Acquisitions

12 Months Ended

Dec. 31, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Business Combinations

During 2024, the Company completed eight acquisitions, with the purchase price allocation, including the residual amount allocated to goodwill, based on preliminary information. This allocation is subject to change as additional data concerning final asset and liability valuations are obtained and management finalizes its reassessment of the measurement period procedures, based on the results of the preliminary valuation. The Company does not anticipate any significant adjustments during the applicable measurement period. However, the Company will adjust assets and liabilities if new information arises regarding facts and circumstances that existed as of the acquisition date, which, if known, would have led to revised estimated values for those assets or liabilities. The effect of any measurement period adjustments will be reflected as if the adjustments had been made on the acquisition date.

Surdex Corporation

On April 2, 2024, the Company entered into a merger agreement with Surdex Corporation (“Surdex”), a St. Louis-based geospatial and engineering services firm providing low, medium and high-altitude digital orthoimagery, advanced high-resolution LiDAR, intelligent digital mapping, 3D hydrography, and disaster mapping. The Company paid total consideration of $43.3 million, which was comprised of cash, promissory note, common stock and assumed liabilities. The shares are subject to a six-month lock up. The promissory note bears a simple interest rate fixed at 6.50%, and is payable in equal quarterly payments of principal and interest beginning July 2024 and ending July 2027. The merger agreement included a contingent consideration feature, which was met, allowing the sellers to earn an additional $0.6 million in the form of the Company's common stock. This was based on the average trading price of the Company's common stock over the 90 trading days following the acquisition. For tax purposes, the Surdex transaction is considered a tax-free merger, in

which the assets have been recorded at their respective carrying values. As a result, there is no corresponding tax goodwill, and therefore no tax goodwill to be amortized or otherwise deductible.

The following summarizes the preliminary calculations of the fair values of Surdex assets acquired and liabilities assumed as of the acquisition date (in thousands):


(in thousands)	Surdex
Assets:
Accounts Receivable, net	$	4,052
Contract assets	3,312
Prepaid and other current assets	2,174
Property and equipment, net	15,085
Operating lease, right-of-use assets	1,030
Goodwill	17,248
Other intangible assets	12,900
Total assets acquired:	$	55,801
Liabilities:
Accounts payable and accrued liabilities, current portion	$	3,938
Contract liabilities	772
Other non-current obligations	10,689
Operating lease obligation, less current portion	1,030
Deferred tax liability	6,952
Total liabilities assumed:	$	23,381
Net assets acquired:	$	32,420
Cash flow reconciling items:
Issuance of common stock as partial consideration	(16,536)
Cash paid for acquisition, net of cash acquired	$	15,884

The consolidated financial statements of the Company include the results of operations since the date Surdex was acquired. The following table presents the results of operations of Surdex since the date of acquisition for the year ended December 31, 2024 (in thousands):


	For the Year Ended December 31, 2024
Gross Contract Revenue1	$	20,708
Pre-tax Net Loss2	$	66

1 Gross contract revenue includes adjustments as required by ASC 606, Revenue from Contracts with Customers based on opening balance sheet provided by the acquired company. There is no assurance these adjustments will be consistent in future periods. Opening balance sheet balances are subject to adjustment prior to being finalized.

2 Pre-tax Net Income excludes corporate overhead allocation.

The following table presents the unaudited, pro forma consolidated results of operations for the year ended December 31, 2024 and December 31, 2023 assuming that the Surdex acquisition, discussed above, occurred on January 1, 2023. The pro forma information provided below is compiled from pre-acquisition information and includes pro forma adjustments for amortization and depreciation. The unaudited pro forma results are presented for informational purposes only and are not meant to represent actual operating results that would have been achieved had the related events occurred on such date (in thousands):


	For the Year Ended
	December 31, 2024		December 31, 2023
Gross Contract Revenue 3	$	432,581	$	376,308
Pre-tax Net Loss	$	9,714	$	6,221

3Gross contract revenue in these pro forma financials does not conform to GAAP as required by ASC 606, Revenue from Contract with Customers, as it is impracticable to obtain the historical information necessary to apply this accounting standard. The historical estimates required to be able to accurately determine the percent complete accounting on the contracts that comprise the revenue is not available for the required periods.

For the year ended December 31, 2024, the Company recorded measurement period adjustments of $0.2 million increase to prepaid and other current assets, $0.1 million increase to contract assets, $0.1 million increase to intangible assets, $0.1 million increase to contract liabilities offset by $0.4 million decrease to goodwill and $0.1 million of deferred tax liability. If the change in provisional amounts had been recorded at the acquisition date, it would not have resulted in a change in operating income in the prior periods.

Other 2024 Acquisitions

During the year ended December 31, 2024, the Company completed seven additional acquisitions in diverse geographic regions and service lines. The Company paid total consideration of $36.3 million through combinations of cash, promissory notes, shares of common stock and assumed liabilities. No cash was acquired with these acquisitions. Shares of common stock issued in connection with the acquisitions are subject to a six-month lock-up. Promissory notes bear a simple interest rate ranging from 5.00% to 6.75% and are payable in quarterly payments of principal and interest beginning May 2024 and ending in November 2028. For tax purposes, depending on the transaction, the acquisitions were treated either as an asset acquisition, in which case the assets have been stepped up and recorded at their respective fair values, or a tax-free merger, in which case the assets have been recorded at their respective carrying values. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. For asset acquisitions, all the goodwill recognized is expected to be deductible for tax purposes. For three of the acquisitions, the purchase agreement includes a contingent consideration feature, which affords the sellers the opportunity to earn additional consideration in the form of the Company's common stock, cash and non-negotiable promissory notes, based on certain financial performance thresholds. The final settlement amount will depend on ongoing operations of the acquired company. The payout amounts range between $0 and $1.0 million. See Note 2 Fair Value Measurements for additional information regarding the fair value of contingent consideration.

The following summarizes the preliminary calculations of the fair values of the other 2024 acquisition assets acquired and liabilities assumed as of the acquisition date (in thousands):


(in thousands)	2024
Assets:
Accounts Receivable, net	$	5,757
Contract assets	2,468
Prepaid and other current assets	201
Property and equipment, net	685
Operating lease, right-of-use assets	2,681
Goodwill	20,623
Other intangible assets	13,531
Other assets	118
Total assets acquired:	$	46,064
Liabilities:
Accounts payable and accrued liabilities, current portion	$	1,370
Contract liabilities	$	2,705
Other non-current obligations	$	9,954
Operating lease obligation, less current portion	$	2,681
Deferred tax liability	3,126
Total liabilities assumed:	$	19,836
Net assets acquired:	$	26,228
Cash flow reconciling items:
Issuance of common stock as partial consideration	(17,780)
Cash paid for acquisitions, net of cash acquired	$	8,448

For the year ended December 31, 2024, the Company recorded measurement period adjustments of $0.1 million increase to prepaid and other current assets, $0.5 million increase to intangible assets, $0.1 million increase to accrued liabilities, $0.1 increase to other non-current obligations offset by $0.6 million decrease in goodwill and $0.2 million decrease to deferred tax liability. If the change in provisional amounts had been recorded at the acquisition date, it would not have resulted in a change in operating income in the prior periods.

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 companies acquired during 2024 (excluding Surdex) from their respective dates of acquisition for the year ended December 31, 2024 (in thousands):


	For the Year Ended December 31, 2024
Gross Contract Revenue1	$	21,741
Pre-tax Net Income2	$	3,973

1 Gross contract revenue includes adjustments as required by ASC 606, Revenue from Contracts with Customers based on opening balance sheet provided by the acquired companies. There is no assurance these adjustments will be consistent in future periods. Opening balance sheet balances are subject to adjustment prior to being finalized.

2 Pre-tax Net Income excludes corporate overhead allocation.

The following table presents the unaudited, pro forma consolidated results of operations for the year ended December 31, 2024 and December 31, 2023 assuming that the companies acquired in 2024 (excluding Surdex), discussed above, occurred on January 1, 2023. The pro forma information provided below is compiled from pre-acquisition information and includes pro forma adjustments for amortization and depreciation. The unaudited pro forma results are

presented for informational purposes only and are not meant to represent actual operating results that would have been achieved had the related events occurred on such date (in thousands):


	For the Year Ended
	December 31, 2024		December 31, 2023
Gross Contract Revenue 3	$	442,345	$	379,909
Pre-tax Net Loss	$	7,162	$	5,686

In connection with all of the 2024 acquisitions, the Company recognized $1.1 million of acquisition related expenses within Other Income and Expenses in the consolidated statement of income for year ended December 31, 2024, including legal fees, consulting fees, and other miscellaneous expenses associated with acquisitions.

2023 Acquisitions

During 2023, the Company completed eleven acquisitions, diversifying across geographic regions and services. The Company paid total consideration of $75.7 million which was comprised of combinations of cash, promissory notes, convertible notes, shares of common stock and assumed liabilities. No cash was acquired with these acquisitions. Shares of common stock are subject to a six-month lock-up. Promissory notes bear a simple interest rate ranging from 5.00% to 11.00% and are payable in quarterly payments of principal and interest beginning February 2023 and ending in December 2026. Convertible notes bear a simple interest rate ranging from 7.00% to 8.00% and are payable in lump sum payments or quarterly payments of principal and interest beginning December 2024 and ending in September 2027; see Note 12 Notes Payable for additional information regarding the convertible notes payable. For tax purposes, dependent on the transaction, the acquisitions were treated either as an asset, stock or a merger. Goodwill results from an assembled workforce, which does not qualify for separate recognition, as well as expected future synergies from combining operations. Portions of the Goodwill recognized is expected to be deductible for tax purposes. For six of the acquisitions, the purchase agreement includes a contingent consideration feature, which affords the sellers the opportunity to earn additional consideration in the form of the Company's common stock, cash and non-negotiable promissory notes, based on certain financial performance thresholds. The final settlement amount will depend on ongoing operations of the acquired company. The payout amounts range between $0 and $3.0 million; see Note 2 Fair Value Measurements for additional information regarding the fair value of contingent consideration.

For the year ended December 31, 2023, the Company recorded measurement period adjustments of $0.1 million increase to prepaid and other current assets, $0.3 million increase to contract assets, $3.2 million increase to goodwill and intangible assets offset by $3.7 million increase to deferred tax liability and $0.1 million decrease to contract liabilities and accrued liabilities. If the change in provisional amounts had been recorded at the acquisition date it would have resulted in a decrease in revenue by $0.4 million in prior periods.

For the year ended December 31, 2024, for the 2023 acquisitions, the Company recorded measurement period adjustments of $0.4 million increase to goodwill offset by $0.4 million increase to consideration. The change did not result in a change to operating income.

In connection with these acquisitions, the Company recognized $1.2 million of acquisition related expenses within Other Income and Expenses in the consolidated statement of income for the year ended December 31, 2023, including legal fees, consulting fees, and other miscellaneous expenses associated with acquisitions.

The purchase price allocations at fair value, for 2023 acquisitions as of December 31, 2023 are presented below:


(in thousands)	2023
Assets:
Accounts Receivable, net	$	10,112
Contract assets	6,334
Prepaid and other current assets	361
Property and equipment, net	1,952
Operating lease, right-of-use assets	7,078
Goodwill	43,900
Other intangible assets	27,361
Other assets	44
Total assets acquired:	$	97,142
Liabilities:
Accounts payable and accrued liabilities, current portion	$	3,228
Contract liabilities	4,891
Other non-current obligations	24,222
Operating lease obligation, less current portion	7,078
Deferred tax liability	5,787
Total liabilities assumed:	$	45,206
Net assets acquired:	$	51,936
Cash flow reconciling items:
Issuance of common stock as partial consideration	(26,133)
Cash paid for acquisitions, net of cash acquired	$	25,803

The amounts in the tables above represent the final purchase allocation for the 2023 acquisitions. The purchase price allocation has been completed and the amounts identified above are deemed final.

Definite-lived intangible assets that were acquired through asset acquisitions or business combinations include customer relationships, contract rights, and favorable leaseholds. These intangible assets are amortized over their estimated useful lives ranging from two to thirteen years using a straight-line method as it approximates the accelerated method.

The following table summarizes the preliminary purchase price allocation at fair value for identifiable intangible assets acquired in 2024 and 2023:


	2024		Weighted-Average Life	2023		Weighted-Average Life
Customer relationships	$	20,540	12.51	$	20,050	10.45
Contract rights	5,790		1.42	6,980		1.18
Favorable leaseholds	101		5.50	331		7.76
Total	$	26,431		$	27,361