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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________
FORM 10-Q
_______________________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 3, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to
Commission File Number 001-35849
_______________________________________________________
NV5 Global, Inc.
(Exact name of registrant as specified in its charter)
_______________________________________________________
Delaware45-3458017
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
200 South Park Road,Suite 350
Hollywood,Florida33021
(Address of principal executive offices)(Zip Code)

(954495-2112
(Registrant’s telephone number, including area code)
_______________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueNVEEThe NASDAQ Stock Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes     No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated Filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes    No
As of August 6, 2021, there were 15,381,617 shares outstanding of the registrant’s common stock, $0.01 par value.




NV5 GLOBAL, INC.
INDEX
Page



PART I – FINANCIAL INFORMATION


ITEM 1.    FINANCIAL STATEMENTS.
1


NV5 Global, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share data)
July 3, 2021January 2, 2021
Assets
Current assets:  
Cash and cash equivalents$113,023 $64,909 
Billed receivables, net109,122 142,705 
Unbilled receivables, net83,586 74,458 
Prepaid expenses and other current assets11,013 6,804 
Total current assets316,744 288,876 
Property and equipment, net29,444 27,011 
Right-of-use lease assets, net44,196 43,607 
Intangible assets, net175,093 174,931 
Goodwill364,562 343,796 
Other assets3,364 2,954 
Total assets$933,403 $881,175 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$38,446 $39,989 
Accrued liabilities47,319 45,325 
Billings in excess of costs and estimated earnings on uncompleted contracts16,805 24,962 
Client deposits706 380 
Current portion of contingent consideration3,933 1,334 
Current portion of notes payable and other obligations26,989 24,196 
Total current liabilities134,198 136,186 
Contingent consideration, less current portion1,374 1,066 
Other long-term liabilities39,762 38,737 
Notes payable and other obligations, less current portion142,347 283,326 
Deferred income tax liabilities, net29,736 27,791 
Total liabilities347,417 487,106 
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized, no shares issued and outstanding
  
Common stock, $0.01 par value; 45,000,000 shares authorized, 15,365,382 and 13,270,131 shares issued and outstanding as of July 3, 2021 and January 2, 2021, respectively
154 133 
Additional paid-in capital441,049 268,271 
Retained earnings144,783 125,665 
Total stockholders’ equity585,986 394,069 
Total liabilities and stockholders’ equity$933,403 $881,175 
See accompanying notes to consolidated financial statements (unaudited).
2


NV5 Global, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands, except share data)
Three Months EndedSix Months Ended
July 3, 2021June 27, 2020July 3, 2021June 27, 2020
Gross revenues$179,503 $162,689 $332,598 $328,169 
Direct costs:
Salaries and wages45,025 45,079 86,485 90,114 
Sub-consultant services29,978 25,244 53,225 52,670 
Other direct costs13,114 8,914 22,912 17,402 
Total direct costs88,117 79,237 162,622 160,186 
Gross profit91,386 83,452 169,976 167,983 
Operating expenses:
Salaries and wages, payroll taxes and benefits44,213 44,149 87,164 89,706 
General and administrative13,367 11,824 24,915 24,980 
Facilities and facilities related5,038 5,357 10,135 10,754 
Depreciation and amortization10,216 11,160 19,656 22,200 
Total operating expenses72,834 72,490 141,870 147,640 
Income from operations18,552 10,962 28,106 20,343 
Interest expense(1,568)(4,403)(3,886)(8,190)
Income before income tax expense16,984 6,559 24,220 12,153 
Income tax expense(3,346)(2,056)(5,102)(3,462)
Net income and comprehensive income$13,638 $4,503 $19,118 $8,691 
Earnings per share:
Basic$0.95 $0.37 $1.40 $0.71 
Diluted$0.91 $0.36 $1.35 $0.69 
Weighted average common shares outstanding:
Basic14,419,671 12,308,965 13,648,247 12,271,221 
Diluted14,965,188 12,609,918 14,196,035 12,601,830 
See accompanying notes to consolidated financial statements (unaudited).
3


NV5 Global, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(in thousands, except share data)
Three Months Ended
Common StockAdditional
Paid-In
Capital
Retained
Earnings
SharesAmountTotal
Balance, March 28, 202012,874,424 $129 $255,402 $108,835 $364,366 
Stock-based compensation— — 3,501 — 3,501 
Restricted stock issuance, net159,418 1 (1)—  
Stock issuance for acquisitions— — — —  
Net income— — — 4,503 4,503 
Balance, June 27, 202013,033,842 $130 $258,902 $113,338 $372,370 
Balance, April 3, 202114,933,927 $149 $415,895 $131,145 $547,189 
Stock-based compensation— — 4,094 — 4,094 
Restricted stock issuance, net189,520 2 (2)—  
Stock issuance for acquisitions— — (85)— (85)
Proceeds from secondary offering, net of costs241,935 3 21,147 — 21,150 
Net income— — — 13,638 13,638 
Balance, July 3, 202115,365,382 $154 $441,049 $144,783 $585,986 
See accompanying notes to consolidated financial statements (unaudited).























4


NV5 Global, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(in thousands, except share data)
Six Months Ended
Common StockAdditional
Paid-In
Capital
Retained
Earnings
SharesAmountTotal
Balance, December 28, 201912,852,357 $129 $251,187 $104,647 $355,963 
Stock compensation— — 6,880 — 6,880 
Restricted stock issuance, net163,835 1 (1)—  
Stock issuance for acquisitions12,406 — 558 — 558 
Payment of contingent consideration with common stock5,244 — 278 — 278 
Net income— — — 8,691 8,691 
Balance, June 27, 202013,033,842 $130 $258,902 $113,338 $372,370 
Balance, January 2, 202113,270,131 $133 $268,271 $125,665 $394,069 
Stock-based compensation— — 7,790 — 7,790 
Restricted stock issuance, net203,056 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 acquisitions35,737 — 3,060 — 3,060 
Proceeds from secondary offering, net of costs1,854,838 19 161,773 — 161,792 
Payment of contingent consideration with common stock2,200 — 209 — 209 
Net income— — — 19,118 19,118 
Balance, July 3, 202115,365,382 $154 $441,049 $144,783 $585,986 
See accompanying notes to consolidated financial statements (unaudited).
5


NV5 Global, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Six Months Ended
July 3, 2021June 27, 2020
Cash flows from operating activities:
Net income$19,118 $8,691 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization21,936 23,277 
Non-cash lease expense4,884 4,307 
Provision for doubtful accounts583 1,690 
Stock-based compensation7,790 6,880 
Change in fair value of contingent consideration235  
Gain on disposals of property and equipment(581)(350)
Deferred income taxes(2,988)(869)
Amortization of debt issuance costs454 442 
Changes in operating assets and liabilities, net of impact of acquisitions:
Billed receivables36,727 (1,134)
Unbilled receivables(7,238)(2,286)
Prepaid expenses and other assets(4,208)2,117 
Accounts payable(2,446)138 
Accrued liabilities(4,187)1,922 
Income taxes payable 613 
Billings in excess of costs and estimated earnings on uncompleted contracts(8,158)5,241 
Deposits307 66 
Net cash provided by operating activities62,228 50,745 
Cash flows from investing activities:
Cash paid for acquisitions (net of cash received from acquisitions)(21,652) 
Proceeds from sale of assets460 437 
Purchase of property and equipment(4,028)(6,145)
Net cash used in investing activities(25,220)(5,708)
Cash flows from financing activities:
Proceeds from common stock offering172,500  
Payments on notes payable(5,325)(8,415)
Payments of contingent consideration(413)(913)
Payments of borrowings from Senior Credit Facility(145,082)(1,875)
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) 
Payments of debt issuance costs (447)
Net cash provided by (used in) financing activities11,106 (11,650)
Net increase in cash and cash equivalents48,114 33,387 
Cash and cash equivalents – beginning of period64,909 31,825 
Cash and cash equivalents – end of period$113,023 $65,212 
See accompanying notes to consolidated financial statements (unaudited).
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NV5 Global, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Six Months Ended
July 3, 2021June 27, 2020
Non-cash investing and financing activities:
Contingent consideration (earn-out)$3,294 $ 
Notes payable and other obligations issued for acquisitions$11,174 $ 
Stock issuance for acquisitions$3,060 $558 
Accrued common stock offering costs$186 $ 
Finance leases$248 $409 
Payment of contingent consideration with common stock$209 $278 
See accompanying notes to consolidated financial statements (unaudited).
7


NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
Note 1 – Organization and Nature of Business Operations
Business
NV5 Global, Inc. and its subsidiaries (collectively, the “Company,” or “NV5 Global”) is a provider of professional and technical engineering and consulting solutions to public and private sector clients in the infrastructure, utility services, construction, real estate, and environmental markets, operating nationwide and abroad. The Company’s clients include the U.S. federal, state and local governments, and the private sector. NV5 Global provides a wide range of services, including, but not limited to:
Utility servicesMEP & technology engineering
LNG servicesCommissioning
EngineeringProgram management
Civil program managementEnvironmental health & safety
SurveyingReal estate transaction services
Testing, inspection & consulting (TIC)Energy efficiency services
Code compliance consulting3D geospatial data modeling
Forensic engineeringEnvironmental & natural resources
Litigation supportRobotic survey solutions
Ecological studiesGeospatial data applications & software
Fiscal Year
    The Company operates on a "52/53 week" fiscal year ending on the Saturday closest to the calendar quarter end, and fiscal 2021 contains 52 weeks compared to fiscal 2020, which contained 53 weeks.
Impact of COVID-19 on Our Business
The COVID-19 pandemic has significantly impacted global stock markets and economies. The Company is closely monitoring the impact of the outbreak of COVID-19 on all aspects of its business, including how it will impact the Company's customers and employees. Some of the Company's services were affected, primarily its Geospatial segment, real estate transactional services and hospitality-related services. In particular, due to COVID-19 restrictions, some of the Company's casino and hotel projects have been delayed. As U.S. and international economies begin to reopen and with a vaccine underway, 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, including new information which may emerge concerning the severity of the outbreak and actions by government authorities to contain the outbreak or treat its impact. The Company intends to continue to monitor the impact of COVID-19 pandemic on its business closely.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The consolidated financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting of interim financial information. Pursuant to such rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
U.S. GAAP have been condensed or omitted. The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
In the opinion of management, the accompanying unaudited interim consolidated financial statements of the Company contain all adjustments necessary to present fairly the financial position and results of operations of the Company as of the dates and for the periods presented. Accordingly, these statements should be read in conjunction with the consolidated financial statements and notes contained in the Company’s Annual Report on Form 10-K for the year ended January 2, 2021 (the “2020 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 2021 fiscal year.
Performance Obligations
To determine the proper 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 the Company's contracts have a single performance obligation as the promise to transfer the individual goods or services that is not separately identifiable from other promises in the contracts and therefore, is not distinct.
The Company’s performance obligations are satisfied as work progresses or at a point in time. Revenue on the Company's cost-reimbursable contracts is recognized over time using direct costs incurred or direct costs incurred to date as compared to the estimated total direct costs for performance obligations because it depicts the transfer of control to the customer. Contract costs include labor, sub-consultant services, and other direct costs.
Gross revenue from services transferred to customers at a point in time is recognized when the customer obtains control of the asset, which is generally upon delivery and acceptance by the customer of the reports and/or analysis performed.
As of July 3, 2021, the Company had $678,715 of remaining performance obligations, of which $544,001 is expected to be recognized over the next 12 months and the majority of the balance over the next 24 months. Contracts for which work authorizations have been received are included in performance obligations. Most of the Company's government contracts are multi-year contracts for which funding is appropriated on an annual basis, therefore performance obligations include only those amounts that have been funded and authorized and does not reflect the full amounts the Company may 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.
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed receivables, unbilled receivables (contract assets), and billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities) on the Consolidated Balance Sheet. The liability “Billings in excess of costs and estimated earnings on uncompleted contracts” represents billings in excess of revenues recognized on these contracts as of the reporting date. This liability is generally classified as current. Revenue recognized that was included in the contract liability balance at the beginning of the fiscal year was $4,742 and $23,358 for the three and six months ended July 3, 2021.

Goodwill and Intangible Assets
Goodwill is the excess of consideration paid for an acquired entity over the amounts assigned to assets acquired, including other identifiable intangible assets and liabilities assumed in a business combination. To determine the amount of goodwill resulting from a business combination, the Company performs an assessment to determine the acquisition date fair value of the acquired company’s tangible and identifiable intangible assets and liabilities.
 
Goodwill is required to be evaluated for impairment on an annual basis or whenever events or changes in circumstances indicate the asset may be impaired. An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. These qualitative factors include: macroeconomic and industry conditions, cost factors, overall financial
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
performance and other relevant entity-specific events. If the entity determines that this threshold is met, then the Company may apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit'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. The Company has elected to perform its annual goodwill impairment review as of August 1 of each year. The Company conducts its annual impairment tests on the goodwill using the quantitative method of evaluating goodwill.

As of August 1, 2020, the Company conducted its annual impairment tests using the quantitative method of evaluating goodwill. Based on the quantitative analyses the Company determined the fair value of each of the reporting units exceeded its carrying value. Therefore, the goodwill was not impaired and the Company did not recognize an impairment charge relating to goodwill as of August 1, 2020. Furthermore, there were no indicators, events or changes in circumstances that would indicate goodwill was impaired during the period from August 2, 2020 through July 3, 2021.
Identifiable intangible assets primarily include customer backlog, customer relationships, trade names, non-compete agreements, and 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. There were no indicators, events or changes in circumstances that would indicate intangible assets were impaired during the six months ended July 3, 2021.

See Note 8, Goodwill and Intangible Assets, for further information on goodwill and identified intangibles.
There have been no material changes in the Company's significant accounting policies described in the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended January 2, 2021.
Note 3 – Recent Accounting Pronouncements
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) ("ASU 2020-04"). This ASU provides optional expedients and exceptions to the current guidance on contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts and hedging relationships that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to reference rate reform. The guidance was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company adopted this ASU upon issuance and there was no impact to its financial statements as a result of the adoption. The Company will apply this guidance to any future modifications to its Credit Agreement that references LIBOR.
Note 4 – Earnings per Share
Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period, excluding unvested restricted shares. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. 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 share for the six months ended July 3, 2021 and June 27, 2020 exclude 830,182 and 612,827 non-vested restricted shares, respectively. During the three and six months ended July 3, 2021, there were 16,894 and 11,805 weighted average securities which are not included in the calculation of diluted weighted average shares outstanding because their impact is anti-dilutive or their performance conditions have not been met. During the three and six months ended June 27, 2020, there were 180,554 and 177,029 weighted average securities which are not included in the calculation of diluted weighted average shares outstanding because their impact is anti-dilutive.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
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:
Three Months EndedSix Months Ended
July 3, 2021June 27, 2020July 3, 2021June 27, 2020
Numerator:
Net income – basic and diluted$13,638 $4,503 $19,118 $8,691 
Denominator:
Basic weighted average shares outstanding14,419,671 12,308,965 13,648,247 12,271,221 
Effect of dilutive non-vested restricted shares and units515,913 245,282 520,824 271,618 
Effect of issuable shares related to acquisitions29,604 55,671 26,964 58,991 
Diluted weighted average shares outstanding14,965,188 12,609,918 14,196,035 12,601,830 

Secondary Offering
On March 10, 2021, the Company priced an underwritten public offering of 1,612,903 shares of its common stock (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 $140,642 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.
Note 5 Business Acquisitions
2021 Acquisitions
On February 9, 2021 ("IDA Closing Date"), the Company acquired all of the outstanding equity interests in Industrial Design Associates International, Industrial Design Associates International PTE LTD., and IDA Engineering Private Limited (collectively "IDA"), an international engineering services consulting company that provides building commissioning and MEP design services to clients throughout Asia. The aggregate purchase price is $2,955, including $1,975 of cash and a $980 promissory note, payable in two equal installments due on each of the sixth month and twelve month anniversaries of the IDA Closing Date. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for IDA, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. The final determination of the fair value of assets and liabilities will be completed within the one-year measurement period as required by ASC Topic 805, Business Combinations ("ASC 805"). The IDA acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, accounts receivable, and certain fixed assets.
On February 22, 2021 ("TerraTech Closing Date"), the Company acquired all of the outstanding equity interests in TerraTech Engineers, Inc. ("TerraTech"), a geotechnical engineering, environmental consulting, and materials testing company headquartered in North Carolina. The aggregate purchase price is $7,514, including $3,000 of cash, a $3,200 promissory note (bearing interest at 2.75%), payable in five equal installments of $640 due on the first, second, third, fourth and fifth anniversaries of the TerraTech Closing Date, and $450 of the Company's common stock (5,204 shares) issued at the closing date. The purchase price also includes $864 of the Company's common stock payable in two equal installments due on the first and second anniversaries of the TerraTech Closing Date. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for TerraTech, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. 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 TerraTech acquisition will necessitate the use of this measurement period
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, accounts receivable, and certain fixed assets.
On March 25, 2021 ("Geodynamics Closing Date"), the Company acquired all of the outstanding equity interests in Geodynamics LLC ("Geodynamics"), a provider of sonar-based, deep-water geospatial solutions. The aggregate purchase price is $19,879, including $11,000 of cash, a $4,000 promissory note (bearing interest at 2.75%), payable in three equal installments of $1,333 due on the first, second, and third anniversaries of the Geodynamics Closing Date, and $2,610 of the Company's common stock (30,533 shares) issued at the closing date. The purchase price also includes a potential $21,000 earn-out of cash, which was recorded at an estimated fair value of $2,269. An option based model was used to determine the fair value of the earn-out, 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 for Geodynamics, the Company engaged an independent third-party valuation specialist to assist in the determination of fair values. 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 Geodynamics acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, accounts receivable, and certain fixed assets.
On May 14, 2021 ("PES Environmental Closing Date"), the Company acquired all of the outstanding equity interests in PES Environmental, Inc. ("PES Environmental"), an environmental engineering and consulting company providing environmental site assessment, water resources and stormwater management, permitting and compliance, industrial hygiene, and litigation support services. The aggregate purchase price is $9,655, including $6,500 of cash, a $1,500 promissory note (bearing interest at 2.75%), payable in three equal installments due on the first, second, and third anniversaries of the PES Environmental Closing Date, and $630 of the Company's common stock (7,847 shares) issuable within 90 days of the PES Environmental Closing Date. The purchase price also includes a potential non-interest bearing earn-out of up to $1,100 payable in cash and stock, which was recorded at an estimated fair value of $1,025. An option based model was used to determine the fair value of the earn-out, 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 for PES Environmental, the Company engaged an independent third-party valuation specialist to assist in the determination of fair values. 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 PES Environmental acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, accounts receivable, and certain fixed assets.
2020 Acquisitions    

    On July 16, 2020, the Company acquired all of the outstanding equity interests in Mediatech FZ, LLC and Mediatech Information Technology Consultants ("Mediatech"), a technology company providing security, enterprise IT, and building technology solutions in the Middle East and North Africa (MENA) region and South East Asia. Mediatech provides technology design services for the hospitality, industrial, healthcare, commercial, retail, and convention center markets. The Company acquired Mediatech for an aggregate purchase price of $1,949, including $882 of cash and $500 in promissory note, payable in four equal installments of $125 due on the first, second, third, and fourth anniversaries of the closing date. The purchase price also includes $312 of the Company's common stock payable in four equal installments due at closing and on the first, second and third anniversaries of the closing date. Further, the purchase price includes $255 in additional contingent payments. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for Mediatech, the Company performed a fair value assessment.
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NOTES 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 date for the acquisitions closed during the six months ended July 3, 2021 and the fiscal year ended January 2, 2021:
Six Months EndedFiscal Year Ended
July 3, 2021January 2, 2021
Cash$823 $ 
Billed and unbilled receivables, net5,631 1,439 
Right-of-use assets2,329  
Property and equipment3,475 28 
Prepaid expenses392 33 
Other assets6 28 
Intangible assets:
Customer relationships11,709 237 
Trade name703 30 
Customer backlog1,547 56 
Non-compete2,715 5 
Total Assets$29,330 $1,856 
Liabilities(5,155)(345)
Deferred tax liabilities(4,852)(86)
Net assets acquired$19,323 $1,425 
Consideration paid (Cash, Notes and/or stock)$36,709 $1,694 
Contingent earn-out liability (Cash and stock)3,294 255 
Total Consideration$40,003 $1,949 
Excess consideration over the amounts assigned to the net assets acquired (Goodwill)$20,680 $524 
Goodwill was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is attributable to the reputation of the business acquired, the workforce in place and the synergies to be achieved from these acquisitions. See Note 8, Goodwill and Intangible Assets, for further information on fair value adjustments to goodwill and identified intangibles.
The consolidated financial statements of the Company 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 from their respective dates of acquisition for the three and six months ended July 3, 2021.
Three Months EndedSix Months Ended
July 3, 2021July 3, 2021
Gross revenues$8,529 $9,981 
Income before income taxes$2,795 $3,288 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
The following table presents the unaudited, pro forma consolidated results of operations (in thousands, except per share amounts) for the three and six months ended July 3, 2021 and June 27, 2020 as if the acquisitions of TerraTech, GeoDynamics, and PES Environmental had occurred at the beginning of fiscal year 2020. The pro forma information provided below is compiled from the pre-acquisition financial information of TerraTech, GeoDynamics, and PES Environmental and 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 operations of these acquisitions actually been acquired at the beginning of fiscal year 2020 or (ii) future results of operations:
Three Months EndedSix Months Ended
July 3, 2021June 27, 2020July 3, 2021June 27, 2020
Gross revenues$180,954 $168,656 $339,947 $341,214 
Net income$13,551 $4,484 $19,299 $8,974 
Basic earnings per share$0.94 $0.36 $1.41 $0.73 
Diluted earnings per share$0.91 $0.35 $1.36 $0.71 

    The pro forma results for Mediatech and IDA have not been presented as the financial impact on the Company's consolidated financial statements would be immaterial.
Note 6 Billed and Unbilled Receivables
Billed and Unbilled Receivables consists of the following:
July 3, 2021January 2, 2021
Billed receivables$114,779 $149,233 
Less: allowance for doubtful accounts(5,657)(6,528)
Billed receivables, net$109,122 $142,705 
Unbilled receivables$85,996 $76,609 
Less: allowance for doubtful accounts(2,410)(2,151)
Unbilled receivables, net$83,586 $74,458 

Note 7 Property and Equipment, net
Property and equipment, net, consists of the following:
July 3, 2021January 2, 2021
Office furniture and equipment$3,845 $3,782 
Computer equipment16,648 15,597 
Survey and field equipment27,143 22,866 
Leasehold improvements6,406 6,322 
Total54,042 48,567 
Less: accumulated depreciation(24,598)(21,556)
Property and equipment, net$29,444 $27,011 
Depreciation expense was $2,865 and $5,439 for the three and six months ended July 3, 2021, respectively, of which $1,178 and $2,280 was included in other direct costs for the three and six months ended July 3, 2021. Depreciation expense was $2,725 and $5,426 for the three and six months ended June 27, 2020, respectively, of which $1,077 and $2,179 was included in other direct costs for the three and six months ended June 27, 2020, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
Note 8 Goodwill and Intangible Assets
Goodwill
The changes in the carrying value by reportable segment for the six months ended July 3, 2021 were as follows:
Six Months Ended
January 2, 20212021 AcquisitionsAdjustmentsJuly 3, 2021
INF$87,333 $3,392 $ $90,725 
BTS78,848 5,790 86 84,724 
GEO177,615 11,498  189,113 
Total$343,796 $20,680 $86 $364,562 
During the six months ended July 3, 2021, the Company recorded goodwill related to the acquisitions of IDA, TerraTech, Geodynamics, and PES Environmental of $832, $3,392, $11,498, and $4,958, respectively, and a purchase price allocation adjustment of $86 that increased goodwill for the acquisition of Mediatech.
Intangible Assets
Intangible assets, net, as of July 3, 2021 and January 2, 2021 consist of the following:
July 3, 2021January 2, 2021
Gross
Carrying
Amount
Accumulated AmortizationNet
Amount
Gross
Carrying
Amount
Accumulated AmortizationNet
Amount
Finite-lived intangible assets:
Customer relationships(1)
$194,757 $(55,536)$139,221 $183,048 $(46,506)$136,542 
Trade name(2)
15,220 (13,540)1,680 14,517 (12,099)2,418 
Customer backlog(3)
26,658 (22,372)4,286 25,111 (19,709)5,402 
Non-compete(4)
12,088 (7,920)4,168 9,373 (6,909)2,464 
Developed technology(5)
32,944 (7,206)25,738 32,944 (4,839)28,105 
Total finite-lived intangible assets$281,667 $(106,574)$175,093 $264,993 $(90,062)$174,931 

(1) Amortized on a straight-line basis over estimated lives (5 to 12 years)
(2) Amortized on a straight-line basis over their estimated lives (1 to 3 years)
(3) Amortized on a straight-line basis over their estimated lives (1 to 5 years)
(4) Amortized on a straight-line basis over their contractual lives (2 to 5 years)
(5) Amortized on a straight-line basis over their estimated lives (5 to 7 years)
Amortization expense was $8,529 and $16,497 during the three and six months ended July 3, 2021, respectively, and $9,512 and $17,851 during the three and six months ended June 27, 2020, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
Note 9 Accrued Liabilities
Accrued liabilities consist of the following:
July 3, 2021January 2, 2021
Current portion of lease liability$12,879 $13,161 
Accrued vacation14,542 11,998 
Payroll and related taxes11,453 10,744 
Benefits3,130 4,764 
Accrued operating expenses3,568 2,792 
Professional liability reserve902 949 
Accrued interest expense507 506 
Income tax payable and other liabilities338 411 
Total$47,319 $45,325 

Note 10 Notes Payable and Other Obligations
Notes payable and other obligations consists of the following:
July 3, 2021January 2, 2021
Senior credit facility$138,750 $283,832 
Uncollateralized promissory notes28,374 23,175 
Finance leases2,742 2,994 
Other obligations2,645 1,151 
Debt issuance costs, net of amortization(3,175)(3,630)
Total notes payable and other obligations169,336 307,522 
Current portion of notes payable and other obligations26,989 24,196 
Notes payable and other obligations, less current portion$142,347 $283,326 
As of July 3, 2021 and January 2, 2021, 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.
Senior Credit Facility
On December 20, 2019 (the "Closing Date"), the Company amended and restated its Credit Agreement (the "A&R Credit Agreement"), dated December 7, 2016, as amended on December 20, 2018, with Bank of America, N.A. ("Bank of America"), as administrative agent, swingline lender and letter of credit issuer, the other lenders party thereto, and certain of the Company's subsidiaries as guarantors. Pursuant to the A&R Credit Agreement, the lenders provided term commitments of $150,000 in the aggregate in a single draw on the Closing Date to fund the acquisition of QSI and various costs and expenses relating thereto and revolving commitments totaling $215,000 in the aggregate. The revolving commitment is available through December 20, 2024 (the "Maturity Date"), at which time the term commitments and revolving commitments will be due and payable in full. An aggregate amount of $320,500 was drawn under the A&R Credit Agreement on the Closing Date to fund the QSI acquisition and repay previously existing borrowings. Borrowings under the A&R Credit Agreement are secured by a first priority lien on substantially all of the assets of the Company. The A&R Credit Agreement also includes an accordion feature permitting the Company to request an increase in either the term facility or the revolver facility under the A&R Credit Agreement by an additional amount of up to $100,000 in the aggregate.
Borrowings under the term facility amortize at the rate of 5.0% per annum for the first two years of the facility and thereafter at the rate of 7.5% per annum until the Maturity Date.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
On May 5, 2020 (the "Amendment Closing Date"), in response to the COVID-19 pandemic, the Company entered into an amendment to the A&R Credit Agreement (the "Amended A&R Credit Agreement") to amend the financial covenants that requires NV5 Global to maintain a consolidated leverage ratio (the ratio of the Company's pro forma consolidated funded indebtedness to the Company's pro forma consolidated EBITDA for the most recently completed measurement period). The amended consolidated leverage ratio requirements are as follows:
Measurement Period EndingMaximum Consolidated Leverage Ratio
Amendment Closing Date through June 27, 2020
4.50 to 1.00
June 28, 2020 through October 3, 2020
5.00 to 1.00
October 4, 2020 through January 2, 2021
5.25 to 1.00
January 3, 2021 and April 3, 2021
4.75 to 1.00
April 4, 2021 and July 3, 2021
4.00 to 1.00
July 4, 2021 and thereafter
3.50 to 1.00
These financial covenants also require the Company to maintain a consolidated fixed charge coverage ratio of no less than 1.20 to 1.00 as of the end of any measurement period. As of July 3, 2021, the Company was in compliance with the financial covenants.

    The Amended A&R Credit Agreement also amended pricing terms which remain variable and tied to a Eurocurrency rate equal to LIBOR (London Interbank Offered Rate) plus an applicable margin or a base rate denominated in U.S. dollars. Interest rates remain subject to change based on the Company's consolidated leverage ratio. As of July 3, 2021 the Company's interest rate was 2.3%.

    The Amended A&R Credit Agreement contains covenants that may have the effect of limiting the Company's 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 Amended A&R Credit Agreement also contains customary events of default, including (but not limited to) a default in the payment of principal or, following an applicable grace period, interest, breaches of the Company's covenants or warranties under the Amended A&R Credit Agreement, payment default or acceleration of certain indebtedness, certain events of bankruptcy, insolvency or liquidation, certain judgments or uninsured losses, changes in control and certain liabilities related to ERISA based plans.
The Amended A&R Credit Agreement limits the payment of cash dividends (together with certain other payments that would constitute a "Restricted Payment" within the meaning of the Amended 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 securities) to no more than $10,000 in any fiscal year, so long as no default shall exist at the time of or arise as a result from such payment.
Total debt issuance costs incurred and capitalized in connection with the issuance of the Amended A&R Credit Agreement were $4,123. Total amortization of debt issuance costs was $227 and $454 during the three and six months ended July 3, 2021, respectively, and $222 and $442 during the three and six months ended June 27, 2020, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
Other Obligations
On May 14, 2021, the Company acquired PES Environmental. The purchase price allowed for the payment of $630 in shares of the Company's stock payable within 90 days of the PES Environmental Closing Date. At July 3, 2021, the outstanding balance on this obligation was $630.
On February 22, 2021, the Company acquired TerraTech. The purchase price allowed for the payment of $864 in shares of the Company's stock or a combination of cash and shares of the Company's stock, at its discretion, payable in two equal annual installments. At July 3, 2021, the outstanding balance on this obligation was $864.
    On July 16, 2020, the Company acquired Mediatech. The purchase price allowed for the payment of $230 in shares of the Company's stock or a combination of cash and shares of the Company's stock, at its discretion, payable in three equal annual installments. At July 3, 2021 and January 2, 2021, the outstanding balance on this obligation was $230.
    On July 1, 2019, the Company acquired GeoDesign. The purchase price allowed for the payment of $425 in shares of the Company's stock or a combination of cash and shares of the Company's stock, at its discretion, payable on the first and second anniversary of July 1, 2019. At July 3, 2021 and January 2, 2021, the outstanding balance on this obligation was $44.
    On November 2, 2018, the Company acquired CHI. 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 its discretion, payable in three equal annual installments. At July 3, 2021 and January 2, 2021, the outstanding balance of this obligation was $877.
Uncollateralized Promissory Notes
On May 14, 2021, the Company acquired PES Environmental. The purchase price included an uncollateralized $1,500 promissory note bearing interest at 2.75% ("PES Environmental Note") and payable in three equal annual installments. The outstanding balance of the PES Environmental Note was $1,500 as of July 3, 2021.
On March 25, 2021, the Company acquired Geodynamics. The purchase price included an uncollateralized $4,000 promissory note bearing interest at 2.75% ("Geodynamics Note") and payable in three equal annual installments. The outstanding balance of the Geodynamics Note was $4,000 as of July 3, 2021.
On February 22, 2021, the Company acquired TerraTech. The purchase price included an uncollateralized $3,200 promissory note bearing interest at 2.75% ("TerraTech Note") and payable in five equal annual installments. The outstanding balance of the TerraTech Note was $3,200 as of July 3, 2021.
On February 9, 2021, the Company acquired IDA. The purchase price included an uncollateralized $980 promissory note ("IDA Note") payable in two equal annual installments. The outstanding balance of the IDA Note was $980 as of July 3, 2021.
    On July 16, 2020, the Company acquired Mediatech. The purchase price included an uncollateralized $500 promissory note ("Mediatech Note") payable in four equal annual installments. The outstanding balance of the Mediatech Note was $500 as of July 3, 2021 and January 2, 2021.
    On July 1, 2019, the Company acquired GeoDesign. The purchase price included an uncollateralized $2,000 promissory note bearing interest at 4.0% ("GeoDesign Note") and payable in four equal annual installments. The outstanding balance of the GeoDesign Note was $1,000 and $1,500 as of July 3, 2021 and January 2, 2021, respectively.
On June 3, 2019, the Company acquired Alta. The purchase price included an uncollateralized $2,000 promissory note bearing interest at 4.0% ("Alta Note") and payable in four equal annual installments. The outstanding balance of the Alta Note was $1,000 and $1,500 as of July 3, 2021 and January 2, 2021, respectively.
On June 3, 2019, the Company acquired Page One. The purchase price included an uncollateralized $1,000 promissory note bearing interest at 3.0% ("Page One Note") and payable in three equal annual installments. The outstanding balance of the Page One Note was $333 and $700 as of July 3, 2021 and January 2, 2021, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
On March 22, 2019, the Company acquired The Sextant Group. The purchase price included an uncollateralized $4,000 promissory note bearing interest at 4.0% ("The Sextant Group Note") and payable in four equal annual installments. The outstanding balance of The Sextant Group Note was $2,000 and $3,000 as of July 3, 2021 and January 2, 2021, respectively.
On December 31, 2018, the Company acquired certain assets of Celtic. The purchase price included an uncollateralized $300 promissory note bearing interest at 3.0% (the "Celtic Note") payable in three equal annual installments. The outstanding balance of the Celtic Note was $97 and $100 as of July 3, 2021 and January 2, 2021, respectively.
On November 2, 2018, the Company acquired CHI. The purchase price included an uncollateralized $15,000 promissory note bearing interest at 3.0% (the "CHI Note") payable in four equal annual installments. The outstanding balance of the CHI Note was $7,500 as of July 3, 2021 and January 2, 2021.
On August 24, 2018, the Company acquired CALYX. The purchase price included an uncollateralized $4,000 promissory note bearing interest at 3.75% payable in four equal annual installments of $1,000. The outstanding balance of the CALYX Note was $2,000 as of July 3, 2021 and January 2, 2021.
    On February 2, 2018, the Company acquired CSA. The purchase price included an uncollateralized $600 promissory note bearing interest at 3.0% (the "CSA Note") payable in four equal annual installments of $150. The outstanding balance of the CSA Note was $150 and $300 as of July 3, 2021 and January 2, 2021, respectively.
On January 12, 2018, the Company acquired all of the outstanding equity interest in Butsko. The purchase price included an uncollateralized $1,000 promissory note bearing interest at 3.0% (the "Butsko Note") payable in four equal annual installments of $250. The outstanding balance of the Butsko Note was $300 and $500 as of July 3, 2021 and January 2, 2021, 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 equal annual installments of $1,375. There was no outstanding balance on the RDK Note as of July 3, 2021. As of January 2, 2021, the outstanding balance of the RDK Note was $1,375.
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 equal annual installments of $150. There was no outstanding balance on the H&K Note as of July 3, 2021. As of January 2, 2021, the outstanding balance of the H&K Note was $150.
On May 1, 2017, the Company acquired all of the outstanding equity interest in Lochrane. The purchase price included an uncollateralized $1,650 promissory note bearing interest at 3.0% (the "Lochrane Note") payable in four equal annual installments of $413. There was no outstanding balance on the Lochrane Note as of July 3, 2021. As of January 2, 2021, the outstanding balance of the Lochrane Note was $413.
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 equal annual installments of $675. The outstanding balance of the Hanna Note was $430 as of July 3, 2021 and January 2, 2021.
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 equal annual installments of $1,400. The outstanding balance of the JBA Note was $3,011 as of July 3, 2021 and January 2, 2021.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
Note 11 Contingent Consideration
The following table summarizes the changes in the carrying value of estimated contingent consideration:
July 3, 2021January 2, 2021
Contingent consideration, beginning of the year$2,400 $4,002 
Additions for acquisitions3,294 255 
Reduction of liability for payments made(622)(1,857)
Increase of liability related to re-measurement of fair value235  
Total contingent consideration, end of the period5,307 2,400 
Current portion of contingent consideration3,933 1,334 
Contingent consideration, less current portion$1,374 $1,066 

Note 12 Commitments and Contingencies
Litigation, Claims and Assessments
The Company is subject to certain claims and lawsuits typically filed against the engineering, consulting and construction profession, alleging primarily professional errors or omissions. The Company carries professional liability insurance, subject to certain deductibles and policy limits, against such claims. However, in some actions, parties are seeking damages that exceed our insurance coverage or for which we are not insured. While management does not believe that the resolution of these claims will have a material adverse effect, individually or in aggregate, on its financial position, results of operations or cash flows, management acknowledges the uncertainty surrounding the ultimate resolution of these matters.
Note 13 Stock-Based Compensation
In October 2011, our 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. We 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 July 3, 2021, 661,858 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 our 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.
The following summarizes the activity of restricted stock awards during the six months ended July 3, 2021:
Number of Unvested Restricted Shares of Common Stock and Restricted Stock UnitsWeighted Average
Grant Date Fair
Value
January 2, 2021770,183$57.20 
Granted235,418$90.02 
Vested(137,477)$62.13 
Forfeited(32,362)$57.71 
July 3, 2021835,762$65.83 
Stock-based compensation expense relating to restricted stock awards during the three and six months ended July 3, 2021 was $4,094 and $7,790, respectively, and $3,501 and $6,880 during the three and six months ended June 27, 2020, respectively. Approximately $34,940 of deferred compensation, which is expected to be recognized over the remaining weighted average
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
vesting period of 1.8 years, is unrecognized at July 3, 2021. The total fair value of restricted shares vested during the six months ended July 3, 2021 and June 27, 2020 was $12,426 and $8,426, respectively.
Note 14 Income Taxes
As of July 3, 2021 and January 2, 2021, the Company had net deferred income tax liabilities of $29,736 and $27,791, respectively. Deferred income tax liabilities primarily relate to intangible assets and accounting basis adjustments where we have a future obligation for tax purposes.
The Company's effective income tax rate was 19.7% and 21.1% during the three and six months ended July 3, 2021, respectively, and 31.3% and 28.5% during the three and six months ended June 27, 2020, respectively. The difference between the effective income tax rate and the combined statutory federal and state income tax rate was primarily due to the recognition of excess tax benefits from stock-based payments in the second quarter of 2021 and the recognition of tax expense from stock-based payments in the second quarter in 2020.
The Company evaluates tax positions for recognition using a more-likely-than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information. The California Franchise Tax Board (“CFTB”) challenged research and development tax credits generated for the years 2012 to 2014. Fiscal years 2012 through 2020 are considered open tax years in the State of California and 2017 through 2020 in the U.S. federal jurisdiction and other state and foreign jurisdictions. It is not expected that there will be a significant change in the unrecognized tax benefits within the next 12 months.
Note 15 Reportable Segments
The Company reports segment information in accordance with ASC Topic No. 280 “Segment Reporting” (“Topic No. 280”). The Company's Chief Executive Officer, who is the chief operating decision maker ("CODM"), organized the Company into three operating and reportable segments: Infrastructure ("INF"), which includes the Company's engineering, civil program management, utility services, and construction quality assurance, testing and inspection practices; Building, Technology & Sciences ("BTS"), which includes the Company's environmental, buildings and program management, and MEP & technology practices; and Geospatial Solutions ("GEO"), which includes the Company's geospatial solution practices. The prior period results of the Company's INF and GEO reportable segments were adjusted to include the results of Skyscene, LLC ("Skyscene") in the Company's GEO reportable segment. The adjustment to the INF and GEO segments was not material to prior period segment financial results.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
The Company evaluates the performance of these reportable segments based on their respective operating income before the effect of amortization expense related to acquisitions and other unallocated corporate expenses. The following tables set forth summarized financial information concerning our reportable segments:
Three Months EndedSix Months Ended
July 3, 2021June 27, 2020July 3, 2021June 27, 2020
Gross revenues
INF$97,755 $87,087 $185,288 $170,820 
BTS43,818 36,641 82,423 79,752 
GEO37,930 38,961 64,887 77,597 
Total gross revenues$179,503 $162,689 $332,598 $328,169 
Segment income before taxes
INF$19,149 $15,484 $35,961 $28,596 
BTS7,501 5,409 13,766 10,828 
GEO10,121 6,458 14,026 14,299 
Total Segment income before taxes36,771 27,351 63,753 53,723 
Corporate(1)
(19,787)(20,792)(39,533)(41,570)
Total income before taxes$16,984 $6,559 $24,220 $12,153 
(1) Includes amortization of intangibles of $8,529 and $16,497 for the three and six months ended July 3, 2021, respectively, and $9,512 and $17,851 for the three and six months ended June 27, 2020, respectively.
Upon adoption of Topic 606, the Company disaggregates its gross revenues from contracts with customers by geographic location, customer-type and contract-type for each of our reportable segments. Disaggregated revenues include the elimination of inter-segment revenues which has been allocated to each segment. The Company believes this best depicts how the nature, 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 3, 2021Six Months Ended July 3, 2021
INFBTSGEOTotalINFBTSGEOTotal
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 June 27, 2020Six Months Ended June 27, 2020
INFBTSGEOTotalINFBTSGEOTotal
United States$87,087 $34,743 $38,731 $160,561 $170,820 $75,185 $76,962 $322,967 
Foreign 1,898 230 2,128  4,567 635 5,202 
Total gross revenues$87,087 $36,641 $38,961 $162,689 $170,820 $79,752 $77,597 $328,169 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
    Gross revenue by customer were as follows:
Three Months Ended July 3, 2021Six Months Ended July 3, 2021
INFBTSGEOTotalINFBTSGEOTotal
Public and quasi-public sector$76,777 $16,562 $24,847 $118,186 $145,460 $36,885 $42,820 $225,165 
Private sector20,978 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 June 27, 2020Six Months Ended June 27, 2020
INFBTSGEOTotalINFBTSGEOTotal
Public and quasi-public sector$67,157 $17,658 $27,090 $111,905 $132,090 $35,492 $54,053 $221,635 
Private sector19,930 18,983 11,871 50,784 38,730 44,260 23,544 106,534 
Total gross revenues$87,087 $36,641 $38,961 $162,689 $170,820 $79,752 $77,597 $328,169 

    Gross revenues by contract type were as follows:
Three Months Ended July 3, 2021Six Months Ended July 3, 2021
INFBTSGEOTotalINFBTSGEOTotal
Cost-reimbursable contracts$93,396 $31,453 $37,822 $162,671 $176,781 $60,162 $64,711 $301,654 
Fixed-unit price contracts4,359 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 

Three Months Ended June 27, 2020Six Months Ended June 27, 2020
INFBTSGEOTotalINFBTSGEOTotal
Cost-reimbursable contracts$81,884 $31,167 $38,906 $151,957 $161,660 $64,377 $77,438 $303,475 
Fixed-unit price contracts5,203 5,474 55 10,732 9,160 15,375 159 24,694 
Total gross revenues$87,087 $36,641 $38,961 $162,689 $170,820 $79,752 $77,597 $328,169 
Note 16 – Leases
The Company primarily leases property under operating leases and has six equipment operating leases for aircrafts used by the operations of QSI. The Company's property operating leases consist of various office facilities. The Company uses a portfolio approach to account for such leases due to the similarities in characteristics and apply an incremental borrowing rate based on estimates of rates the Company would pay for senior collateralized loans over a similar term. The Company's office leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for lease components (e.g. fixed payments including rent, real estate taxes and common area maintenance costs) as a single lease component. Some of the Company's leases include one or more options to renew the lease term at its sole discretion; however, these are not included in the calculation of its lease liability or ROU lease asset because they are not reasonably certain of exercise.
The Company also leases vehicles through a fleet leasing program. The payments for the vehicles are based on the terms selected. The Company has determined that it is reasonably certain that the leased vehicles will be held beyond the period in which the entire capitalized value of the vehicle has been paid to the lessor. As such, the capitalized value is the delivered price of the vehicle. The Company's vehicle leases are classified as financing leases.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
Supplemental balance sheet information related to the Company's operating and finance leases is as follows:
LeasesClassificationJuly 3, 2021January 2, 2021
Assets
Operating lease assets
Right-of-use lease asset, net (1)
$44,196 $43,607 
Finance lease assets
Property and equipment, net (1)
2,719 2,946 
Total leased assets$46,915 $46,553 
Liabilities
Current
OperatingAccrued liabilities$(12,879)$(13,161)
FinanceCurrent portion of notes payable and other obligations(1,346)(1,321)
Noncurrent
OperatingOther long-term liabilities(33,076)(32,290)
FinanceNotes payable and other obligations, less current portion(1,396)(1,673)
Total lease liabilities$(48,697)$(48,445)
(1) At July 3, 2021, operating right of-use lease assets and finance lease assets are recorded net of accumulated amortization of $23,964 and $3,034, respectively. At January 2, 2021, operating right-of-use lease assets and finance lease assets are recorded net of accumulated amortization of $19,096 and $2,499, respectively.

    Supplemental balance sheet information related to the Company's operating and finance leases is as follows:
Weighted - Average Remaining Lease Term (Years)
July 3, 2021January 2, 2021
Operating leases4.74.9
Finance leases1.92.1
Weighted - Average Discount Rate
Operating leases4%4%
Finance leases7%7%

    Supplemental cash flow information related to the Company's operating and finance lease liabilities is as follows:
Three Months EndedSix Months Ended
July 3, 2021June 27, 2020July 3, 2021June 27, 2020
Operating cash flows from operating leases$3,531 $3,419 $7,048 $6,939 
Financing cash flows from finance leases$337 $268 $592 $535 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$1,073 $2,995 $2,382 $7,985 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
    The following tables summarize the components of lease cost recognized in the consolidated statements of net income and comprehensive income:
Three Months EndedSix Months Ended
Lease CostClassificationJuly 3, 2021July 3, 2021
Operating lease costFacilities and facilities related$3,973 $7,654 
Variable operating lease costFacilities and facilities related333 931 
Finance lease cost
Amortization of financing lease assetsDepreciation and amortization337 592 
Interest on lease liabilitiesInterest expense45 78 
Total lease cost$4,688 $9,255 

Three Months EndedSix Months Ended
Lease CostClassificationJune 27, 2020June 27, 2020
Operating lease costFacilities and facilities related$3,515 $7,100 
Variable operating lease costFacilities and facilities related  
Finance lease cost
Amortization of financing lease assetsDepreciation and amortization260 509 
Interest on lease liabilitiesInterest expense31 61 
Total lease cost$3,806 $7,670 

    As of July 3, 2021, maturities of the Company's lease liabilities under its long-term operating leases and finance leases for the next five fiscal years and thereafter are as follows:
Fiscal YearOperating LeasesFinance Leases
Remainder of 2021$7,512 $1,397 
202212,729 993 
202310,143 522 
20247,411 119 
20255,436 53 
Thereafter7,245  
Total lease payments50,476 3,084 
Less: Interest(4,521)(342)
Present value of lease liabilities$45,955 $2,742 

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of the financial condition and results of operations of NV5 Global, Inc. and its subsidiaries (collectively, the “Company,” “we,” “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 January 2, 2021, included in our Annual Report on Form 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” 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 for the year ended January 2, 2021 and 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 presented are in thousands, except per share data.
Overview
We are a provider of professional and technical engineering and consulting solutions to public and private sector clients. We focus on the infrastructure, utility services, construction, real estate, and environmental markets. We primarily focus on the following business service verticals: testing, inspection & consulting, infrastructure support services, utility services, buildings & program management, environmental health sciences, and geospatial technology services. Our primary clients include U.S. 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, utility services, and public utilities, including schools, universities, hospitals, health care providers, insurance providers, large utility service providers, and large to small utility service producers.
Fiscal Year
    We operate on a "52/53 week" fiscal year ending on the Saturday closest to the calendar quarter end, and fiscal 2021 contains 52 weeks compared to fiscal 2020, which contained 53 weeks.
Recent Acquisitions
On February 9, 2021 ("IDA Closing Date"), we acquired all of the outstanding equity interests in Industrial Design Associates International, Industrial Design Associates International PTE LTD., and IDA Engineering Private Limited (collectively "IDA"), an international engineering services consulting company that provides building commissioning and MEP design services to clients throughout Asia. The aggregate purchase price is $2,955, including $1,975 of cash and a $980 promissory note, payable in two equal installments due on each of the sixth month and twelve month anniversaries of the IDA Closing Date. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for IDA, we engaged a third-party independent valuation specialist to assist in the determination of fair values. The final determination of the fair value of assets and liabilities will be completed within the one-year measurement period as required by ASC Topic 805, Business Combinations ("ASC 805"). The IDA acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, accounts receivable, and certain fixed assets.
On February 22, 2021 ("TerraTech Closing Date"), we acquired all of the outstanding equity interests in TerraTech Engineers, Inc. ("TerraTech"), a geotechnical engineering, environmental consulting, and materials testing company headquartered in North Carolina. The aggregate purchase price is $7,514, including $3,000 of cash, a $3,200 promissory note (bearing interest at 2.75%), payable in five equal installments of $640 due on the first, second, third, fourth and fifth anniversaries of the TerraTech Closing Date, and $450 of our common stock (5,204 shares) issued at the closing date. The purchase price also includes $864 of our common stock payable in two equal installments due on the first and second anniversaries of the TerraTech Closing Date. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for TerraTech, we engaged a third-party independent valuation specialist to assist in the determination of fair values. 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 TerraTech acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, accounts receivable, and certain fixed assets.
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On March 25, 2021 ("Geodynamics Closing Date"), we acquired all of the outstanding equity interests in Geodynamics LLC ("Geodynamics"), a provider of sonar-based, deep-water geospatial solutions. The aggregate purchase price is $19,879, including $11,000 of cash, a $4,000 promissory note (bearing interest at 2.75%), payable in three equal installments of $1,333 due on the first, second, and third anniversaries of the Geodynamics Closing Date, and $2,610 of our common stock (30,533 shares) issued at the closing date. The purchase price also includes a potential $21,000 earn-out of cash, which was recorded at an estimated fair value of $2,269. An option based model was used to determine the fair value of the earn-out, 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 for Geodynamics, we engaged an independent third-party valuation specialist to assist in the determination of fair values. 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 Geodynamics acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, accounts receivable, and certain fixed assets.
On May 14, 2021 ("PES Environmental Closing Date"), we acquired all of the outstanding equity interests in PES Environmental, Inc. ("PES Environmental"), an environmental engineering and consulting company providing environmental site assessment, water resources and stormwater management, permitting and compliance, industrial hygiene, and litigation support services. The aggregate purchase price is $9,655, including $6,500 of cash, a $1,500 promissory note (bearing interest at 2.75%), payable in three equal installments due on the first, second, and third anniversaries of the PES Environmental Closing Date, and $630 of our common stock (7,847 shares) issuable within 90 days of the PES Environmental Closing Date. The purchase price also includes a potential non-interest bearing earn-out of up to $1,100 payable in cash and stock, which was recorded at an estimated fair value of $1,025. An option based model was used to determine the fair value of the earn-out, 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 for PES Environmental, we engaged an independent third-party valuation specialist to assist in the determination of fair values. 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 PES Environmental acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, accounts receivable, and certain fixed assets.
Secondary Offering
On March 10, 2021, we priced an underwritten public offering of 1,612,903 shares of our common stock (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, we also granted the underwriters a 30-day option to purchase 241,935 additional shares (the "Option Shares") of our common stock at the public offering price. On March 15, 2021, we closed on the Firm Shares, for which we received net proceeds of approximately $140,642 after deducting the underwriting discount and estimated offering expenses payable by us. On April 13, 2021, the underwriters exercised the Option Shares and we received net proceeds of $21,150 after deducting the underwriting discount and estimated offering expenses payable by us.
Segments
Our operations are organized into three operating and reportable segments:
Infrastructure ("INF") – includes our engineering, civil program management, utility services, and construction quality assurance, testing and inspection practices;
Building, Technology & Sciences ("BTS") includes our environmental health sciences, buildings and program management, and MEP & technology practices; and
Geospatial Solutions ("GEO") includes our geospatial solution practices.

    The prior period results of our INF and GEO reportable segments were adjusted to include the results of Skyscene in our GEO reportable segment. The adjustment to the INF and GEO segments was not material to prior period segment financial results. For additional information regarding our reportable segments, see Note 15, Reportable Segments, of the Notes to Consolidated Financial Statements included elsewhere herein.
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Impact of COVID-19 on Our Business
The COVID-19 pandemic has significantly impacted global stock markets and economies. We are closely monitoring the impact of the outbreak of COVID-19 on all aspects of our business, including how it will impact our customers and employees. Some of our services have been 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 have been delayed. As U.S. and international economies begin to reopen and with a vaccine underway, our real estate transactional services have recovered, however we are unable to predict the ultimate impact that it 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 COVID-19 pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the outbreak and actions by government authorities to contain the outbreak or treat its impact. We intend to continue to monitor the impact of COVID-19 pandemic on our business closely.
Critical Accounting Policies and Estimates
    For a discussion of our critical accounting estimates, see Management’s Discussion and Analysis of Financial Condition and Results of Operations that is included in the 2020 Form 10-K.
Results of Operations
Consolidated Results of Operations
The following table represents our condensed results of operations for the periods indicated (dollars in thousands):
Three Months EndedSix Months Ended
July 3, 2021June 27, 2020July 3, 2021June 27, 2020
Gross revenues$179,503 $162,689 $332,598 $328,169 
Direct costs88,117 79,237 162,622 160,186 
Gross profit91,386 83,452 169,976 167,983 
Operating expenses72,834 72,490 141,870 147,640 
Income from operations18,552 10,962 28,106 20,343 
Interest expense(1,568)(4,403)(3,886)(8,190)
Income tax expense(3,346)(2,056)(5,102)(3,462)
Net income$13,638 $4,503 $19,118 $8,691 
Three Months Ended July 3, 2021 Compared to the Three Months Ended June 27, 2020.
Gross Revenues 
Our consolidated gross revenues increased by $16,814, or 10.3%, for the three months ended July 3, 2021 compared to the three months ended June 27, 2020. The increase in gross revenues was primarily due to incremental revenues of $9,086 from acquisitions completed since the second quarter of 2020 and increases in power delivery and utility services of $8,955 and real estate transactional services of $6,231. These increases were partially offset by decreases in our geospatial services of $4,587 and hospitality-related services of $1,035. We believe the decreases were primarily a result of COVID-19 and contract delays in our geospatial services.
Gross Profit
As a percentage of gross revenues, our gross profit margin was 50.9% and 51.3% for the three months ended July 3, 2021 and June 27, 2020, respectively. The decrease in gross profit margin was primarily due to a change in the mix of work performed, as power delivery and utility services and real estate transactional and hospitality-related services tend to be lower margin than geospatial services. As a percentage of gross revenues, other direct costs and sub-consultant services increased 1.8% and 1.2%, respectively. These increases were partially offset by decreases in direct salaries and wages as a percentage of gross revenues of 2.6%.
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Operating expenses 
Our operating expenses increased $344, or 0.5%, for the three months ended July 3, 2021 compared to the three months ended June 27, 2020.

    Interest Expense
Our interest expense decreased $2,835 for the three months ended July 3, 2021 compared to the three months ended June 27, 2020. The decrease in interest expense primarily resulted from the pay down of our Senior Credit Facility indebtedness.

    Income taxes
Our effective income tax rate was 19.7% and 31.3% for the three months ended July 3, 2021 and June 27, 2020, respectively. The decrease in the effective tax rate was primarily the result of excess tax benefits from stock-based payments of $970 during the three months ended July 3, 2021 as compared to tax expense on stock-based payments of $306 during the three months ended June 27, 2020. The decrease in our tax expense on stock-based payments during the three months ended July 3, 2021 was a result of the increase in our stock price as it relates to the value of stock vested during the period.

    Net income
Our net income increased $9,135, or 202.9%, for three months ended July 3, 2021 compared to three months ended June 27, 2020. The increase was primarily a result of an increase in gross profit of $7,934 and a decrease in interest expense of $2,835.
Six Months Ended July 3, 2021 Compared to the Six Months Ended June 27, 2020.
Gross Revenues 
Our consolidated gross revenues increased by $4,429, or 1.3%, for the six months ended July 3, 2021 compared to the six months ended June 27, 2020. The increase in gross revenues was primarily due to increases in our power delivery and utility services of $19,623, real estate transactional services of $5,941, and incremental revenue of $11,092 from acquisitions completed since the second quarter of 2020. These increases were partially offset by decreases in our geospatial solution services of $16,276, infrastructure of $4,948, hospitality-related services of $2,686, testing, inspection and consulting of $2,591, energy and technology services of $2,538, and civil project management of $2,203. We believe the decreases were primarily a result of COVID-19 and contract delays in our geospatial services.
Gross Profit
As a percentage of gross revenues, our gross profit margin was 51.1% and 51.2% for the six months ended July 3, 2021 and June 27, 2020, respectively. As a percentage of gross revenues, other direct costs increased 1.6% and direct salaries decreased 1.5% primarily as a result of the mix of work performed.
Operating expenses 
Our operating expenses decreased $5,770, or 3.9%, for the six months ended July 3, 2021 compared to the six months ended June 27, 2020. The decrease in operating expenses primarily resulted from decreased payroll costs of $2,542, decreased intangible asset amortization expense of $1,354, and decreased depreciation expense of $1,190. The decrease in payroll costs was primarily driven by a decrease in employees as compared to the prior year period, primarily driven by the COVID-19 pandemic.

    Interest Expense
Our interest expense decreased $4,304 for the six months ended July 3, 2021 compared to the six months ended June 27, 2020. The decrease in interest expense primarily resulted from the pay down of our Senior Credit Facility indebtedness.

    Income taxes
Our effective income tax rate was 21.1% and 28.5% for the six months ended July 3, 2021 and June 27, 2020, respectively. The decrease in the effective rate was primarily the result of excess tax benefits from stock-based payments of $1,045 during the six months ended July 3, 2021 as compared to tax expense on stock-based payments of $260 during the six months ended June 27, 2020. The decrease in our tax expense on stock-based payments during the six months ended July 3, 2021 was a result of the increase in our stock price as it relates to the value of stock vested during the period.
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    Net income
Our net income increased $10,427, or 120.0%, for six months ended July 3, 2021 compared to six months ended June 27, 2020. The increase was primarily a result of an increase in gross profit of $1,993, decreases in payroll costs of 2,542, and a decrease in interest expense of $4,304.
Segment Results of Operations
The following tables set forth summarized financial information concerning our reportable segments (dollars in thousands):
Three Months EndedSix Months Ended
July 3, 2021June 27, 2020July 3, 2021June 27, 2020
Gross revenues
INF$97,755 $87,087 $185,288 $170,820 
BTS43,818 36,641 82,423 79,752 
GEO37,930 38,961 64,887 77,597 
Total gross revenues$179,503 $162,689 $332,598 $328,169 
Segment income before taxes
INF$19,149 $15,484 $35,961 $28,596 
BTS$7,501 $5,409 $13,766 $10,828 
GEO$10,121 $6,458 $14,026 $14,299 
For additional information regarding our reportable segments, see Note 15, Reportable Segments, of the notes to the unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Three Months Ended July 3, 2021 Compared to Three Months Ended June 27, 2020
INF Segment
Our gross revenues from INF increased $10,668, or 12.2%, during the three months ended July 3, 2021 compared to the three months ended June 27, 2020. The increase in gross revenues is due to increases in our power delivery and utility services of $8,955 and incremental gross revenue of $2,034 from acquisitions completed since the second quarter of 2020.
Segment Income before Taxes from INF increased $3,665, or 23.7%, during the three months ended July 3, 2021 compared to the three months ended June 27, 2020. The increase was primarily due to higher gross revenues.
BTS Segment
Our gross revenues from BTS increased $7,177, or 19.6%, during the three months ended July 3, 2021 compared to the three months ended June 27, 2020. The increase in gross revenues was due to increases in our real estate transactional services of $6,231 and incremental gross revenues of $3,413 from acquisitions completed since the second quarter of 2020. These increases were partially offset by decreases in our hospitality-related services of $1,035.
Segment Income before Taxes from BTS increased $2,092, or 38.7% during the three months ended July 3, 2021 compared to the three months ended June 27, 2020. The increase was primarily due to higher gross revenues.
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GEO Segment
    Our gross revenues from GEO decreased $1,031, or 2.6%, during the three months ended July 3, 2021 compared to the three months ended June 27, 2020. The decreases were primarily a result of contract delays associated with the COVID-19 pandemic.
    Segment Income before Taxes from GEO increased $3,663, or 56.7%, during the three months ended July 3, 2021 compared to the three months ended June 27, 2020. The increase was primarily due to decreased operating expenses.
Six Months Ended July 3, 2021 Compared to Six Months Ended June 27, 2020
INF Segment
Our gross revenues from INF increased $14,468, or 8.5%, during the six months ended July 3, 2021 compared to the six months ended June 27, 2020. The increase in gross revenues is due to increases in our power delivery and utility services of $19,623 and incremental gross revenues of $2,562 from acquisitions completed since the second quarter of 2020. These increases were partially offset by decreases in gross revenues from infrastructure of $4,948 and testing, inspection and consulting of $2,591.
Segment Income before Taxes from INF increased $7,365, or 25.8%, during the six months ended July 3, 2021 compared to the six months ended June 27, 2020. The increase was primarily due to higher gross revenues.
BTS Segment
Our gross revenues from BTS increased $2,671, or 3.3%, during the six months ended July 3, 2021 compared to the six months ended June 27, 2020. The increase in gross revenues was due to increases in our real estate transactional services of $5,941 and incremental gross revenues of $4,846 from acquisitions completed since the second quarter of 2020. These increases were partially offset by decreases in our hospitality-related services of $2,686, energy and technology services of $2,538, and project management of $1,751.
Segment Income before Taxes from BTS increased $2,938, or 27.1% during the six months ended July 3, 2021 compared to the six months ended June 27, 2020. The increase was primarily due to higher gross revenues.
GEO Segment
    Our gross revenues from GEO decreased $12,710, or 16.4%, during the six months ended July 3, 2021 compared to the six months ended June 27, 2020. The decreases were primarily a result of contract delays associated with the COVID-19 pandemic and weather delays during the first quarter of 2021.
    Segment Income before Taxes from GEO decreased $273, or 1.9%, during the six months ended July 3, 2021 compared to the six months ended June 27, 2020. The decrease was primarily due to lower gross revenues.
Liquidity and Capital Resources
Our principal sources of liquidity are our cash and cash equivalents balances, cash flows from operations, 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 flows 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.
Operating activities
Net cash provided by operating activities was $62,228 for the six months ended July 3, 2021, compared to $50,745 during the six months ended June 27, 2020. The increase was a result of the growth in our net income primarily driven by higher gross revenues and reduction of costs and changes in our working capital. The changes in our working capital that contributed to increased cash flows were primarily a result of decreased billed receivables of $37,861 driven by increased collections. These increases in cash flows from working capital were partially offset by decreases in advanced billings of $13,399 related to the timing of liquefied natural gas project billing cycles, decreases in accrued liabilities of $6,109 primarily related to the timing of payments, and an increase of $6,325 in prepaid expenses and other assets primarily as a result of increased prepaid income taxes of $3,718 and increased other receivables of $1,370.
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Investing activities
During the six months ended July 3, 2021 and June 27, 2020, net cash used in investing activities totaled $25,220 and $5,708, respectively. The increase in cash used in investing activities was primarily a result of increased acquisition activity of $21,652, partially offset by decreases in property and equipment purchases of $2,117.
Financing activities

    Net cash flows provided by financing activities totaled $11,106 during the six months ended July 3, 2021 compared to net cash flows used in financing activities of $11,650 during the six months ended June 27, 2020. During the six months ended July 3, 2021 we received $172,500 from our common stock public offering and used the proceeds to make principal payments on our Senior Credit Facility of $145,082. We also made common stock public offering cost payments of $10,522 during the six months ended July 3, 2021.
Financing
Senior Credit Facility
On December 20, 2019 (the "Closing Date"), we amended and restated our Credit Agreement (the "A&R Credit Agreement"), dated December 7, 2016, as amended on December 20, 2018, with Bank of America, N.A. ("Bank of America"), as administrative agent, swingline lender and letter of credit issuer, the other lenders party thereto, and certain of our subsidiaries as guarantors. Pursuant to the A&R Credit Agreement, the lenders provided term commitments of $150,000 in the aggregate in a single draw on the Closing Date to fund the acquisition of QSI and various costs and expenses relating thereto and revolving commitments totaling $215,000 in the aggregate. The revolving commitment is available through December 20, 2024 (the "Maturity Date"), at which time the term commitments and revolving commitments will be due and payable in full. An aggregate amount of $320,500 was drawn under the A&R Credit Agreement on the Closing Date to fund the QSI acquisition and repay previously existing borrowings. Borrowings under the A&R Credit Agreement are secured by a first priority lien on substantially all of our assets. The A&R Credit Agreement also includes an accordion feature permitting us to request an increase in either the term facility or the revolver facility under the A&R Credit Agreement by an additional amount of up to $100,000 in the aggregate.
Borrowings under the term facility amortize at the rate of 5.0% per annum for the first two years of the facility and thereafter at the rate of 7.5% per annum until the Maturity Date.
On May 5, 2020 (the "Amendment Closing Date"), in response to the COVID-19 pandemic, we entered into an amendment to the A&R Credit Agreement (the "Amended A&R Credit Agreement") to amend the financial covenants that requires us to maintain a consolidated leverage ratio (the ratio of our pro forma consolidated funded indebtedness to our pro forma consolidated EBITDA for the most recently completed measurement period). The amended consolidated leverage ratio requirements are as follows:
Measurement Period EndingMaximum Consolidated Leverage Ratio
Amendment Closing Date through June 27, 20204.50 to 1.00
June 28, 2020 through October 3, 20205.00 to 1.00
October 4, 2020 through January 2, 20215.25 to 1.00
January 3, 2021 and April 3, 20214.75 to 1.00
April 4, 2021 and July 3, 20214.00 to 1.00
July 4, 2021 and thereafter3.50 to 1.00
    These financial covenants also require us to maintain a consolidated fixed charge coverage ratio of no less than 1.20 to 1.00 as of the end of any measurement period. As of July 3, 2021, we were in compliance with the financial covenants.
    The Amended A&R Credit Agreement also amended pricing terms which remain variable and tied to a Eurocurrency rate equal to LIBOR (London Interbank Offered Rate) plus an applicable margin or a base rate denominated in U.S. dollars. Interest rates remain subject to change based on our consolidated leverage ratio. As of July 3, 2021 our interest rate was 2.3%.
    The Amended A&R Credit Agreement 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 Amended A&R Credit Agreement also contains customary events of default, including (but
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not limited to) a default in the payment of principal or, following an applicable grace period, interest, breaches of our covenants or warranties under the Amended A&R Credit Agreement, payment default or acceleration of certain indebtedness, certain events of bankruptcy, insolvency or liquidation, certain judgments or uninsured losses, changes in control and certain liabilities related to ERISA based plans.
The Amended A&R Credit Agreement limits the payment of cash dividends (together with certain other payments that would constitute a "Restricted Payment" within the meaning of the Amended 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 securities) to no more than $10,000 in any fiscal year, so long as no default shall exist at the time of or arise as a result from such payment.
Total debt issuance costs incurred and capitalized in connection with the issuance of the Amended A&R Credit Agreement were $4,123. Total amortization of debt issuance costs was $227 and $454 during the three and six months ended July 3, 2021, respectively, and $222 and $442 during the three and six months ended June 27, 2020, respectively.
Other Obligations
On May 14, 2021, we acquired PES Environmental. The purchase price allowed for the payment of $630 in shares of our stock payable within 90 days of the PES Environmental Closing Date. At July 3, 2021, the outstanding balance on this obligation was $630.
On February 22, 2021, we acquired TerraTech. The purchase price allowed for the payment of $864 in shares of our stock or a combination of cash and shares of our stock, at our discretion, payable in two equal annual installments. At July 3, 2021, the outstanding balance on this obligation was $864.
    On July 16, 2020, we acquired Mediatech. The purchase price allowed for the payment of $230 in shares of our stock or a combination of cash and shares of our stock, at our discretion, payable in three equal annual installments. At July 3, 2021 and January 2, 2021, the outstanding balance on this obligation was $230.
    On July 1, 2019, we acquired GeoDesign. The purchase price allowed for the payment of $425 in shares of our stock or a combination of cash and shares of our stock, at our discretion, payable on the first and second anniversary of July 1, 2019. At July 3, 2021 and January 2, 2021, the outstanding balance on this obligation was $44.
    On November 2, 2018, we acquired CHI. The purchase price allowed for the payment of $3,000 in shares of our stock or a combination of cash and shares of our stock, at our discretion, payable in three equal annual installments. At July 3, 2021 and January 2, 2021, the outstanding balance of this obligation was $877.
Uncollateralized Promissory Notes
On May 14, 2021, we acquired PES Environmental. The purchase price included an uncollateralized $1,500 promissory note bearing interest at 2.75% ("PES Environmental Note") and payable in three equal annual installments. The outstanding balance of the PES Environmental Note was $1,500 as of July 3, 2021.
On March 25, 2021, we acquired Geodynamics. The purchase price included an uncollateralized $4,000 promissory note bearing interest at 2.75% ("Geodynamics Note") and payable in three equal annual installments. The outstanding balance of the Geodynamics Note was $4,000 as of July 3, 2021.
On February 22, 2021, we acquired TerraTech. The purchase price included an uncollateralized $3,200 promissory note bearing interest at 2.75% ("TerraTech Note") and payable in five equal annual installments. The outstanding balance of the TerraTech Note was $3,200 as of July 3, 2021.
On February 9, 2021, we acquired IDA. The purchase price included an uncollateralized $980 promissory note ("IDA Note") payable in two equal annual installments. The outstanding balance of the IDA Note was $980 as of July 3, 2021.
On July 16, 2020, we acquired Mediatech. The purchase price included an uncollateralized $500 promissory note ("Mediatech Note") payable in four equal annual installments. The outstanding balance of the Mediatech Note was $500 as of July 3, 2021 and January 2, 2021.
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    On July 1, 2019, we acquired GeoDesign. The purchase price included an uncollateralized $2,000 promissory note bearing interest at 4.0% ("GeoDesign Note") and payable in four equal annual installments. The outstanding balance of the GeoDesign Note was $1,000 and $1,500 as of July 3, 2021 and January 2, 2021, respectively.
On June 3, 2019, we acquired Alta. The purchase price included an uncollateralized $2,000 promissory note bearing interest at 4.0% ("Alta Note") and payable in four equal annual installments. The outstanding balance of the Alta Note was $1,000 and $1,500 as of July 3, 2021 and January 2, 2021, respectively.
On June 3, 2019, we acquired Page One. The purchase price included an uncollateralized $1,000 promissory note bearing interest at 3.0% ("Page One Note") and payable in three equal annual installments. The outstanding balance of the Page One Note was $333 and $700 as of July 3, 2021 and January 2, 2021, respectively.
On March 22, 2019, we acquired The Sextant Group. The purchase price included an uncollateralized $4,000 promissory note bearing interest at 4.0% ("The Sextant Group Note") and payable in four equal annual installments. The outstanding balance of The Sextant Group Note was $2,000 and $3,000 as of July 3, 2021 and January 2, 2021, respectively.
On December 31, 2018, we acquired certain assets of Celtic. The purchase price included an uncollateralized $300 promissory note bearing interest at 3.0% (the "Celtic Note") payable in three equal annual installments. The outstanding balance of the Celtic Note was $97 and $100 as of July 3, 2021 and January 2, 2021, respectively.
On November 2, 2018, we acquired CHI. The purchase price included an uncollateralized $15,000 promissory note bearing interest at 3.0% (the "CHI Note") payable in four equal annual installments. The outstanding balance of the CHI Note was $7,500 as of July 3, 2021 and January 2, 2021.
On August 24, 2018, we acquired CALYX. The purchase price included an uncollateralized $4,000 promissory note bearing interest at 3.75% payable in four equal annual installments of $1,000. The outstanding balance of the CALYX Note was $2,000 as of July 3, 2021 and January 2, 2021.
    On February 2, 2018, we acquired CSA. The purchase price included an uncollateralized $600 promissory note bearing interest at 3.0% (the "CSA Note") payable in four equal annual installments of $150. The outstanding balance of the CSA Note was $150 and $300 as of July 3, 2021 and January 2, 2021, respectively.
On January 12, 2018, we acquired all of the outstanding equity interest in Butsko. The purchase price included an uncollateralized $1,000 promissory note bearing interest at 3.0% (the "Butsko Note") payable in four equal annual installments of $250. The outstanding balance of the Butsko Note was $300 and $500 as of July 3, 2021 and January 2, 2021, 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 equal annual installments of $1,375. There was no outstanding balance on the RDK Note as of July 3, 2021. As of January 2, 2021, the outstanding balance of the RDK Note was $1,375.
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 equal annual installments of $150. There was no outstanding balance on the H&K Note as of July 3, 2021. As of January 2, 2021, the outstanding balance of the H&K Note was $150.
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 equal annual installments of $413. There was no outstanding balance on the Lochrane Note as of July 3, 2021. As of January 2, 2021, the outstanding balance of the Lochrane Note was $413.
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 equal annual installments of $675. The outstanding balance of the Hanna Note was $430 as of July 3, 2021 and January 2, 2021.
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 equal annual installments of $1,400. The outstanding balance of the JBA Note was $3,011 as of July 3, 2021 and January 2, 2021.
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Recently Issued Accounting Pronouncements
For information on recently issued accounting pronouncements, see Note 2, Summary of Significant Accounting Policies, of the notes to the unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Cautionary Statement about Forward-Looking Statements
Our disclosure and analysis in this Quarterly Report on Form 10-Q, contain “forward-looking” statements within the meaning of Section 27A of the Securities Act Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. From time to time, we also provide forward-looking statements in other materials we release to the public, as well as oral forward-looking statements. Forward-looking statements include, statements regarding our “expectations,” “hopes,” “beliefs,” “intentions,” or “strategies” regarding the future. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “predict,” “project,” “may,” “might,” “should,” “would,” “will,” “likely,” “will likely result,” “continue,” “could,” “future,” “plan,” “possible,” “potential,” “target,” “forecast,” “goal,” “observe,” “seek,” “strategy” and other words and terms of similar meaning, but the absence of these words does not mean that a statement is not forward looking. The forward-looking statements in this Quarterly Report on Form 10-Q reflect the Company’s current views with respect to future events and financial performance.
Forward-looking statements are not historical factors and should not be read as a guarantee or assurance of future performance or results, and will not necessarily be accurate indications of the times at, or by, or if such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made or management’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;
the credit and collection risks associated with our clients;
our ability to comply with procurement laws and regulations;
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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 Quarterly 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.”
The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties, or assumptions, many of which are beyond our control, which may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, those factors described in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended January 2, 2021. 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 January 2, 2021 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 www.sec.gov.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are exposed to certain market risks from transactions that are entered into during the normal course of business. We have not entered into derivative financial instruments for trading purposes. We have no significant market risk exposure to interest rate changes related to the promissory notes related to acquisitions since these contain fixed interest rates. 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 July 3, 2021, there was $138,750 outstanding on the Senior Credit Facility. A one percentage point change in the assumed interest rate of the Senior Credit Facility would change our annual interest expense by approximately $1,388 annually.
ITEM 4. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation, under the supervision and with the participation of its management, including the Company's Chief Executive Officer and its Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as such term is defined in rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, the 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's disclosure controls and procedures were effective to provide reasonable assurance that information required to be
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disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission's rules and forms, and (ii) accumulated and communicated to the Company's management, including the Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes to the Company’s internal control over financial reporting as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) that occurred during the quarter ended July 3, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. As a result of the COVID-19 pandemic, in March 2020 certain employees of the Company began working remotely. As a result of these changes to the working environment, the Company has not identified any material changes in the Company's internal control over financial reporting. The Company is continually monitoring and assessing the COVID-19 situation to determine any potential impacts on the design and operating effectiveness of our internal controls over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we are subject to various legal proceedings that arise in the normal course of our business activities. As of the date of 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.
ITEM 1A. RISK FACTORS.
There have been no material changes to any of the principal risks that we believe are material to our business, results of operations and financial condition, from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended January 2, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Recent Sales of Unregistered Securities
None.
Issuer Purchase of Equity Securities
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
    None.
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ITEM 6.    EXHIBITS.
NumberDescription
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
*    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.

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NV5 GLOBAL, INC.
/s/ Edward Codispoti
Date: August 11, 2021Edward Codispoti
Chief Financial Officer
(Principal Financial and Accounting Officer)

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