Moeller"). Dade Moeller provides professional services in radiation protection, health physics,asset 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 dateliability fair values as 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,including intangible assets, accounts receivable, 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. certain fixed assets. 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)The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition datesdate for the acquisitions closed during 2017the six months ended July 2, 2022 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 Six Months Ended Fiscal Year Ended July 2, 2022 January 1, 2022 Cash $ — $ 1,480 Billed and unbilled receivables, net 1,848 17,728 Right-of-use assets 632 2,932 Property and equipment 1,531 3,741 Prepaid expenses — 587 Other assets — 13 Intangible assets: Customer relationships 5,713 36,338 Trade name 290 2,098 Customer backlog 175 3,847 Non-compete 378 4,456 Total Assets $ 10,567 $ 73,220 Liabilities (1,555) (13,984) Deferred tax liabilities — (4,521) Net assets acquired $ 9,012 $ 54,715 Consideration paid (Cash, Notes and/or stock) $ 7,577 $ 95,316 Contingent earn-out liability (Cash and stock) 6,579 5,133 Total Consideration $ 14,156 $ 100,449 Excess consideration over the amounts assigned to the net assets acquired (Goodwill) $ 5,144 $ 45,734 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 3, 2021. 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 3, 2021 July 3, 2021 Gross revenues $ 8,529 $ 9,981 Income before income taxes $ 2,795 $ 3,288 expenseexpenses for the three and ninesix months ended September 30, 2017 is $315July 2, 2022 and $892, respectively, ofJuly 3, 2021 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 2, 2022 and July 3, 2021 as if Dade Moeller, B&Cthe fiscal 2022 and RDK2021 acquisitions had occurred asat the beginning of January 1, 2016.fiscal year 2021. The pro forma information provided below is compiled from the pre-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 2021 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 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Gross revenues $ 204,806 $ 194,204 $ 396,893 $ 365,985 Net income $ 17,302 $ 14,139 $ 26,003 $ 20,398 Basic earnings per share $ 1.17 $ 0.98 $ 1.77 $ 1.49 Diluted earnings per share $ 1.14 $ 0.94 $ 1.71 $ 1.43 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 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 2, 2022 January 1, 2022 Billed receivables $ 144,500 $ 159,942 Less: allowance for doubtful accounts (4,541) (6,128) Billed receivables, net $ 139,959 $ 153,814 Unbilled receivables $ 95,777 $ 91,558 Less: allowance for doubtful accounts (2,291) (1,824) Unbilled receivables, net $ 93,486 $ 89,734 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 2, 2022 January 1, 2022 Office furniture and equipment $ 3,365 $ 3,314 Computer equipment 22,865 20,063 Survey and field equipment 44,831 35,436 Leasehold improvements 6,420 6,395 Total 77,481 65,208 Less: accumulated depreciation (37,924) (32,479) Property and equipment, net $ 39,557 $ 32,729 $760$2,835 and $2,014$5,739 for the three and ninesix months ended September 30, 2017,July 2, 2022, respectively, of which $1,223 and $416$2,456 was included in other direct costs. Depreciation expense was $2,865 and $1,207$5,439 for the three and ninesix months ended September 30, 2016, respectively.Note 7 – GoodwillJuly 3, 2021, respectively, of which $1,178 and Intangible AssetsGoodwillOn August 1, 2017, the Company conducted its annual impairment tests using the quantitative method$2,280 was included in other direct costs.Six Months Ended January 1, 2022 2022 Acquisitions Adjustments July 2, 2022 INF $ 90,725 $ 120 $ 19 $ 90,864 BTS 111,005 61 (319) 110,747 GEO 188,186 4,963 — 193,149 Total $ 389,916 $ 5,144 $ (300) $ 394,760 September 30, 2017July 2, 2022 and December 31, 2016January 1, 2022 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 2, 2022 January 1, 2022 Gross
Carrying
AmountAccumulated Amortization Net
AmountGross
Carrying
AmountAccumulated Amortization Net
AmountFinite-lived intangible assets: $ 225,099 $ (75,958) $ 149,141 $ 219,455 $ (65,017) $ 154,438 16,905 (15,348) 1,557 16,615 (14,815) 1,800 29,133 (26,357) 2,776 28,971 (25,162) 3,809 14,207 (10,304) 3,903 13,829 (9,024) 4,805 32,944 (11,938) 21,006 32,944 (9,572) 23,372 Total finite-lived intangible assets $ 318,288 $ (139,905) $ 178,383 $ 311,814 $ (123,590) $ 188,224 ranging from 1(1 to 3 years. Customer backlog and customer relationships are amortizedyears)straight-linesstraight-line basis over their estimated lives ranging from 1(1 to 9 years. Non-compete agreements are amortized10 years)ranging from 4(2 to 5 years. Favorable lease is amortizedyears)remaining lease termsix months ended July 2, 2022 consists of 9 years.$3,028$8,056 and $7,528 for$16,319 during the three and ninesix months ended September 30, 2017,July 2, 2022, respectively, and $1,189$8,529 and $3,077 for$16,497 during the three and ninesix months ended September 30, 2016,July 3, 2021, 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 2, 2022 January 1, 2022 Current portion of lease liability $ 13,214 $ 12,897 Accrued vacation 14,635 12,819 Payroll and related taxes 12,134 10,931 Benefits 4,226 6,767 Accrued operating expenses 4,988 4,329 Other 1,938 2,718 Total $ 51,135 $ 50,461 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 2, 2022 January 1, 2022 Senior credit facility $ 63,750 $ 98,750 Uncollateralized promissory notes 27,996 31,493 Finance leases 2,236 2,215 Other obligations 1,814 2,733 Debt issuance costs, net of amortization (3,025) (3,395) Total notes payable and other obligations 92,771 131,796 Current portion of notes payable and other obligations 18,932 20,734 Notes payable and other obligations, less current portion $ 73,839 $ 111,062 September 30, 2017July 2, 2022 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 January 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 2, 2022 January 1, 2022 Contingent consideration, beginning of the year $ 8,328 $ 2,400 Additions for acquisitions 6,579 5,133 Reduction of liability for payments made (1,597) (1,538) Increase of liability related to re-measurement of fair value (518) 2,333 Total contingent consideration, end of the period 12,792 8,328 Current portion of contingent consideration 9,772 5,807 Contingent consideration, less current portion $ 3,020 $ 2,521 11 12– Commitments and ContingenciesNV5 Global,In August 2021, a Consolidated Amended Class Action Complaint was filed in a case titled In Re: Champlain Towers South Collapse Litigation, 2021-015089-CA-01, Circuit Court of the Eleventh Judicial District, Miami-Dade County regarding the collapse of the Champlain Tower South condominium building in Surfside, Florida. The case initially claimed negligence by the Champlain Towers South Condominium Association, 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(the “Association”) led to the building’s partial collapse (the “CTS Collapse”). In November 2021, a Consolidated Second Amended Class Action Complaint (the “Second Complaint”) was filed against firms involved in the construction of a neighboring building known as “Eighty-Seven Park” alleging that work at Eighty-Seven Park may have been a contributing factor in the collapse. The defendants in the Second Complaint included the developers of Eighty-Seven Park, the general contractor and four other firms, including the Company (collectively, the “Eight-Seven Park Defendants”). The Company provided limited services to the developers of Eight-Seven Park in 2016, which is more than 5 years prior to the collapse of the Champlain Tower South Condominium Building. On June 16, 2022, a settlement agreement was reached to settle these cases with (a) proposed class of unit owners, (b) invitees, (c) residents, (d) persons who died or sustained any personal injury (including, without limitation, emotional distress) as a result of the CTS Collapse, (e) persons or entities who suffered a loss of, or damage to, real property or personal property, or suffered other economic loss, as a result of the CTS Collapse, (f) representative claimants, and (g) derivative claimants. The Company’s Consolidated Statementsinsurers have agreed to pay the settlement amount on behalf 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 dueCompany pursuant to the underlying leases is included in accrued liabilities insettlement agreement. The Court granted preliminary approval of the Company’s consolidated balance sheets. 12 13– Stock-Based CompensationCompany’sCompany's stockholders approved the 2011 Equity Incentive Plan, which was subsequently amended and restated in March 2013 (as amended, the “2011 Equity Plan”). The 2011 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 2, 2022, 1,981,440 shares of common stock are authorized and reserved for issuance under the 2011 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’sCompany's Board of Directors. The restricted shares of common stock granted generally provide for service-based 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 as of September 30, 2017 and 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-basedthe six months ended July 2, 2022:Number of Unvested Restricted Shares of Common Stock and Restricted Stock Units Weighted Average
Grant Date Fair
ValueJanuary 1, 2022 744,490 $ 66.34 Granted 168,591 $ 114.73 Vested (61,634) $ 57.80 Forfeited (57,981) $ 66.91 July 2, 2022 793,466 $ 77.01 ninesix months ended September 30, 2017July 2, 2022 was $1,161$4,826 and $2,743,$9,615, respectively, and $655$4,094 and $1,704 for$7,790 during the three and ninesix months ended September 30, 2016,July 3, 2021, respectively. In connection with the Company's 401(k) Profit Sharing match, stock-based compensation expense during the three and six months ended July 2, 2022 includes $383 and $654 of expense related to the Company's liability-classified awards. The total estimated amount of the liability-classified awards for fiscal 2022 is approximately $5,669. Approximately $9,895$36,732 of deferred compensation, which is expected to be recognized over the remaining weighted average vesting period of 2.61.5 years, is unrecognized at September 30, 2017. 13 14– Income TaxesIn November 2015, the FASB issued ASU 2015-17, Balance Sheet ClassificationDeferred Taxes to simplify the presentation of deferred income taxes. The amendments in this update require that deferred tax liabilitiesJuly 2, 2022 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. As of January 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, 2017 and December 31, 2016,2022, the Company had net non-current deferred income tax liabilities of $22,084$22,366 and $6,197,$25,385, 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%20.5% and 27.8% for22.3% during the three and ninesix months ended September 30, 2017,July 2, 2022, respectively, and 36.9%19.7% and 36.8% for21.1% during the three and ninesix months ended September 30, 2016,July 3, 2021, 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 2022 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 20052018 through 20162021 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 two3 operating and reportable segments: Infrastructure (INF)("INF"), which includes ourthe Company's engineering, civil program management, utility services, and construction quality assurance, testing and inspection practices; and Building, Technology & Sciences (BTS) (formerly Building, Energy & Sciences (BES)("BTS"), which includes our energythe Company's environmental health sciences, 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 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Gross revenues INF $ 102,639 $ 97,755 $ 202,600 $ 185,288 BTS 61,331 43,818 121,785 82,423 GEO 38,762 37,930 68,500 64,887 Total gross revenues $ 202,732 $ 179,503 $ 392,885 $ 332,598 Segment income before taxes INF $ 19,206 $ 19,149 $ 35,457 $ 35,961 BTS 12,622 7,501 25,435 13,766 GEO 11,034 10,121 16,138 14,026 Total Segment income before taxes 42,862 36,771 77,030 63,753 (21,149) (19,787) (43,678) (39,533) Total income before taxes $ 21,713 $ 16,984 $ 33,352 $ 24,220 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 reorganizednature, amount, timing and uncertainty of its revenues and cash flows are affected by economic factors. Gross revenue, classified by the major geographic areas in which the Company's customers were located, were as follows: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 3, 2021 Six Months Ended July 3, 2021 INF BTS GEO Total INF BTS GEO Total United States $ 97,755 $ 39,718 $ 37,490 $ 174,963 $ 185,288 $ 75,016 $ 63,864 $ 324,168 Foreign — 4,100 440 4,540 — 7,407 1,023 8,430 Total gross revenues $ 97,755 $ 43,818 $ 37,930 $ 179,503 $ 185,288 $ 82,423 $ 64,887 $ 332,598 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 3, 2021 Six Months Ended July 3, 2021 INF BTS GEO Total INF BTS GEO Total Public and quasi-public sector $ 76,777 $ 16,562 $ 24,847 $ 118,186 $ 145,460 $ 36,885 $ 42,820 $ 225,165 Private sector 20,978 27,256 13,083 61,317 39,828 45,538 22,067 107,433 Total gross revenues $ 97,755 $ 43,818 $ 37,930 $ 179,503 $ 185,288 $ 82,423 $ 64,887 $ 332,598 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 Three Months Ended July 3, 2021 Six Months Ended July 3, 2021 INF BTS GEO Total INF BTS GEO Total Cost-reimbursable contracts $ 93,396 $ 31,453 $ 37,822 $ 162,671 $ 176,781 $ 60,162 $ 64,711 $ 301,654 Fixed-unit price contracts 4,359 12,365 108 16,832 8,507 22,261 176 30,944 Total gross revenues $ 97,755 $ 43,818 $ 37,930 $ 179,503 $ 185,288 $ 82,423 $ 64,887 $ 332,598 Leases Classification July 2, 2022 January 1, 2022 Assets Operating lease assets $ 40,595 $ 44,260 Finance lease assets 2,217 2,197 Total leased assets $ 42,812 $ 46,457 Liabilities Current Operating Accrued liabilities $ (13,214) $ (12,897) Finance Current portion of notes payable and other obligations (1,134) (1,225) Noncurrent Operating Other long-term liabilities (29,358) (33,169) Finance Notes payable and other obligations, less current portion (1,102) (990) Total lease liabilities $ (44,808) $ (48,281) July 2, 2022 January 1, 2022 Operating leases 4.2 4.5 Finance leases 1.5 1.6 Operating leases 3.9% 4.0% Finance leases 7.0% 7.0% Three Months Ended Six Months Ended July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Operating cash flows from operating leases $ 3,439 $ 3,531 $ 6,881 $ 7,048 Financing cash flows from finance leases $ 303 $ 337 $ 623 $ 592 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 724 $ 1,073 $ 926 $ 2,382 Three Months Ended Six Months Ended Lease Cost Classification July 2, 2022 July 2, 2022 Operating lease cost Facilities and facilities related $ 3,869 $ 7,692 Variable operating lease cost Facilities and facilities related 827 1,740 Finance lease cost Amortization of financing lease assets Depreciation and amortization 302 626 Interest on lease liabilities Interest expense 30 65 Total lease cost $ 5,028 $ 10,123 Three Months Ended Six Months Ended Lease Cost Classification July 3, 2021 July 3, 2021 Operating lease cost Facilities and facilities related $ 3,973 $ 7,654 Variable operating lease cost Facilities and facilities related 333 931 Finance lease cost Amortization of financing lease assets Depreciation and amortization 337 592 Interest on lease liabilities Interest expense 45 78 Total lease cost $ 4,688 $ 9,255 Fiscal Year Operating Leases Finance Leases Remainder of 2022 $ 7,516 $ 1,212 2023 13,116 660 2024 10,025 306 2025 7,078 257 2026 4,401 85 Thereafter 3,884 8 Total lease payments 46,020 2,528 Less: Interest (3,448) (292) Present value of lease liabilities $ 42,572 $ 2,236 structure that occurred duringperiod until the fourth quarter of 2016: $ 49,024 $ 42,713 $ 134,446 $ 118,902 43,262 18,846 107,997 45,637 (1,023 ) (1,468 ) (3,385 ) (3,651 ) $ 91,263 $ 60,091 $ 239,058 $ 160,888 $ 9,559 $ 7,065 $ 23,749 $ 19,676 6,974 2,704 15,065 5,607 16,533 9,769 38,814 25,283 (8,098 ) (4,375 ) (21,510 ) (12,118 ) $ 8,435 $ 5,394 $ 17,304 $ 13,165
unvested RSAs are granted.(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 months ended September 30, 2017 and 2016, respectively.“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,January 1, 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, 2016January 1, 2022and 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.On September 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.Acquisitionspaid by us isof all three acquisitions was $14,156, including $4,644 in cash, a $2,500 promissory note, $433 of our common stock, and potential earn-outs of up to $22,500, paid with a combination$15,500 payable in cash and common stock, which were recorded at an estimated fair value of cash at closing, stock and future note payments.On May 4, 2017,$6,579. An option-based model was used to determine the Company acquired allfair value of the outstanding equity interestsearn-outs, which is a generally accepted valuation technique that embodies all significant assumption types. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed, we engaged an independent third-party valuation specialist to assist in Holdrege & Kull, Consulting Engineersthe determination of fair values. The final determination of the fair value of assets and Geologists (“H&K”), a full-service geotechnical engineering firm basedliabilities 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 Northern California. H&K provides services toestablishing the asset and liability fair values as of the relevant acquisition date, including intangible assets, accounts receivable, and certain fixed assets.municipal and special district, industrial, and private sector clients. The purchaseoffering of 1,612,903 shares of our common stock (the "Firm Shares") at a price of this acquisition is up$93.00 per share. The shares were sold pursuant to $2,200, paid withan effective registration statement on Form S-3 (Registration No. 333-237167). In addition, we also granted the underwriters a combination30-day option to purchase 241,935 additional shares (the "Option Shares") of cash,our common stock at the public offering price. On March 15, 2021, we closed on the Firm Shares, for which it received net proceeds of approximately $140,693 after deducting the underwriting discount and future note payments.On May 1, 2017, we 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 aggregate purchase price paidestimated offering expenses payable by us is up to $4,940, paid with a combination of cash at closing and future note payments.14, 2017,13, 2021, the Company acquired allunderwriters exercised the Option Shares and we received net proceeds of $21,150 after deducting the outstanding equity interests in Bock & Clark Corporation (“B&C”), an Akron, Ohio based surveying, commercial zoning,underwriting discount and environmental services firm. We believe that the acquisition of B&C will expand our cross-selling opportunities within our infrastructure engineering, surveying, and program management groups and with our financial and transactional real estate clients. The aggregate purchase price consideration paidestimated offering expenses payable by the Company in connection with the acquisition was $42,000, subject to customary closing working capital adjustments, funded entirely in cash.Tax credit.Weus.currently under examination by the CFTB about certain research and development tax credits generated for the years 2005 to 2014. Fiscal years 2005 through 2016 are considered open tax years in the State of California and 2013 through 2016 in the U.S. federal jurisdiction and other state jurisdictions. At September 30, 2017 and December 31, 2016, we had $770 of unrecognized tax benefits related to this matter.Backlog. As 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 $220,800 as of December 31, 2016. We include in backlog only those contracts for which funding has been provided and work authorizations have been received. We cannot guarantee that the revenue projected in our backlog will be realized or, if realized, will result 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 with the U.S. federal government and other clients are terminable at the discretion of the client, with or without cause. These types of backlog reductions could adversely affect our revenue and margins. Accordingly, our backlog as of any particular date is an uncertain indicator of our future earnings.Segments. Our Chief Executive Officer is the chief operating decision maker and 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;testing and inspection practices;(BTS) (formerly known as Building, Energy & Sciences (BES)("BTS"), which– includes our energyenvironmental health sciences, buildings and environmental practices as well as buildings program management. Componentsmanagement, and MEP & technology design practices; andIncomethe Notes to Consolidated Financial Statements included elsewhere herein.ExpenseRevenuesenter into contracts with our clients that contain two principal typesare closely monitoring the impact of pricing provisions: cost-reimbursable and fixed-price. The majoritythe outbreak of COVID-19 on all aspects of our contractsbusiness. Some of our services were affected, primarily our Geospatial segment, real estate transactional services and hospitality-related services. In particular, due to COVID-19 restrictions, some of our casino and hotel projects were delayed. As U.S. and international economies have reopened and with increased vaccine availability, real estate transactional services have recovered, however we are cost-reimbursable contractsunable to predict the ultimate impact that fall underit may have on our business, future results of operations, financial position, or cash flows. The extent to which our operations may be impacted by the relatively low-risk subcategory of timeCOVID-19 pandemic will depend largely on future developments, which are highly uncertain and materials contracts.Cost-reimbursable contracts. Cost-reimbursable contracts consistcannot be accurately predicted. We intend to continue to monitor the impact of the 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 incurred 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 are 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 reportCOVID-19 pandemic 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 on2021 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 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Gross revenues $ 202,732 $ 179,503 $ 392,885 $ 332,598 Direct costs 103,492 88,117 199,819 162,622 Gross profit 99,240 91,386 193,066 169,976 Operating expenses 76,640 72,834 157,913 141,870 Income from operations 22,600 18,552 35,153 28,106 Interest expense (887) (1,568) (1,801) (3,886) Income tax expense (4,445) (3,346) (7,442) (5,102) Net income $ 17,268 $ 13,638 $ 25,910 $ 19,118 and Nine MonthsMonths Ended September30, 2017 comparedJuly 2, 2022 Compared to the Three and NineMonthsMonths Ended SeptemberJuly 3,0, 2016and Net Revenues.approximately $31,172 and $78,170by $23,229, or approximately 51.9% and 48.6%12.9%, for the three and nine months ended September 30, 2017July 2, 2022 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 3, 2021. 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, includes grosswas primarily due to incremental revenues of $21,316$14,217 from acquisitions completed since the second quarter of 2021 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 the increases in net revenues for the nine months ended September 30, 2017 is an increased utilizationour power delivery and utility services of our billable employees$4,272, international engineering and reductionconsulting services of sub-consultants used to perform$1,678, and other services in 2017. The growth in revenues was primarily attributable to 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 reductions in revenues related to project delays due to record rainfall and hurricanes affecting our California, Florida and Texas projects. We are currently unaware 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%49.0% and 50.1%50.9% for the three and nine months ended September 30, 2017, respectively, compared to 46.0%July 2, 2022 and 47.7% for the three and nine months ended September 30, 2016,July 3, 2021, respectively. GrossThe decrease 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 increased 3.3% and 0.2%, respectively. These increases were partially offset by decreases in direct salaries and wages as a percentage of contracts are likelygross revenues of 1.6%. The increase in sub-consultant expenses as a percentage of gross revenues was primarily driven by a higher mix of business related to increase as well..approximately $15,606 and $38,179,$3,806, or 70.4% and 60.3%5.2%, for the three and nine months ended September 30, 2017, respectively,July 2, 2022 compared to the three and nine months ended September 30, 2016.July 3, 2021. The increase in operating expenses primarily resulted from increased payroll costs of $3,070 and general and administrative expenses of $1,127. The increase in payroll costs was primarily driven by an increase in employees as compared to the prior year period primarily driven by our 2021 acquisitions and an increase in stock-based compensation. The increase in general and administrative expenses was primarily driven by increases in travel expenses.and nine months ended September 30, 2017 include operating expenses of $17,410 and $28,677, respectively, related to acquisitions closed during 2017. During the three and nine months ended September 30, 2017, acquisition related expenses were approximately $315 and $892, respectively,July 2, 2022 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 amortization 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.Interest expense.Our interest expense increased $443 and $821 for the three and nine months ended September 30, 2017, respectively, comparted to the three and nine months ended September 30, 2016.July 3, 2021. The increasedecrease in interest expense is due primarily toresulted from the increasereduction in outstanding borrowings during these periods.taxes. consolidated effective income tax rate was 29.9%20.5% and 27.8%19.7% for the three and nine months ended September 30, 2017, respectively, compared to a consolidated effective income tax rate of 36.9%July 2, 2022 and 36.8% for the three and nine months ended September 30, 2016,July 3, 2021, respectively. The difference between the effective income tax rate and the combined statutory federal and state income tax rate is principally due to the federal domestic production activities deduction and research and development credits. Furthermore, during the three and nine months ended September 30, 2017, we recorded a reduction in income tax expense of $114 and $974 relating to the income tax benefit received in conjunction with the vesting of restricted stock during the period. Also contributing to the decreaseincrease in the effective tax rate was primarily driven by the overall mix of earnings in jurisdictions with different tax rates.three and ninesix months ended September 30, 2017, isJuly 2, 2022 compared to the six months ended July 3, 2021. The increase in gross revenues was primarily due to incremental revenues of $32,686 from acquisitions completed since the beginning of fiscal 2021 and increases in our power delivery and utility services of $10,168, international engineering and consulting services of $4,319, testing, inspection and consulting of $3,613, real estate transactional services of $3,705, and other services of $5,796.applicablewas primarily driven by the overall mix of earnings in jurisdictions with different tax rates.the Asia operations purchasedsix months ended July 3, 2021. The increase was primarily a result of an increase in the JBA acquisition at the endgross profit 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 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021 Gross revenues INF $ 102,639 $ 97,755 $ 202,600 $ 185,288 BTS 61,331 43,818 121,785 82,423 GEO 38,762 37,930 68,500 64,887 Total gross revenues $ 202,732 $ 179,503 $ 392,885 $ 332,598 Segment income before taxes INF $ 19,206 $ 19,149 $ 35,457 $ 35,961 BTS $ 12,622 $ 7,501 $ 25,435 $ 13,766 GEO $ 11,034 $ 10,121 $ 16,138 $ 14,026 14 - "Reportable Segments"15, Reportable Segments, of the "Notesnotes to Consolidated Financial Statements”.and Nine Months ended September30, 2017 comparedMonths EndedJuly 2, 2022 Compared to the Three and NineMonths ended September 30, 2016reportable segment increased approximately $6,311 and $15,544,$4,884, or 14.7% and 13.1%5.0%, respectively, during the three nine months ended September 30, 2017July 2, 2022 compared to the three and nine months ended September 30, 2016. The increases during the three 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.July 3, 2021. The increase in gross revenues for the three and nine months ended September 30, 2017 reflectswas due to increases in energy distributionour power delivery and utility 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.$2,494 and $4,073,$57, or 35.3% and 20.7%0.3%, respectively, during the three and nine months ended September 30, 2017July 2, 2022 compared to the three and nine months ended September 30, 2016.July 3, 2021. The increases wereincrease was primarily due to increased gross revenues from organic growth, contributions from acquisitions completedpartially offset by lower gross margins in 2017 as well as a reduction of sub-consultants used to perform services.the BTS reportable segment increased approximately $24,416 and $62,360,$17,513, or 129.6% and 136.6%40.0%, during the three and nine months ended September 30, 2017July 2, 2022 compared to the three and nine months ended September 30, 2016.July 3, 2021. The increases duringincrease in gross revenues was due to incremental gross revenues of $14,011 from acquisitions completed since the threesecond quarter of 2021 and nine months ended September 30, 2017 includes approximately $16,808 and $27,941 related to acquisitions closed during both the three and nine months ended September 30, 2017. The growth in revenues from BTS was primarily attributable to increases in facilities program managementour international engineering and environmental services.consulting services of $1,678 and real estate transactional services of $946.$4,270 and $9,458,$5,121, or 157.9% and 168.7%, respectively,68.3% during the three and nine months ended September 30, 2017July 2, 2022 compared to the three and nine months ended September 30, 2016.July 3, 2021. The increases wereincrease was primarily due to increased gross revenues.organic growth, contributionsGEO increased $832, or 2.2%, during the three months ended July 2, 2022 compared to the three months ended July 3, 2021. The increase was primarily related to increases in Geospatial business activity.2017 as well as a reductionour international engineering and consulting services of sub-consultants used$4,319, and real estate transactional services of $3,705.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 $54,258 for the six months ended July 2, 2022, compared to $5,671, primarily attributable to$62,228 during the six months ended July 3, 2021. The decrease was a result of increases in net income, offset by increases in working capital during the six months ended July 2, 2022 compared to the six months ended July 3, 2021. The changes in our working capital that contributed to decreased cash flows were primarily a result of $12,501, which included non-cash chargesincreases in billed receivables of $12,285 from stock based compensation$21,575, partially offset by decreases in prepaid expenses and depreciation and amortization,other assets of $3,697 and decreases in unbilled receivables of $5,078$3,437. The increases in accounts payablebilled receivables primarily resulted from the timing of our liquefied natural gas business billing cycles. The decreases in prepaid expenses and accrued liabilitiesother assets resulted from a decrease of $4,881 in prepaid income taxes, partially offset by an increase in prepaid insurance of $17,031$1,713. The decreases in accounts receivable. unbilled receivables primarily relates to the timing of project billing cycles.2017, we made income tax payments of approximately $4,962. For the ninesix 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 compensationJuly 2, 2022 and depreciation and amortization, and increases of $3,368 in accounts payable and accrued liabilities offset by an increase of $7,795 in accounts receivable. During 2016, we made income tax payments of approximately $4,642. Investing activitiesFor the nine months ended September 30, 2017,July 3, 2021, 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 $15,001 and the purchase of property and equipment of $1,591 for our ongoing operations.For the nine months ended September 30, 2016, net$25,220, respectively. The decrease in cash used in investing activities amounted to $24,954,was primarily resulting froma result of decreased cash usedpaid for our acquisitions (net of cash acquired) during 2016 of $24,388 and the purchase of$16,982, partially offset by increases in property and equipment purchases of $566 for$6,351 primarily as a result of investments in our ongoing operations.Forninesix months ended September 30, 2017,July 2, 2022 compared to net cash flows provided by financing activities amounted to $36,077,of $11,106 during the six months ended July 3, 2021. The increase in cash used in financing activities was primarily due to proceeds from borrowing under thea result of payments on our Senior Credit Facility of $42,000 offset by principal repayments$35,000 during fiscal 2022 and an increase in contingent consideration payments of $5,360 towards long-term debt and $563 towards contingent consideration.For$1,184. During the ninesix months ended September 30, 2016, net cash provided by financing activities amountedJuly 3, 2021 we received $172,500 from our common stock public offering and used the proceeds to $43,858, primarily due to the net proceeds from the secondary offering of $47,147 and the unit warrant exercise of $1,008 offset bymake 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 Credit Facility includes a $5,000 sublimit for$200,000 in the issuanceaggregate. As of standby letters of creditJuly 2, 2022 and a $15,000 sublimit for swingline loans. The proceeds ofJanuary 1, 2022, the outstanding balance on the Senior Credit Facility are intended to be used (i) to finance permitted acquisitions, (ii) for capital expenditures,was $63,750 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) plus 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 2, 2022 our interest rate was 2.3%.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 2, 2022, 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 asshares 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 $185 and $370 during the paymentthree and six months ended July 2, 2022, respectively, and $227 and $454 during the three and six months ended July 3, 2021, respectively.$2,600$12,159, $10,553, $4,352, $1,373, and $1,373, due in sharesthe remainder of our common stock or a combination of cashfiscal 2022, 2023, 2024, 2025, 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, 2016,2026, 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.On July 1, 2015, we 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 As of July 1, 2015, the effective date of the acquisition. The2, 2022, 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”)2.4%. 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.12, Summary of Significant Accounting Policies, 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.January 1, 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, 2016January 1, 2022 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) 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). As of September 30, 2017, theJuly 2, 2022, there was $63,750 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.$638 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 2, 2022 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.From time to time, we are subject to variousthat ariseplease see Note 12, Commitments and Contingencies, in the normal course of our business activities. As ofnotes to the date ofunaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q, we are not a party to any litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our results of operations or financial position. 1A. 1A.RISK FACTORS.During the nine months ended September 30, 2017, thereDecember 31, 2016 filed with the SEC.September 30, 2017,July 2, 2022, we issued the following securities that were not registered under the Securities Act:September 2017,July 2022, we issued 1,510agreed to issue $500 of additional shares of our common stock as partial consideration for ourof an acquisition based on the then-current market price on the first, second, third, and fourth anniversaries of Marron.the closing date. These shares were issuedsold in reliance upon 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 5, 2022Michael P. RamaVice President and Edward Codispoti
Chief Financial Officer
(Principal Financial and Accounting Officer)39