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NV5 Announces Strong Third Quarter 2018 Results and Raises 2018 Guidance

HOLLYWOOD, Fla., Nov. 07, 2018 (GLOBE NEWSWIRE) -- NV5 Global, Inc. (Nasdaq: NVEE) (“NV5” or the “Company”), a provider of professional and technical engineering and consulting solutions, today reported financial results for the third quarter ended September 29, 2018.

Third Quarter 2018 Financial Highlights

  • Total Revenues for the quarter were $105.5 million, an increase of 14% year-over-year. Gross Revenues – GAAP for the quarter were $104.2 million, an increase of 14% year-over-year.
  • Net Revenues for the quarter were $84.4 million, an increase of 13% year-over-year.
  • Organic growth for the quarter was 8%, an increase of 100% compared to the third quarter of 2017.
  • EBITDA for the quarter was $14.0 million, or 17% of Net Revenues, an increase of 10% from $12.7 million or 17% of Net Revenues in the third quarter of 2017.
  • Net income for the quarter was $7.3 million, an increase of 23% from $5.9 million in the third quarter of 2017.
  • Adjusted EPS for the quarter was $0.82 per diluted share, an increase of 9% from $0.75 per diluted share in the third quarter of 2017.
  • GAAP EPS for the quarter was $0.62 per diluted share over 11.7 million shares, an increase of 13% from $0.55 per diluted share over 10.8 million shares in the third quarter of 2017.
  • Backlog was $342.3 million as of September 29, 2018 compared to $274.5 million as of September 30, 2017.

“We are pleased to announce another quarter of strong continued organic growth in revenues and earnings in the third quarter of 2018,” said Dickerson Wright, PE, Chairman and CEO of NV5. “We once again saw growth in all of our service verticals, and we are enthusiastic about the strategic investments we are making to further grow our infrastructure and energy business throughout the United States. The flat and dynamic organization we have in place allows us to provide maximum support and the highest level of service to our clients, and we are grateful to our employees and shareholders who continue to contribute to NV5’s success.”

Operating Results

Total Revenues for the third quarter of 2018 were $105.5 million, an increase of 14% from the third quarter of 2017. Total Revenues include intercompany revenues where the Company performed the services in lieu of using a third-party sub-consultant. Gross Revenues - GAAP for the third quarter of 2018 were $104.2 million, a 14% increase from the third quarter of 2017. Net Revenues for the third quarter of 2018 were $84.4 million, an increase of 13% from the third quarter of 2017.

EBITDA for the third quarter of 2018 was $14.0 million or 17% of Net Revenues, an increase of 10% from $12.7 million or 17.0% of Net Revenues for the third quarter of last year.

Adjusted EPS for the third quarter of 2018 was $0.82 per diluted share versus $0.75 per diluted share in the third quarter of 2017. Net income for the third quarter of 2018 was $7.3 million, resulting in GAAP EPS of $0.62 per diluted share, compared to net income of $5.9 million, or $0.55 per diluted share in the third quarter of 2017.

GAAP EPS and Adjusted EPS reflect weighted-average shares outstanding of 11,701,394 for the third quarter of 2018, compared to weighted-average shares outstanding of 10,785,630 for the third quarter of 2017. The increase in the weighted-average shares outstanding reflects the issuance of 1,270,000 shares of common stock related to a secondary offering during the third quarter of 2018.

At September 29, 2018, the Company reported a twelve-month backlog of $342.3 million, compared to $274.5 million as of September 30, 2017.

Nine Months Ended September 29, 2018 Financial Highlights

  • Total Revenues for the first nine months of 2018 were $306.0 million, an increase of 26% from the first nine months of 2017. Gross Revenues – GAAP were $302.7 million in the first nine months of 2018, an increase of 27% from the first nine months of 2017.
  • Net Revenues were $245.8 million in the first nine months of 2018, an increase of 26% from the first nine months of 2017.
  • Organic growth for the first nine months of 2018 was 10%, an increase of 150% compared to the first nine months of 2017.
  • EBITDA for the first nine months of 2018 was $37.3 million, or 15% of Net Revenues, an increase of 34% from $27.9 million or 14% of Net Revenues for the first nine months of 2017.
  • Net income was $19.2 million, an increase of 54% from $12.5 million in the first nine months of 2017.
  • Adjusted EPS was $2.33 per diluted share, an increase of 40% from $1.67 per diluted share in the first nine months of 2017.
  • GAAP EPS was $1.71 per diluted share over 11.2 million shares, an increase of 47% compared to $1.16 per diluted share over 10.7 million shares in the first nine months of 2017.
  • Cash flows from operating activities for the first nine months of 2018 were $17.6 million compared to cash flows of $5.7 million for the first nine months of 2017.

Total Revenues for the nine months ended September 29, 2018 were $306.0 million, a 26% increase from the first nine months of 2017. Total Revenues include intercompany revenues where the Company performed the services in lieu of using a third-party sub-consultant. Gross Revenues - GAAP for the nine months ended September 29, 2018 were $302.7 million, a 27% increase from the first nine months of 2017. Net Revenues for the nine months ended September 29, 2018 were $245.8 million, an increase of 26% from 2017.

EBITDA for the nine months ended September 29, 2018 was $37.3 million, or 15% of Net Revenues, an increase of 34% from $27.9 million, or 14% of Net Revenues for the same period in 2017.

Adjusted EPS for the nine months ended September 29, 2018 was $2.33 per diluted share versus $1.67 per diluted share in the nine months of 2017. Net income for the nine months ended September 29, 2018 was $19.2 million, resulting in GAAP EPS of $1.71 per diluted share, compared to net income of $12.5 million, or $1.16 per diluted share in the nine months ended September 30, 2017.

GAAP EPS and Adjusted EPS reflect weighted-average shares outstanding of 11,205,748 for the nine months ended September 29, 2018, compared to weighted-average shares outstanding of 10,744,619 for the first nine months of 2017. The increase in the weighted-average shares outstanding reflects the issuance of 1,270,000 shares of common stock related to a secondary offering during the third quarter of 2018.

Cash flows from operating activities for the first nine months of 2018 were $17.6 million compared to cash flows of $5.7 million for the first nine months of 2017. At September 29, 2018, our cash and cash equivalents were $56.2 million compared to $18.8 million as of December 30, 2017. The increase in cash and cash equivalents reflects net proceeds of $93.5 million from the secondary offering in the third quarter of 2018 partially offset by repayments of long-term debt of $43.9 million.

2018 Outlook

The Company is raising its guidance for Full Year 2018 Gross Revenues, Net Revenues, Adjusted EPS and GAAP EPS, including the impact of acquisitions closed through November 2, 2018. The Company expects Gross Revenues to range from $415 million to $430 million, which represents an increase of 25% to 29% from 2017 Gross Revenues of $333 million. Net Revenues are expected to range from $332 million to $344 million, which represents an increase of 24% to 28% from 2017 Net Revenues of $268 million. The Company expects Full Year 2018 Adjusted EPS to range from $3.23 per share to $3.43 per share, an increase of 36% to 45% from Full Year 2017 Adjusted EPS. Furthermore, the Company expects Full Year 2018 GAAP EPS to range from $2.39 per share to $2.59 per share. This guidance for Gross Revenues, Net Revenues, Adjusted EPS and GAAP EPS excludes anticipated acquisitions for the remainder of 2018.

Use of Non-GAAP Financial Measures

Total Revenues and Net Revenues are not measures of financial performance under U.S. generally accepted accounting principles (“GAAP”). Gross Revenues – GAAP include sub-consultant costs and other direct costs which are generally pass-through costs. Furthermore, Gross Revenues – GAAP eliminate intercompany revenues where the Company performed the service in lieu of using a third-party sub-consultant. Therefore, the Company believes that Total Revenues and Net Revenues, which are non-GAAP financial measures commonly used in our industry, provide a meaningful perspective on its business results. A reconciliation of Gross Revenues as reported in accordance with GAAP to Total Revenues and Net Revenues is provided at the end of this news release.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) is not a measure of financial performance under GAAP. Management believes EBITDA, in addition to operating profit, net income and other GAAP measures, is a useful indicator of NV5’s financial and operating performance and its ability to generate cash flows from operations that are available for taxes, capital expenditures and debt service. A reconciliation of net income as reported in accordance with GAAP to EBITDA is provided at the end of this news release.

Adjusted earnings per diluted share data (“Adjusted EPS”) is not a measure of financial performance under GAAP. Adjusted EPS reflects adjustments to reported diluted earnings per share (“GAAP EPS”) data to eliminate amortization expense of intangible assets from acquisitions, net of tax benefits. As the Company continues its acquisition strategy, the growth in Adjusted EPS will likely increase at a greater rate than GAAP EPS as reported in accordance with GAAP. A reconciliation of GAAP EPS as reported in accordance with GAAP to Adjusted EPS is provided at the end of this news release.

NV5’s definition of Total Revenues, Net Revenues, EBITDA and Adjusted EPS may differ from other companies reporting similarly named measures. These measures should be considered in addition to, and not as a substitute for, or superior to, other measures of financial performance prepared in accordance with GAAP, such as contract revenues, net income and diluted earnings per share.

Conference Call

NV5 will host a conference call to discuss its third quarter 2018 financial results at 4:30 p.m. (Eastern Time) on November 7, 2018.

Date:   Wednesday, November 7, 2018
Time:   4:30 p.m. Eastern
Toll-free dial-in number:   +1 844-348-6875
International dial-in number:   +1 509-844-0152
Conference ID:   6468056
Webcast:   http://ir.nv5.com

The conference call will be webcast live and available for replay via the “Investors” section of the NV5 website.

About NV5

NV5 Global, Inc. (NASDAQ: NVEE) is a provider of professional and technical engineering and consulting solutions ranked #45 in the Engineering News Record Top 500 Design Firms list. NV5 serves public and private sector clients in the infrastructure, energy, construction, real estate and environmental markets. NV5 primarily focuses on five business verticals: construction quality assurance, infrastructure engineering and support services, energy, program management, and environmental solutions. The Company operates out of more than 100 locations nationwide and abroad in Macau, Hong Kong, and the UAE. For additional information, please visit the Company’s website at www.NV5.com. Also visit the Company on Twitter, LinkedIn, Facebook, and Vimeo.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. The Company cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements contained in this press release and on the conference call. Such factors include: (a) changes in demand from the local and state government and private clients that we serve; (b) general economic conditions, nationally and globally, and their effect on the market for our services; (c) competitive pressures and trends in our industry and our ability to successfully compete with our competitors; (d) changes in laws, regulations, or policies; and (e) the “Risk Factors” set forth in the Company’s most recent SEC filings. All forward-looking statements are based on information available to the Company on the date hereof, and the Company assumes no obligation to update such statements, except as required by law.

Contact

NV5 Global, Inc.                                           

Jenna Carrick
Investor Relations Manager
Tel: +1-916-641-9124
Email: ir@nv5.com

Source: NV5 Global, Inc.

NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
 
    September 29, 2018   December 30, 2017
Assets        
Current assets:        
Cash and cash equivalents $ 56,202 $ 18,751
Billed receivables, net   85,835   70,686
Unbilled receivables, net   43,638   39,401
Prepaid expenses and other current assets   2,504   2,555
Total current assets   188,179   131,393
Property and equipment, net   10,684   8,731
Intangible assets, net   75,971   65,754
Goodwill   114,054   98,899
Other assets   1,259   1,003
Total Assets $ 390,147 $ 305,780
         
Liabilities and Stockholders’ Equity        
Current liabilities:        
Accounts payable $ 17,638 $ 18,373
Accrued liabilities   19,602   18,994
Income taxes payable   -   6,102
Billings in excess of costs and estimated earnings on uncompleted contracts   1,149   665
Client deposits   198   197
Current portion of contingent consideration   1,763   977
Current portion of notes payable and other obligations   14,212   11,127
Total current liabilities   54,562   56,435
Contingent consideration, less current portion   1,232   913
Notes payable and other obligations, less current portion   19,041   57,430
Deferred income tax liabilities, net   11,966   10,905
Total liabilities   86,801   125,683
         
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, 12,461,900 and 10,834,770        
shares issued and outstanding as of September 29, 2018 and December 30, 2017, respectively   125   108
Additional paid-in capital   229,989   125,954
Retained earnings   73,232   54,035
Total stockholders’ equity   303,346   180,097
Total liabilities and stockholders’ equity $ 390,147 $ 305,780
     

 

NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME
(in thousands, except share data)
(Unaudited)
           
                 
    Three Months Ended   Nine Months Ended
    September 29,   September 30,   September 29,   September 30,
    2018   2017   2018   2017
                 
Gross revenues $   104,185   $   91,263   $   302,737   $   239,058  
                 
Direct costs (excluding depreciation and amortization):                
Salaries and wages     34,475       28,219       98,542       75,235  
Sub-consultant services     14,989       12,663       43,349       33,719  
Other direct costs     4,747       3,635       13,539       10,276  
Total direct costs     54,211       44,517       155,430       119,230  
                 
Gross Profit     49,974       46,746       147,307       119,828  
                 
Operating Expenses:                
Salaries and wages, payroll taxes and benefits     24,897       23,090       76,122       62,847  
General and administrative     7,556       7,362       23,348       19,931  
Facilities and facilities related     3,490       3,547       10,552       9,162  
Depreciation and amortization     4,057       3,788       11,660       9,542  
Total operating expenses     40,000       37,787       121,682       101,482  
                 
Income from operations     9,974       8,959       25,625       18,346  
                 
Interest expense      (451 )     (524 )     (1,712 )     (1,042 )
                 
Income before income tax expense     9,523       8,435       23,913       17,304  
Income tax expense     (2,238 )     (2,523 )     (4,716 )     (4,803 )
Net Income and Comprehensive Income $   7,285   $   5,912   $   19,197   $   12,501  
                 
Earnings per share:                 
Basic   $0.65     $0.58     $1.80     $1.23  
Diluted   $0.62     $0.55     $1.71     $1.16  
                 
Weighted average common shares outstanding:                
Basic     11,256,946       10,211,114       10,686,040       10,155,751  
Diluted     11,701,394       10,785,630       11,205,748       10,744,619  
                 

 

NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
         
         
    Nine Months Ended
    September 29, 2018   September 30, 2017
Cash Flows From Operating Activities:        
Net income $ 19,197   $ 12,501  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization   11,660     9,542  
Provision for doubtful accounts   843     445  
Stock based compensation   4,541     2,743  
Change in fair value of contingent consideration   267     56  
Loss on disposal property and equipment   -     2  
Deferred income taxes   564     320  
Changes in operating assets and liabilities, net of impact of acquisitions:        
Billed receivables   (6,396 )   (6,466 )
Unbilled receivables   (3,759 )   (10,565 )
Prepaid expenses and other assets   819     (13 )
Accounts payable   (679 )   (1,827 )
Accrued liabilities   (3,259 )   (3,251 )
Income taxes payable   (6,713 )   (279 )
Billings in excess of costs and estimated earnings on uncompleted contracts   485     1,641  
Client deposits   -     822  
Net cash provided by operating activities   17,570     5,671  
         
Cash Flows From Investing Activities:        
Cash paid for acquisitions (net of cash received from acquisitions)   (28,460 )   (60,241 )
Purchase of property and equipment   (1,582 )   (1,591 )
Net cash used in investing activities   (30,042 )   (61,832 )
         
Cash Flows From Financing Activities:        
Proceeds from secondary offering   93,469     -  
Proceeds from borrowings from Senior Credit Facility   -     47,000  
Payments of borrowings from Senior Credit Facility   (36,500 )   (5,000 )
Payments on notes payable   (7,410 )   (5,360 )
Payments of contingent consideration   (728 )   (563 )
Proceeds from exercise of warrant   1,092     -  
Net cash provided by financing activities   49,923     36,077  
         
Net increase (decrease) in Cash and Cash Equivalents    37,451     (20,084 )
Cash and cash equivalents – beginning of period   18,751     35,666  
Cash and cash equivalents – end of period $ 56,202   $ 15,582  
         
         
         
         
NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
         
         
    Nine Months Ended 
    September 29, 2018   September 30, 2017
         
Supplemental disclosures of cash flow information:        
Cash paid for interest $ 1,624   $ 843  
Cash paid for income taxes $ 10,696   $ 4,962  
         
Non-cash investing and financing activities:        
Contingent consideration (earn-out) $ 1,565   $ 908  
Notes payable and other obligations issued for acquisitions $ 8,356   $ 9,371  
Stock issuance for acquisitions $ 4,950   $ 1,746  
Capital leases $ 2,878   $ -  
Payment of contingent consideration and other obligations with common stock $ -   $ 62  
             

 

NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GROSS REVENUES TO TOTAL REVENUES
(in thousands)
(Unaudited)
                   
                   
      Three Months Ended   Nine Months Ended
      September 29,   September 30,   September 29,   September 30,
      2018   2017   2018   2017
Gross Revenues - GAAP $ 104,185 $ 91,263 $ 302,737 $ 239,058
Add: Intercompany revenues in lieu of sub-consultants   1,309   1,023   3,218   3,385
Total Revenues $ 105,494 $ 92,286 $ 305,955 $ 242,443
                   

 

  NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GROSS REVENUES TO NET REVENUES
(in thousands)
  (Unaudited)
                   
      Three Months Ended   Nine Months Ended
      September 29,   September 30,   September 29,   September 30,
      2018   2017   2018   2017
Gross Revenues - GAAP $ 104,185   $ 91,263   $ 302,737   $ 239,058  
Less: Sub-consultant services   (14,989 )   (12,663 )   (43,349 )   (33,719 )
  Other direct costs   (4,747 )   (3,635 )   (13,539 )   (10,276 )
Net Revenues $ 84,449   $ 74,965   $ 245,849   $ 195,063  
                           

 

NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO EBITDA
(in thousands)
(Unaudited)
 
                   
      Three Months Ended   Nine Months Ended
      September 29,   September 30,   September 29,   September 30,
      2018   2017   2018   2017
Net Income $ 7,285 $ 5,912 $ 19,197 $ 12,501
Add: Interest expense   451   524   1,712   1,042
  Income tax expense   2,238   2,523   4,716   4,803
  Depreciation and Amortization   4,057   3,788   11,660   9,542
EBITDA $ 14,031 $ 12,747 $ 37,285 $ 27,888
                   

 

NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EPS TO ADJUSTED EPS
(Unaudited)
 
                   
      Three Months Ended   Nine Months Ended
      September 29,   September 30,   September 29,   September 30,
      2018   2017   2018   2017
                   
Net Income - per diluted share $ 0.62   $ 0.55   $ 1.71   $ 1.16  
                   
  Per diluted share adjustments:                
Add: Amortization expense of intangible assets   0.26     0.28     0.77     0.70  
  Income tax expense   (0.06 )   (0.08 )   (0.15 )   (0.19 )
Adjusted EPS $ 0.82   $ 0.75   $ 2.33   $ 1.67  
                   

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Source: NV5 Global, Inc.