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NV5 Announces Record Third Quarter 2019 Revenue Results and Signs Definitive Agreement to Acquire Nation’s Largest Full-Service Geospatial Solutions Provider
Announces Full Year 2019 Guidance and Preliminary 2020 Guidance

HOLLYWOOD, Fla., Nov. 07, 2019 (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 28, 2019.

In the third quarter 2019, Gross Revenues - GAAP increased 26% year-over-year, EBITDA increased 3%, Net Income decreased 20% and Net Income adjusted for the impact of intangible amortization increased 3%. Our backlog as of September 28, 2019 increased 35% compared to September 29, 2018 and cash flows from operating activities for the nine months ended September 28, 2019 increased 23% compared to the nine months ended September 29, 2018.

In July 2019, the Company acquired two companies, GeoDesign, Inc. and WH Pacific, Inc., expanding NV5’s infrastructure design, surveying and construction quality assurance capabilities in the Pacific Northwest and supporting the Company’s ENERGY 2021 initiative.  Operating results for the third quarter of 2019 were negatively affected, however, by both an unexpected delay in the Company’s liquefied natural gas (“LNG”) service line and declining revenue from contracts with the North Carolina Department of Transportation (“NCDOT”), as projects throughout the state were put on temporary hold pending funding. We expect that the project delay in our LNG service line and the NCDOT are temporary in nature. Decreases in other areas were partially offset by healthy upward trends in our power and construction quality assurance divisions.  Erosion of utilization, along with integration of four acquisitions in the late second quarter and early third quarter, resulted in increased overhead costs in the third quarter.  Scalable indirect costs are expected to begin in the fourth quarter, and full synergy is anticipated in 2020.

NV5 today also announced the signing of a definitive agreement to acquire Quantum Spatial, Inc. (“QSI”), the largest full-service geospatial solutions provider in North America, with approximately 600 employees operating out of 8 offices in the United States, Canada, and India.  QSI combines advanced remote sensing technologies and proprietary processes, analytics tools, and algorithms to transform the way client utilize and value geospatial data, including subscription software.  QSI’s client base contributes significant recurring revenue and includes federal agencies, major utility companies, and state and regional government authorities.  QSI is an all cash transaction for $303 million.  QSI is expected to generate $30 million of EBITDA on 2019 expected gross revenues of $128 million

“NV5 continues to strategically invest in technical capabilities that add value to our clients and deepen our relationships, have significant barriers to entry, and provide margins that are higher than the industry average.  Our seven acquisitions in 2019 only contributed partial year revenue, but have given us a significant presence in the Pacific Northwest, provided us with access to key DOTs and utilities, and made us the leading provider of geospatial solutions, a rapidly-growing, specialized service that impacts important fields such as power transmission line fire mitigation, pipeline asset management, and forestry management, said Dickerson Wright, PE, Chairman and CEO of NV5. “NV5 is at the forefront of advancements in service delivery and data management solutions, an example of which is our monitoring-based energy efficiency commissioning services.  We are excited for QSI to lead our new Technology service line, a suite of technologically advanced service offerings that provide unique value for our clients.”

Peter LaMontagne, President and CEO of QSI added, “Our employees are looking forward to contributing to NV5’s strategy of adding value to client relationships through technology. We have worked with NV5 over the past few years and are very enthusiastic about the new value that we can provide to our expanding list of federal, state, and commercial clients.”

Houlihan Lokey served as the exclusive financial advisor to QSI.  Sheppard Mullin served as legal advisor to QSI.

Third Quarter 2019 Financial Highlights

  • Total Revenues for the quarter were $132.1 million, an increase of 25% year-over-year. Gross Revenues - GAAP for the quarter were $131.0 million, an increase of 26% year-over-year.

  • Net Revenues for the quarter were $103.9 million, an increase of 23% year-over-year.

  • EBITDA for the quarter was $14.4 million or 14% of Net Revenues, an increase of 3% from $14.0 million, or 17% of Net Revenues in the third quarter of 2018.

  • Net Income for the quarter was $5.8 million, a decrease of 20% compared to $7.3 million in the third quarter of 2018. Adjusting for the impact of intangible amortization, which results from acquisitions, net income for the quarter was $9.7 million, a 3% increase compared to the third quarter of 2018.

  • Adjusted EPS for the quarter was $0.78 per diluted share, a decrease of 5% from $0.82 in the third quarter of 2018.

  • Backlog was $463 million as of September 28, 2019, a 35% increase from $342 million as of September 29, 2018.  Backlog includes those contracts for which work authorizations or awards have been received, estimated recurring revenue from one of the Company’s service lines that has a high volume of small contracts and a quick-burn estimate.

  • Organic growth when compared to the quarter end June 28, 2019 and September 29, 2018 was flat when adjusting for customer delays and decreases in Asia attributable to geopolitical events.

Nine Months Ended September 28, 2019 Financial Highlights

  • Total Revenues for the nine months ended September 28, 2019 were $379.1 million, an increase of 24% year-over-year. Gross Revenues - GAAP for the nine months ended September 28, 2019 were $376.3 million, an increase of 24% year-over-year.

  • Net Revenues for the nine months ended September 28, 2019 were $294.1 million, an increase of 20% year-over-year.

  • Organic net revenue growth for 2019 is expected to be relatively flat, when adjusting for decreases in Asia revenue.

  • EBITDA for the nine months ended September 28, 2019 was $43.7 million or 15% of Net Revenues, an increase of 17% from $37.3 million, or 15% of Net Revenues for the nine months ended September 29, 2018.

  • Net Income for the nine months ended September 28, 2019 was $20.2 million, an increase of 5% compared to $19.2 million for the nine months ended September 29, 2018.  Adjusting for the impact of intangible amortization, net income was $31.7 million, a 24% increase compared to the nine months ended September 29, 2018.

  • Adjusted EPS for the nine months ended September 28, 2019 was $2.56 per diluted share, an increase of 10% from $2.33 for the nine months ended September 29, 2018.

  • Cash flows from operating activities increased 23% to $21.6 million for the nine months ended September 28, 2019 compared to $17.6 million for the nine months ended September 29, 2018.

2019 Outlook

As a result of the previously mentioned developments affecting revenue, the Company is lowering guidance for full year 2019 Gross Revenues - GAAP, Net Revenues, GAAP earnings per share and Adjusted EPS, including the impact of acquisitions closed or signed as of today. The Company now expects Gross Revenues - GAAP to range from $511 million to $527 million, which represents an increase of 22% to 26% from 2018 Gross Revenues of $418 million. Net Revenues are expected to range from $401 million to $415 million, which represents an increase of 20% to 24% from 2018 Net Revenues of $334 million. The Company expects full year 2019 Adjusted EPS to range from $3.18 per share to $3.42 per share, a decrease of 2% to an increase of 6% over 2018 adjusted EPS of $3.24 per share. Furthermore, the Company expects full year 2019 GAAP EPS to range from $1.91 per share to $2.15 per share. This guidance for Gross Revenues, Net Revenues, Adjusted EPS and GAAP EPS includes acquisitions that are expected to be closed during the remainder of 2019.

Preliminary 2020 Outlook

By adding QSI, NV5 expects 2020 gross revenues to range from $655 million to $710 million, excluding future acquisitions.  The Company expects full year 2020 Adjusted EPS to range from $3.42 per share to $3.98 per share.

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 eliminates intercompany revenues where the Company performed the service in lieu of utilizing third-party sub-consultants. 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 our 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 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 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. 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 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 Gross Revenues, Net Income and Diluted Earnings per Share.

Conference Call

NV5 will host a conference call to discuss its third quarter 2019 financial results at 4:30 p.m. (Eastern Time) on November 7, 2019.  The accompanying presentation for the call is available by visiting http://ir.nv5.com

Date:  Thursday, November 7, 2019
Time:  4:30 p.m. Eastern
Toll-free dial-in number:  +1 844-348-6875
Conference ID:  +1 509-844-0152
Webcast:  1898764
  http://ir.nv5.com

Please dial-in at least 5-10 minutes prior to the start time in order for 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 and consulting solutions ranked #34 on the Engineering News-Record’s 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 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
(in thousands, except share data)
(Unaudited)
 
  September 28, 2019   December 29, 2018
Assets      
Current assets:      
Cash and cash equivalents $ 31,425     $ 40,739  
Billed receivables, net 109,590     98,324  
Unbilled receivables, net 53,819     43,411  
Prepaid expenses and other current assets 9,198     2,582  
Total current assets 204,031     185,056  
Property and equipment, net 12,349     11,677  
Right-of-use lease asset, net 42,366      
Intangible assets, net 100,688     99,756  
Goodwill 158,423     140,930  
Other assets 2,886     2,002  
Total Assets 520,743     $ 439,421  
       
Liabilities and Stockholders’ Equity      
       
Current liabilities:      
Accounts payable $ 23,082     $ 22,588  
Accrued liabilities 33,654     20,853  
Income taxes payable     2,697  
Billings in excess of costs and estimated earnings on uncompleted contracts 2,241     7,625  
Client deposits 276     208  
Current portion of contingent consideration 3,351     1,845  
Current portion of notes payable and other obligations 17,578     17,139  
Total current liabilities 80,182     72,955  
Contingent consideration, less current portion 2,195     2,853  
Long-term lease liability 32,781      
Notes payable and other obligations, less current portion 40,638     29,847  
Deferred income tax liabilities, net 16,881     16,224  
Total liabilities 172,676     121,879  
       
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,
12,818,919 and 12,550,711 shares issued and outstanding as of
September 28, 2019 and December 29, 2018, respectively
128     126  
Additional paid-in capital 246,869     236,525  
Retained earnings 101,070     80,891  
Total stockholders’ equity 348,067     317,542  
Total liabilities and stockholders’ equity 520,743     $ 439,421  



 
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 28,
2019
  September 29,
2018
  September 28,
2019
  September 29,
2018
Gross revenues $ 131,032     $ 104,185     $ 376,340     $ 302,737  
               
Direct costs (excluding depreciation and amortization):              
Salaries and wages 40,426     34,475     113,762     98,542  
Sub-consultant services 19,972     14,989     56,969     43,349  
Other direct costs 7,139     4,747     25,244     13,539  
Total direct costs 67,536     54,211     195,975     155,430  
               
Gross Profit 63,496     49,974     180,365     147,307  
               
Operating Expenses:              
Salaries and wages, payroll taxes and benefits 33,428     24,897     93,431     76,122  
General and administrative 11,028     7,556     30,786     23,348  
Facilities and facilities related 4,664     3,490     12,407     10,552  
Depreciation and amortization 6,551     4,057     18,908     11,660  
Total operating expenses 55,671     40,000     155,533     121,682  
               
Income from operations 7,825     9,974     24,832     25,625  
               
Interest expense (421 )   (451 )   (1,230 )   (1,712 )
               
Income before income tax expense 7,403     9,523     23,602     23,913  
Income tax expense (1,560 )   (2,238 )   (3,422 )   (4,716 )
Net Income and Comprehensive Income $ 5,843     $ 7,285     $ 20,180     $ 19,197  
               
Earnings per share:              
Basic $ 0.48     $ 0.65     $ 1.67     $ 1.80  
Diluted $ 0.46     $ 0.62     $ 1.62     $ 1.71  
               
Weighted average common shares outstanding:              
Basic 12,191,405     11,256,946     12,086,588     10,686,040  
Diluted 12,566,966     11,701,394     12,485,049     11,205,748  


 
NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
  Nine Months Ended
  September 28,
2019
  September 29,
2018
Cash Flows From Operating Activities:      
Net income $ 20,180     $ 19,197  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 18,908     11,660  
Non-cash lease expense 6,770      
Provision for doubtful accounts 1,725     843  
Stock based compensation 6,989     4,541  
Change in fair value of contingent consideration 49     267  
Gain on disposals of property and equipment (48 )    
Deferred income taxes (3,839 )   564  
Changes in operating assets and liabilities, net of impact of acquisitions:      
Billed receivables 508     (6,396 )
Unbilled receivables (4,490 )   (3,759 )
Prepaid expenses and other assets (5,279 )   819  
Accounts payable (2,053 )   (679 )
Accrued liabilities (9,170 )   (3,259 )
Income taxes payable (2,789 )   (6,713 )
Billings in excess of costs and estimated earnings on uncompleted contracts (5,972 )   485  
Deposits 68      
Net cash provided by operating activities 21,557     17,570  
       
Cash Flows From Investing Activities:      
Cash paid for acquisitions (net of cash received from acquisitions) (29,365 )   (28,460 )
Purchase of property and equipment (1,810 )   (1,582 )
Net cash used in investing activities (31,175 )   (30,042 )
       
Cash Flows From Financing Activities:      
Proceeds from secondary offering     93,469  
Borrowings from Senior Credit Facility 10,000      
Payments on notes payable (8,483 )   (7,410 )
Payments of contingent consideration (1,213 )   (728 )
Proceeds from exercise of warrant     1,092  
Payments of borrowings from Senior Credit Facility     (36,500 )
Net cash provided by financing activities 304     49,923  
       
Net (decrease) increase in Cash and Cash Equivalents (9,314 )   37,451  
Cash and cash equivalents – beginning of period 40,739     18,751  
Cash and cash equivalents – end of period $ 31,425     $ 56,202  


 
NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GROSS REVENUES TO TOTAL REVENUES
(in thousands)
(Unaudited)
 
    Three Months Ended   Nine Months Ended
    September 28,
2019
  September 29,
2018
  September 28,
2019
  September 29,
2018
Gross Revenues - GAAP $ 131,032     $ 104,185     $ 376,340     $ 302,737  
Add: Intercompany revenues in lieu of sub-consultants 1,063   1,309     2,720     3,218  
Total Revenues $ 132,095     $ 105,494     $ 379,060     $ 305,955  



  NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GROSS REVENUES TO NET REVENUES
(in thousands)
  (Unaudited)
 
    Three Months Ended   Nine Months Ended
    September 28,
2019
  September 29,
2018
  September 28,
2019
  September 29,
2018
Gross Revenues - GAAP $ 131,032     $ 104,185     $ 376,340     $ 302,737  
Less: Sub-consultant services (19,972 )   (14,989 )   (56,969 )   (43,349 )
  Other direct costs (7,139 )   (4,747 )   (25,244 )   (13,539 )
Net Revenues $ 103,921     $ 84,449     $ 294,127     $ 245,849  



 
NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO EBITDA
(in thousands)
(Unaudited)
 
    Three Months Ended   Nine Months Ended
    September 28,
2019
  September 29,
2018
  September 28,
2019
  September 29,
2018
Net Income $ 5,843     $ 7,285     $ 20,180     $ 19,197  
Add: Interest expense 421     451     1,230     1,712  
  Income tax expense 1,560     2,238     3,422     4,716  
  Depreciation and Amortization 6,551     4,057     18,908     11,660  
EBITDA $ 14,375     $ 14,031     $ 43,740     $ 37,285  



NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EPS TO ADJUSTED EPS
(Unaudited)
 
    Three Months Ended   Nine Months Ended
    September 28,
2019
  September 29,
2018
  September 28, 2019   September 29, 2018
Net Income - per diluted share $ 0.46     $ 0.62     $ 1.62     $ 1.71  
Per diluted share adjustments:              
Add: Amortization expense of intangible assets 0.42     0.26     1.23     0.77  
  Income tax expense (0.10 )   (0.06 )   (0.29 )   (0.15 )
Adjusted EPS $ 0.78     $ 0.82     $ 2.56     $ 2.33  

 

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Source: NV5 Global, Inc.