NV5 Announces Record Third Quarter Results; Exceeds Analysts' Expectations

November 11, 2020

HOLLYWOOD, Fla., Nov. 11, 2020 (GLOBE NEWSWIRE) -- NV5 Global, Inc. (Nasdaq: NVEE) ("NV5" or the "Company"), a leading provider of compliance, technology, and engineering consulting solutions, today reported financial results for the third quarter ended October 3, 2020.

Gross Revenues during the third quarter of 2020 increased 30% compared to the third quarter of 2019. Net Income increased 33% compared to the third quarter of 2019. “We delivered another strong performance in the third quarter that exceeded analyst expectations for gross revenues and adjusted earnings per share. We are pleased to see the continued success of NV5 despite the pandemic. During the quarter, we generated $21.7 million in cash flows from operations, allowing us to pay down an aggregate of $27.8 million in principal under our credit facility from July through today, while maintaining a strong balance sheet that includes $64.0 million of cash on hand at the end of the third quarter. We increased our backlog by 9% in the third quarter and continue to see a solid pipeline of opportunities as we enter the fourth quarter and beyond,” said Dickerson Wright, PE, Chairman and CEO of NV5.

Third Quarter 2020 Financial Highlights

  • Gross Revenues grew by 30% in the third quarter of 2020 to $169.9 million compared to $131.0 million in the third quarter of 2019, which also exceeded analyst consensus expectations by 9%.
  • Net income for the third quarter of 2020 was $7.8 million compared to $5.8 million in the third quarter of 2019, with the third quarter of 2020 including $3.3 million of additional interest expense, $3.4 million of additional intangible amortization expense, and a higher effective income tax rate compared to third quarter of 2019.
  • Adjusted EBITDA, which excludes stock-based compensation and acquisition-related costs, grew by 70% in the third quarter of 2020 to $29.9 million compared to $17.6 million in the third quarter of 2019.
  • GAAP EPS was $0.61 per share in the third quarter of 2020.
  • Adjusted EPS in the third quarter of 2020 was $1.13 per share, exceeding analyst consensus expectations of $0.70 per share by 61%.
  • Cash flows from operations for the third quarter of 2020 grew by more than four times to $21.7 million compared to $4.1 million in the third quarter of 2019.

Nine Months Ended October 3, 2020 Financial Highlights

  • Gross Revenues grew by 32% for the nine months ended October 3, 2020 to $498.1 million compared to $376.3 million in the nine months ended September 28, 2019.
  • Net income for the nine months ended October 3, 2020 was $16.4 million compared to $20.2 million in the nine months ended September 28, 2019, with the nine months of 2020 including $10.7 million of additional interest expense, $11.2 million of additional intangible amortization expense, and a higher effective income tax rate compared to nine months ended September 28, 2019.
  • Adjusted EBITDA, which excludes stock-based compensation and acquisition-related costs, grew by 58% for the nine months ended October 3, 2020 to $81.0 million compared to $51.4 million in the nine months ended September 28, 2019.
  • GAAP EPS was $1.30 per share in the nine months ended October 3, 2020.
  • Adjusted EPS in the nine months ended October 3, 2020 was $2.91 per share.
  • Cash flows from operations for the nine months ended October 3, 2020 were $72.4 million compared to $21.6 million in the nine months ended September 28, 2019.

52/53 Week Fiscal Year

NV5 uses a 52/53 week fiscal year ending on the Saturday closest to the calendar quarter end. Therefore, the third quarter of 2020 included 14 weeks while the third quarter of 2019 included 13 weeks.

Use of Non-GAAP Financial Measures; Comparability of Certain Measures

Earnings before interest, taxes, depreciation, and amortization (“EBITDA”) is not a measure of financial performance under GAAP. Adjusted EBITDA reflects adjustments to EBITDA to eliminate stock-based compensation expense and acquisition-related costs. Management believes Adjusted EBITDA, in addition to operating profit, Net Income, and other GAAP measures, is a useful indicator of our financial and operating performance and our 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 Adjusted EBITDA is provided at the end of this news release.

Adjusted earnings per diluted share (“Adjusted EPS”) is not a measure of financial performance under GAAP. Adjusted EPS reflects adjustments to reported diluted earnings per share (“GAAP EPS”) to eliminate amortization expense of intangible assets from acquisitions, net of tax benefits, and acquisition-related costs. As we continue our acquisition strategy, the growth in Adjusted EPS will likely increase at a greater rate than GAAP EPS. A reconciliation of GAAP EPS to Adjusted EPS is provided at the end of this news release.

Our definition of Adjusted 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 Net Income and Diluted Earnings per Share.

Conference Call

NV5 will host a conference call to discuss its third quarter 2020 financial results at 4:30 p.m. (Eastern Time) on November 11, 2020. The accompanying presentation for the call is available by visiting http://ir.nv5.com

Date: Wednesday, November 11, 2020
Time:  4:30 p.m. Eastern
Toll-free dial-in number: +1 833-900-1538
International dial-in number: +1 236-712-2278
Conference ID:  4987245
Webcast: http://ir.nv5.com

Please dial-in at least 5-10 minutes prior to the start time to allow the operator to log your name and connect you to the conference.

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 leading provider of compliance, technology, and engineering consulting solutions for public and private sector clients supporting infrastructure, utility, and building assets and systems. The Company primarily focuses on six business verticals: testing, inspection & consulting, infrastructure support services, utility services, buildings & program management, environmental health sciences, and geospatial technology services. NV5 operates out of more than 100 offices nationwide and abroad.  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 news 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 news 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.

Investor Relations Contact

 NV5 Global, Inc.
Jack Cochran
Vice President, Marketing & Investor Relations
Tel: +1-954-637-8048
Email: ir@nv5.com  

Source: NV5 Global, Inc.

 
 
NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share data)
 
  October 3, 2020   December 28, 2019
Assets      
Current assets:      
Cash and cash equivalents $ 64,022     $ 31,825  
Billed receivables, net 122,678     131,041  
Unbilled receivables, net 83,535     79,428  
Prepaid expenses and other current assets 9,493     8,906  
Total current assets 279,728     251,200  
Property and equipment, net 27,957     25,733  
Right-of-use lease assets, net 46,029     46,313  
Intangible assets, net 182,830     255,961  
Goodwill 344,003     309,216  
Other assets 2,777     4,714  
Total Assets $ 883,324     $ 893,137  
       
Liabilities and Stockholders’ Equity      
       
Current liabilities:      
Accounts payable $ 33,842     $ 36,116  
Accrued liabilities 46,810     47,432  
Billings in excess of costs and estimated earnings on uncompleted
contracts
9,009     3,303  
Client deposits 382     221  
Current portion of contingent consideration 1,334     1,954  
Current portion of notes payable and other obligations 21,957     25,332  
Total current liabilities 113,334     114,358  
Contingent consideration, less current portion 1,733     2,048  
Other long-term liabilities 42,130     34,573  
Notes payable and other obligations, less current portion 306,606     332,854  
Deferred income tax liabilities, net 34,956     53,341  
Total liabilities 498,759     537,174  
       
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,          
13,244,713 and 12,852,357 shares issued and outstanding as of
October 3, 2020 and December 28, 2019, respectively
132     129  
Additional paid-in capital 263,341     251,187  
Retained earnings 121,092     104,647  
Total stockholders’ equity 384,565     355,963  
Total liabilities and stockholders’ equity $ 883,324     $ 893,137  
               

 

NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands, except share data)
 
  Three Months Ended   Nine Months Ended
  October 3,
2020
  September 28,
2019
  October 3,
2020
  September 28,
2019
Gross revenues $ 169,949     $ 131,032     $ 498,118     $ 376,340  
               
Direct costs:              
Salaries and wages 46,815     40,426     136,929     113,762  
Sub-consultant services 26,003     19,972     78,673     56,969  
Other direct costs 10,370     7,139     27,771     25,244  
Total direct costs 83,188     67,536     243,373     195,975  
               
Gross Profit 86,761     63,496     254,745     180,365  
               
Operating Expenses:              
Salaries and wages, payroll taxes and benefits 43,750     33,428     133,456     93,431  
General and administrative 13,216     11,028     38,196     30,786  
Facilities and facilities related 5,370     4,664     16,125     12,407  
Depreciation and amortization 10,187     6,551     32,387     18,908  
Total operating expenses 72,523     55,671     220,164     155,533  
               
Income from operations 14,238     7,825     34,581     24,832  
               
Interest expense (3,731 )   (421 )   (11,921 )   (1,230 )
               
Income before income tax expense 10,507     7,403     22,660     23,602  
Income tax expense (2,753 )   (1,560 )   (6,215 )   (3,422 )
Net Income and Comprehensive Income $ 7,754     $ 5,843     $ 16,445     $ 20,180  
               
Earnings per share:              
Basic $ 0.62     $ 0.48     $ 1.33     $ 1.67  
Diluted $ 0.61     $ 0.46     $ 1.30     $ 1.62  
               
Weighted average common shares outstanding:              
Basic 12,434,600     12,191,405     12,328,448     12,086,588  
Diluted 12,749,917     12,566,966     12,650,107     12,485,049  
                       

 

NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
   
  Nine Months Ended
  October 3,
2020
  September 28,
2019
Cash Flows From Operating Activities:      
Net income $ 16,445     $ 20,180  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 34,680     18,908  
Non-cash lease expense 6,731     6,770  
Provision for doubtful accounts 3,127     1,725  
Stock-based compensation 10,900     6,989  
Change in fair value of contingent consideration     49  
Gain on disposals of property and equipment (394 )   (48 )
Deferred income taxes (5,905 )   (3,839 )
Amortization of debt issuance costs 669      
Changes in operating assets and liabilities, net of impact of acquisitions:      
Billed receivables 8,089     508  
Unbilled receivables (7,505 )   (4,490 )
Prepaid expenses and other assets 2,171     (5,279 )
Accounts payable (2,780 )   (2,053 )
Accrued liabilities 322     (9,170 )
Income taxes payable     (2,789 )
Billings in excess of costs and estimated earnings on uncompleted contracts 5,706     (5,972 )
Deposits 163     68  
Net cash provided by operating activities 72,419     21,557  
       
Cash Flows From Investing Activities:      
Cash paid for acquisitions (net of cash received from acquisitions) (882 )   (29,365 )
Proceeds from sale of assets 1,053      
Purchase of property and equipment (8,342 )   (1,810 )
Net cash used in investing activities (8,171 )   (31,175 )
       
Cash Flows From Financing Activities:      
Borrowings from Senior Credit Facility     10,000  
Payments on notes payable (9,941 )   (8,483 )
Payments of contingent consideration (913 )   (1,213 )
Payments of borrowings from Senior Credit Facility (20,750 )    
Payments of debt issuance costs (447 )    
Net cash (used in) provided by financing activities (32,051 )   304  
       
Net increase (decrease) in Cash and Cash Equivalents 32,197     (9,314 )
Cash and cash equivalents – beginning of period 31,825     40,739  
Cash and cash equivalents – end of period $ 64,022     $ 31,425  
               

 

NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP FINANCIAL MEASURES
(UNAUDITED)
(in thousands)
 
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA
 
    Three Months Ended   Nine Months Ended
    October 3,
2020
  September 28,
2019
  October 3,
2020
  September 28,
2019
Net Income $ 7,754     $ 5,843     $ 16,445     $ 20,180  
Add: Interest expense 3,731     421     11,921     1,230  
  Income tax expense 2,753     1,560     6,215     3,422  
  Depreciation and amortization 11,401     6,551     34,680     18,908  
  Stock-based compensation 4,020     2,819     10,900     6,989  
  Acquisition-related costs 274     433     845     671  
Adjusted EBITDA $ 29,933     $ 17,627     $ 81,006     $ 51,400  
                               

 

RECONCILIATION OF GAAP EPS TO ADJUSTED EPS
 
    Three Months Ended   Nine Months Ended
    October 3,
2020
  September 28,
2019
  October 3,
2020
  September 28,
2019
Net Income - per diluted share $ 0.61     $ 0.46     $ 1.30     $ 1.62  
Per diluted share adjustments:              
Add: Amortization expense of intangible assets
and acquisition-related costs
0.70     0.45     2.16     1.28  
  Income tax expense (0.18 )   (0.10 )   (0.55 )   (0.29 )
Adjusted EPS $ 1.13     $ 0.81     $ 2.91     $ 2.61  

 


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Source: NV5 Global, Inc.