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NV5 Announces Record Second Quarter Results; Exceeds Analysts' Expectations

HOLLYWOOD, Aug. 05, 2020 (GLOBE NEWSWIRE) -- NV5 Global, Inc. (Nasdaq: NVEE) ("NV5" or the "Company"), a provider of professional and technical engineering, geospatial, and consulting solutions, today reported financial results for the second quarter ended June 27, 2020.

In the second quarter, Gross Revenues increased 27% and Gross Revenues, exclusive of sub-consultant services and other direct costs ("Net Revenues"), increased 29%. "We are pleased with our second quarter performance, which exceeded analyst expectations in both gross revenues and adjusted earnings per share, while generating strong cash flows from operations and adjusted EBITDA, despite the impacts of the COVID-19 pandemic. We also secured a number of large contracts with utilities, departments of transportation, and the municipal sector in the second quarter and entered into an agreement to acquire Mediatech Design Group, which is expected to increase our technology design services in the Middle East and Southeast Asia," said Dickerson Wright, PE, Chairman and CEO of NV5.

Second Quarter 2020 Financial Highlights

  • Gross Revenues for the second quarter of 2020 were $162.7 million compared to $128.0 million in the second quarter of 2019.

  • Net Revenues for the quarter were $128.5 million compared to $99.5 million in the second quarter of 2019.

  • Gross Revenues for the quarter exceeded analyst consensus expectations by 8%.

  • Net income for the second quarter of 2020 was $4.5 million compared to $8.8 million in the second quarter of 2019 (second quarter of 2020 included $3.9 million of additional interest expense, $4.4 million of additional intangible amortization expense, and a higher effective income tax rate compared to second quarter of 2019).

  • Adjusted EBITDA for the second quarter of 2020, excluding stock compensation and acquisition-related costs, was $26.9 million, an increase from $18.4 million in the second quarter of 2019.

  • GAAP EPS was $0.36 per share in the second quarter of 2020.

  • Adjusted EPS in the second quarter of 2020 was $0.93 per share, exceeding analyst consensus expectations of $0.59 per share.

  • Cash flows from operations for the second quarter of 2020 were $37.1 million compared to $1.1 million in the second quarter of 2019.

Six Months Ended June 27, 2020 Financial Highlights

  • Gross Revenues for the six months ended June 27, 2020 were $328.2 million compared to $245.3 million in the six months ended June 29, 2019.

  • Net Revenues for the six months ended June 27, 2020 were $258.1 million compared to $190.2 million in the six months ended June 29, 2019.

  • Net income for the six months ended June 27, 2020 was $8.7 million compared to $14.3 million in the six months ended June 29, 2019 (six months ended June 27, 2020 included $7.4 million of additional interest expense, $7.8 million of additional intangible amortization expense, and a higher effective income tax rate compared to six months ended June 29, 2019).

  • Adjusted EBITDA for the six months ended June 27, 2020, excluding stock compensation and acquisition-related costs, was $51.1 million, an increase from $33.8 million in the six months ended June 29, 2019.

  • GAAP EPS was $0.69 per share in the six months ended June 27, 2020.

  • Adjusted EPS in the six months ended June 27, 2020 was $1.77 per share.

  • Cash flows from operations for the six months ended June 27, 2020 were $50.7 million compared to $17.4 million in the six months ended June 29, 2019.

Use of Non-GAAP Financial Measures

Net Revenues are not a measure of financial performance under U.S. generally accepted accounting principles (“GAAP”). Gross Revenues include sub-consultant costs and other direct costs, which are generally pass-through costs. Furthermore, Gross Revenues eliminates intercompany revenues where the Company performed the service in lieu of utilizing third-party sub-consultants. The Company believes that Net Revenues, which is a non-GAAP financial measure commonly used in our industry, provides a meaningful perspective on our business results. A reconciliation of Gross Revenues as reported in accordance with GAAP to 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. 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 Net Revenues, 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 Gross Revenues, Net Income, and Diluted Earnings per Share.

Conference Call

NV5 will host a conference call to discuss its second quarter 2020 financial results at 4:30 p.m. (Eastern Time) on August 5, 2020.  The accompanying presentation for the call is available by visiting http://ir.nv5.com.

Date:  Wednesday, August 5, 2020
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:  8279137
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 provider of professional and technical engineering, geospatial, and consulting solutions ranked #27 in the Engineering News-Record Top 500 Design Firms list. NV5 serves public and private sector clients in the infrastructure, utility services, construction, real estate, and environmental markets. NV5 primarily focuses on five business verticals: construction quality assurance, infrastructure engineering and support services, utility services, program management, and environmental solutions, and delivers geospatial services through its subsidiary Quantum Spatial, Inc., the largest full-service geospatial solutions provider in North America. The Company operates out of more than 100 locations worldwide. 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)

  June 27, 2020   December 28, 2019
Assets      
Current assets:      
Cash and cash equivalents $ 65,212   $ 31,825
Billed receivables, net 131,255   131,041
Unbilled receivables, net 80,269   79,428
Prepaid expenses and other current assets 8,435   8,906
Total current assets 285,171   251,200
Property and equipment, net 29,404   25,733
Right-of-use lease assets, net 45,175   46,313
Intangible assets, net 191,126   255,961
Goodwill 343,170   309,216
Other assets 3,069   4,714
Total Assets $ 897,115   $ 893,137
       
Liabilities and Stockholders’ Equity      
       
Current liabilities:      
Accounts payable $ 36,741   $ 36,116
Accrued liabilities 49,797   47,432
Income taxes payable 613  
Billings in excess of costs and estimated earnings on uncompleted contracts 8,544   3,303
Client deposits 286   221
Current portion of contingent consideration 1,079   1,954
Current portion of notes payable and other obligations 22,176   25,332
Total current liabilities 119,236   114,358
Contingent consideration, less current portion 1,733   2,048
Other long-term liabilities 37,181   34,573
Notes payable and other obligations, less current portion 326,020   332,854
Deferred income tax liabilities, net 40,575   53,341
Total liabilities 524,745   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, 13,033,842 and 12,852,357 shares issued and outstanding as of June 27, 2020 and December 28, 2019, respectively 130   129
Additional paid-in capital 258,902   251,187
Retained earnings 113,338   104,647
Total stockholders’ equity 372,370   355,963
Total liabilities and stockholders’ equity $ 897,115   $ 893,137


NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands, except share data)

  Three Months Ended   Six Months Ended
  June 27, 2020   June 29, 2019   June 27, 2020   June 29, 2019
Gross revenues $ 162,689     $ 127,974     $ 328,169     $ 245,309  
               
Direct costs:              
Salaries and wages 45,079     38,080     90,114     73,337  
Sub-consultant services 25,244     20,044     52,670     36,996  
Other direct costs 8,914     8,410     17,402     18,106  
Total direct costs 79,237     66,534     160,186     128,439  
               
Gross Profit 83,452     61,440     167,983     116,870  
               
Operating Expenses:              
Salaries and wages, payroll taxes and benefits 44,149     30,765     89,706     60,004  
General and administrative 11,824     10,896     24,980     19,758  
Facilities and facilities related 5,357     3,937     10,754     7,743  
Depreciation and amortization 11,160     6,245     22,200     12,357  
Total operating expenses 72,490     51,843     147,640     99,862  
               
Income from operations 10,962     9,597     20,343     17,008  
               
Interest expense (4,403 )   (457 )   (8,190 )   (808 )
               
Income before income tax expense 6,559     9,140     12,153     16,200  
Income tax expense (2,056 )   (346 )   (3,462 )   (1,863 )
Net Income and Comprehensive Income $ 4,503     $ 8,794     $ 8,691     $ 14,337  
               
Earnings per share:              
Basic $ 0.37     $ 0.73     $ 0.71     $ 1.19  
Diluted $ 0.36     $ 0.70     $ 0.69     $ 1.15  
               
Weighted average common shares outstanding:              
Basic 12,308,965     12,106,066     12,271,221     12,033,906  
Diluted 12,609,918     12,521,463     12,601,830     12,447,248  


NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)

  Six Months Ended
  June 27, 2020   June 29, 2019
Cash Flows From Operating Activities:      
Net income $ 8,691     $ 14,337  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 23,277     12,357  
Non-cash lease expense 4,307     4,251  
Provision for doubtful accounts 1,690     1,456  
Stock-based compensation 6,880     4,167  
Change in fair value of contingent consideration     49  
Gain on disposals of property and equipment (350 )   (48 )
Deferred income taxes (869 )   477  
Amortization of debt issuance costs 442      
Changes in operating assets and liabilities, net of impact of acquisitions:      
Billed receivables (1,134 )   5,511  
Unbilled receivables (2,286 )   (5,188 )
Prepaid expenses and other assets 2,117     (9,413 )
Accounts payable 138     (3,816 )
Accrued liabilities 1,922     968  
Income taxes payable 613     (2,338 )
Billings in excess of costs and estimated earnings on uncompleted contracts 5,241     (5,383 )
Deposits 66     47  
Net cash provided by operating activities 50,745     17,434  
       
Cash Flows From Investing Activities:      
Cash paid for acquisitions (net of cash received from acquisitions)     (14,160 )
Proceeds from sale of assets 437      
Purchase of property and equipment (6,145 )   (1,626 )
Net cash used in investing activities (5,708 )   (15,786 )
       
Cash Flows From Financing Activities:      
Borrowings from Senior Credit Facility     10,000  
Payments on notes payable (8,415 )   (6,738 )
Payments of contingent consideration (913 )   (1,213 )
Payments of borrowings from Senior Credit Facility (1,875 )    
Payments of debt issuance costs (447 )    
Net cash (used in) provided by financing activities (11,650 )   2,049  
       
Net increase in Cash and Cash Equivalents 33,387     3,697  
Cash and cash equivalents – beginning of period 31,825     40,739  
Cash and cash equivalents – end of period $ 65,212     $ 44,436  


NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO COMPARABLE GAAP FINANCIAL MEASURES
(UNAUDITED)
(in thousands)

RECONCILIATION OF GROSS REVENUES TO NET REVENUES

    Three Months Ended   Six Months Ended
    June 27, 2020   June 29, 2019   June 27, 2020   June 29, 2019
Gross Revenues - GAAP $ 162,689     $ 127,974     $ 328,169     $ 245,309  
Less: Sub-consultant services (25,244 )   (20,044 )   (52,670 )   (36,996 )
  Other direct costs (8,914 )   (8,410 )   (17,402 )   (18,106 )
Net Revenues $ 128,531     $ 99,520     $ 258,097     $ 190,207  


RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA

    Three Months Ended   Six Months Ended
    June 27, 2020   June 29, 2019   June 27, 2020   June 29, 2019
Net Income $ 4,503     $ 8,794     $ 8,691     $ 14,337  
Add: Interest expense 4,403     457     8,190     808  
  Income tax expense 2,056     346     3,462     1,863  
  Depreciation and Amortization 12,237     6,245     23,277     12,357  
  Stock-based compensation 3,501     2,369     6,880     4,167  
  Acquisition-related costs 231     238     571     238  
Adjusted EBITDA $ 26,931     $ 18,449     $ 51,071     $ 33,770  


RECONCILIATION OF GAAP EPS TO ADJUSTED EPS

    Three Months Ended   Six Months Ended
    June 27, 2020   June 29, 2019   June 27, 2020   June 29, 2019
Net Income - per diluted share $ 0.36     $ 0.70     $ 0.69     $ 1.15  
Per diluted share adjustments:              
Add:  Amortization expense of intangible assets and acquisition-related costs 0.77     0.42     1.46     0.83  
  Income tax expense (0.20 )   (0.10 )   (0.38 )   (0.19 )
Adjusted EPS $ 0.93     $ 1.02     $ 1.77     $ 1.79  


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Source: NV5 Global, Inc.