nvee20190306_8k.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

 

FORM 8-K

 

 

 

 

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported) March 7, 2019

 

NV5 GLOBAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

001-35849

45-3458017

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(I.R.S. Employer Identification No.)

     

200 South Park Road, Suite 350

Hollywood, Florida

  

33021

(Address of Principal Executive Offices)

  

(Zip Code)

 

(954) 495-2112

(Registrant’s Telephone Number, Including Area Code)

n/a

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

[_]        Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[_]        Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[_]        Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[_]        Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

Item 2.02

Results of Operations and Financial Condition.

 

On March 7, 2019, NV5 Global, Inc. (the “Company”) issued a press release reporting its unaudited financial results for the fourth quarter ended and the year ended December 29, 2018. The information contained in this Item 2.02 (including Exhibit 99.1) is furnished pursuant to Item 2.02 and shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

 

The Company does not have, and expressly disclaims, any obligation to release publicly any updates or any changes in the Company’s expectations or any change in events, conditions, or circumstances on which any forward-looking statement is based, except as required by law.

 

 

Item 9.01         Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.

Description

   

99.1

Press Release, dated March 7, 2019

 

2

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: March 7, 2019

 

 

NV5 GLOBAL, INC.

 

 

 

By:       /s/ Michael P. Rama                                    

Name: Michael P. Rama

Title: Vice President and Chief Financial Officer

 

3

ex_136821.htm

Exhibit 99.1

 

NV5 ANNOUNCES RECORD FOURTH QUARTER AND

 

FULL YEAR 2018 FINANCIAL RESULTS; ISSUES 2019 GUIDANCE

 

Hollywood, FL – March 7, 2019 – 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 fourth quarter and year ended December 29, 2018.

 

“We are pleased to announce continued strong performance in revenues and earnings in the fourth quarter and full year 2018 and we are looking forward to continued strong organic, acquisition and strategic growth in 2019. Our success in the fourth quarter and full year 2018 was reflected in our strong backlog, profitability, and substantial growth in our strategic geographic presence and service offerings,” said Dickerson Wright, PE Chairman and CEO of NV5. “In the fourth quarter, Gross Revenues increased 23%, EBITDA increased 34% and Net Income increased 38%, excluding the impact of the Tax Cuts and Jobs Act of 2017 (“2017 Tax Reform”). In the full year 2018, Gross Revenues increased 26%, EBITDA increased 34% and Net Income increased 49%, excluding the impact of the 2017 Tax Reform. Our core business remains robust and organic growth for the full year 2018 was 8%. Additionally, our acquisition pipeline is active and we are confident about the strategic investments we are making to further grow our infrastructure and energy business throughout the United States.”

 

Fourth Quarter 2018 Financial Highlights

 

 

Total Revenues for the quarter were $116.1 million, an increase of 22% year-over-year. Gross Revenues – GAAP for the quarter were $115.3 million, an increase of 23% year-over-year.

 

Net Revenues for the quarter were $88.5 million, an increase of 21% year-over-year.

 

Organic revenue growth for the quarter was 5%. Organic growth is measured by internal growth of our existing business plus growth from acquisitions from the time of acquisition.

 

EBITDA for the quarter was $15.8 million or 18% of Net Revenues, an increase of 34% from $11.8 million, or 16% of Net Revenues in the fourth quarter of 2017.

 

Income before income tax expense for the quarter was $9.8 million, an increase of $2.5 million, or 34% compared to $7.3 million in the fourth quarter of 2017.

 

Net Income for the quarter was $7.7 million. Excluding the impact of the 2017 Tax Reform, Net Income increased 38% over the fourth quarter of 2017 from $5.6 million. Net Income, including the impact of the 2017 Tax Reform, was $11.5 million in the fourth quarter of 2017.

 

Adjusted EPS for the quarter was $0.91 per diluted share. Excluding the impact of the 2017 Tax Reform, Adjusted EPS increased 28% from $0.71 per share in the fourth quarter of 2017. Adjusted EPS, including the impact of the 2017 Tax Reform, was $1.26 per diluted share in the fourth quarter of 2017.

 

GAAP EPS for the quarter was $0.62 per diluted share over 12.4 million shares. Excluding the impact of the 2017 Tax Reform, GAAP EPS increased 22% from $0.51 per share in the fourth quarter of 2017. GAAP EPS, including the impact of the 2017 Tax Reform, was $1.06 per diluted share over 10.9 million shares in the fourth quarter of 2017.

 

Backlog was $390 million as of December 29, 2018, a 32% increase from $296 million as of December 30, 2017.

 

Cash flow from operating activities increased $5.5 million, or 46% to $17.4 million for the quarter compared to $12.0 million in the fourth quarter of 2017.

 

 

Full Year 2018 Financial Highlights

 

 

2018 Total Revenues were $422.1 million, an increase of 25% from 2017 Total Revenues of $337.5 million. Gross Revenues – GAAP were $418.1 million for 2018, an increase of 26% from $333.0 million in 2017.

 

Net Revenues for 2018 were $334.3 million, an increase of 25% from $268.3 million in 2017.

 

Organic revenue growth for 2018 was 8%.

 

EBITDA for 2018 was $53.1 million, or 16% of Net Revenues, an increase of 34% from $39.7 million or 15% of Net Revenues in 2017.

 

Income before income tax expense for 2018 was $33.7 million, an increase of $9.1 million, or 37% compared to $24.6 million in 2017.

 

Net Income was $26.9 million in 2018. Excluding the impact of the 2017 Tax Reform, Net Income increased 48% from $18.1 million in 2017. Net Income, including the impact of the 2017 Tax Reform, was $24.0 million in 2017.

 

Adjusted EPS for 2018 was $3.24 per diluted share. Excluding the impact of the 2017 Tax Reform, Adjusted EPS increased 36% from $2.38 for 2017. Adjusted EPS for 2017, including the impact of the 2017 Tax Reform, was $2.93 per diluted share.

 

GAAP EPS for 2018 was $2.33 over 11.5 million shares. Excluding the impact of the 2017 Tax Reform, GAAP EPS increased 39% from $1.68 per share in 2017. GAAP EPS for 2017, including the impact of the 2017 Tax Reform, was $2.23 per diluted share over 10.8 million shares.

 

Cash flow from operating activities increased $17.4 million, or 99% to $35.0 million in 2018 compared to $17.6 million in 2017.

 

1

 

 

2019 Outlook

 

The Company is initiating guidance for full year 2019 Gross Revenues, Net Revenues, Adjusted EPS and GAAP EPS, including the impact of acquisitions closed through February 28, 2019. The Company expects Gross Revenues to range from $485 million to $520 million, which represents an increase of 16% to 24% from 2018 Gross Revenues of $418 million. Net Revenues are expected to range from $385 million to $414 million, which represents an increase of 15% to 24% from 2018 Net Revenues of $334 million. The Company expects full year 2019 Adjusted EPS to range from $3.51 per share to $3.93 per share, an increase of 8% to 21%. Furthermore, the Company expects full year 2019 GAAP EPS to range from $2.44 per share to $2.85 per share. This guidance for Total Revenues, Net Revenues, Adjusted EPS and GAAP EPS excludes anticipated acquisitions for the remainder of 2019.

 

 

Matters Relating to Internal Controls

 

The Company expects to report a material weakness in its upcoming Annual Report on Form 10-K relating to the initial set up of project contracts and analysis of certain percentage of completion projects. A thorough review of these matters has not resulted in the identification of any material misstatements in the Company’s financial statements for 2018 or any prior period and the Company expects a timely filing of its Form 10-K. Remediation efforts have begun and management expects the material weakness to be remediated during 2019.

 

 

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. 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.

 

2

 

 

Conference Call

 

 

NV5 will host a conference call to discuss its fourth quarter and full year 2018 financial results at 4:30 p.m. (Eastern Time) on March 7, 2019.

 

Date:

Thursday, March 7, 2019

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:

5026016

Webcast:

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 #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 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.

Jenna Carrick

Investor Relations Manager

Tel: +1-916-641-9124

Email: ir@nv5.com

 

Source: NV5 Global, Inc.

 

3

 

 

NV5 GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(Unaudited)

 

 

   

December 29, 2018

   

December 30, 2017

 

Assets

               

Current assets:

               

Cash and cash equivalents

  $ 40,739     $ 18,751  

Billed receivables, net

    98,324       70,686  

Unbilled receivables, net

    43,411       39,401  

Prepaid expenses and other current assets

    2,582       2,555  

Total current assets

    185,056       131,393  

Property and equipment, net

    11,677       8,731  

Intangible assets, net

    99,756       65,754  

Goodwill

    140,930       98,899  

Other assets

    2,002       1,003  

Total Assets

  $ 439,421     $ 305,780  
                 

Liabilities and Stockholders’ Equity

               

Current liabilities:

               

Accounts payable

  $ 22,588     $ 18,373  

Accrued liabilities

    20,853       18,994  

Income taxes payable

    2,697       6,102  

Billings in excess of costs and estimated earnings on uncompleted contracts

    7,625       665  

Client deposits

    208       197  

Current portion of contingent consideration

    1,845       977  

Current portion of notes payable and other obligations

    17,139       11,127  

Total current liabilities

    72,955       56,435  

Contingent consideration, less current portion

    2,853       913  

Notes payable and other obligations, less current portion

    29,847       57,430  

Deferred income tax liabilities, net

    16,224       10,905  

Total liabilities

    121,879       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, 12,550,771 and 10,834,770 shares issued and outstanding as of December 29, 2018 and December 30, 2017, respectively

    126       108  

Additional paid-in capital

    236,525       125,954  

Retained earnings

    80,891       54,035  

Total stockholders’ equity

    317,542       180,097  

Total liabilities and stockholders’ equity

  $ 439,421     $ 305,780  

 

 

4

 

 

NV5 GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME

(in thousands, except share data)

(Unaudited)

 

 

   

Three Months Ended

   

Years Ended

 
   

December 29,

   

December 30,

   

December 29,

   

December 30,

 
   

2018

   

2017

   

2018

   

2017

 
                                 

Gross revenues

  $ 115,344     $ 93,976     $ 418,081     $ 333,034  
                                 

Direct costs (excluding depreciation and amortization):

                         

Salaries and wages

    34,380       27,776       132,922       103,011  

Sub-consultant services

    18,869       16,452       62,218       50,171  

Other direct costs

    7,998       4,322       21,537       14,598  

Total direct costs

    61,247       48,550       216,677       167,780  
                                 

Gross Profit

    54,097       45,426       201,404       165,254  
                                 

Operating Expenses:

                               

Salaries and wages, payroll taxes and benefits

    26,099       23,375       102,221       86,222  

General and administrative

    8,365       6,816       31,713       26,747  

Facilities and facilities related

    3,849       3,427       14,401       12,589  

Depreciation and amortization

    5,724       3,586       17,384       13,128  

Total operating expenses

    44,037       37,204       165,719       138,686  
                                 

Income from operations

    10,060       8,222       35,685       26,568  
                                 

Interest expense

    (254 )     (893 )     (1,966 )     (1,935 )
                                 

Income before income tax expense

    9,806       7,329       33,719       24,633  

Income tax expense

    (2,147 )     4,176       (6,863 )     (627 )

Net Income and Comprehensive Income

  $ 7,659     $ 11,505     $ 26,856     $ 24,006  
                                 

Earnings per share:

                               

Basic

  $ 0.64     $ 1.12     $ 2.44     $ 2.36  

Diluted

  $ 0.62     $ 1.06     $ 2.33     $ 2.23  
                                 

Weighted average common shares outstanding:

                               

Basic

    11,916,546       10,243,409       10,991,124       10,178,901  

Diluted

    12,418,788       10,867,713       11,506,466       10,777,806  

 

5

 

 

NV5 GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

 

   

Years Ended

 
   

December 29, 2018

   

December 30, 2017

 

Cash Flows From Operating Activities:

               

Net income

  $ 26,856     $ 24,006  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation and amortization

    17,384       13,128  

Provision for doubtful accounts

    797       586  

Stock based compensation

    6,697       4,011  

Change in fair value of contingent consideration

    424       (832 )

Loss on disposal property and equipment

    26       35  

Deferred income taxes

    (3,585 )     (11,242 )

Changes in operating assets and liabilities, net of impact of acquisitions:

               

Billed receivables

    (8,662 )     (10,911 )

Unbilled receivables

    (2,813 )     (3,802 )

Prepaid expenses and other assets

    (109 )     295  

Accounts payable

    398       (1,495 )

Accrued liabilities

    (2,984 )     (2,442 )

Income taxes payable

    (3,405 )     4,969  

Billings in excess of costs and estimated earnings on uncompleted contracts

    3,964       436  

Client deposits

    11       883  

Net cash provided by operating activities

    34,999       17,625  
                 

Cash Flows From Investing Activities:

               

Cash paid for acquisitions (net of cash received from acquisitions)

    (58,155 )     (60,633 )

Purchase of property and equipment

    (2,203 )     (2,239 )

Net cash used in investing activities

    (60,358 )     (62,872 )
                 

Cash Flows From Financing Activities:

               

Proceeds from common stock offering

    100,330       -  

Payments of borrowings from Senior Credit Facility

    (36,500 )     (10,500 )

Payments on notes payable

    (9,741 )     (7,605 )

Proceeds from exercise of warrant

    1,093       -  

Payments of contingent consideration

    (728 )     (563 )

Payments on common stock offering

    (6,861 )     -  

Proceeds from borrowings from Senior Credit Facility

    -       47,000  

Payments of debt issuance costs

    (246 )     -  

Net cash provided by financing activities

    47,347       28,332  
                 

Net increase (decrease) in Cash and Cash Equivalents

    21,988       (16,915 )

Cash and cash equivalents – beginning of period

    18,751       35,666  

Cash and cash equivalents – end of period

  $ 40,739     $ 18,751  

 

6

 

 

NV5 GLOBAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

 

   

Years Ended

 
   

December 29, 2018

   

December 30, 2017

 
                 

Supplemental disclosures of cash flow information:

               

Cash paid for interest

  $ 1,895     $ 1,508  

Cash paid for income taxes

  $ 13,634     $ 7,607  
                 

Non-cash investing and financing activities:

               

Contingent consideration (earn-out)

  $ 3,112     $ 908  

Notes payable and other obligations issued for acquisitions

  $ 23,987     $ 9,371  

Stock issuance for acquisitions

  $ 9,330     $ 3,856  

Capital leases

  $ 2,884     $ -  

Payment of contingent consideration and other obligations with common stock

  $ -     $ 63  

 

7

 

 

NV5 GLOBAL, INC. AND SUBSIDIARIES

RECONCILIATION OF GROSS REVENUES TO TOTAL REVENUES

(Unaudited)

(in thousands)

 

 

     

Three Months Ended

   

Years Ended

 
     

December 29,

   

December 30,

   

December 29,

   

December 30,

 
     

2018

   

2017

   

2018

   

2017

 

Gross Revenues - GAAP

  $ 115,344     $ 93,976     $ 418,081     $ 333,034  

Add:

Intercompany revenues in lieu of sub-consultants

    793       1,123       4,011       4,508  

Total Revenues

  $ 116,137     $ 95,099     $ 422,092     $ 337,542  

 

 

8

 

 

NV5 GLOBAL, INC. AND SUBSIDIARIES

RECONCILIATION OF GROSS REVENUES TO NET REVENUES

(Unaudited)

(in thousands)

 

 

     

Three Months Ended

   

Years Ended

 
     

December 29,

   

December 30,

   

December 29,

   

December 30,

 
     

2018

   

2017

   

2018

   

2017

 

Gross Revenues - GAAP

  $ 115,344     $ 93,976     $ 418,081     $ 333,034  

Less:

Sub-consultant services

    (18,869 )     (16,452 )     (62,218 )     (50,171 )
 

Other direct costs

    (7,998 )     (4,322 )     (21,537 )     (14,598 )

Net Revenues

  $ 88,477     $ 73,202     $ 334,326     $ 268,265  

 

9

 

 

NV5 GLOBAL, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP NET INCOME TO EBITDA

(Unaudited)

(in thousands)

 

 

     

Three Months Ended

   

Twelve Months Ended

 
     

December 29,

   

December 30,

   

December 29,

   

December 30,

 
     

2018

   

2017

   

2018

   

2017

 

Net Income

  $ 7,659     $ 11,505     $ 26,856     $ 24,006  

Add:

Interest expense

    254       893       1,966       1,935  
 

Income tax expense

    2,147       (4,176 )     6,863       627  
 

Depreciation and Amortization

    5,724       3,586       17,384       13,128  

EBITDA

  $ 15,784     $ 11,808     $ 53,069     $ 39,696  

 

10

 

 

NV5 GLOBAL, INC. AND SUBSIDIARIES

RECONCILIATION OF GAAP EPS TO ADJUSTED EPS

(Unaudited)

 

 

     

Three Months Ended

   

Twelve Months Ended

 
     

December 29,

   

December 30,

   

December 29,

   

December 30,

 
     

2018

   

2017

   

2018

   

2017

 

Net Income - per diluted share

    0.62     $ 1.06       2.33     $ 2.23  
                                   

Per diluted share adjustments:

                               

Add:

Amortization expense of intangible assets

    0.36       0.26       1.14       0.96  
 

Income tax expense

    (0.07 )     (0.06 )     (0.23 )     (0.26 )

Adjusted EPS

    0.91     $ 1.26       3.24     $ 2.93  
                                   

Less: Impact of 2017 Tax Reform,

    -       (0.55 )     -       (0.55 )

Adjusted EPS, excluding impact of 2017 Tax Reform

  $ 0.91     $ 0.71       3.24     $ 2.38  

 

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