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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

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

Nine Months Ended September 28, 2019 Financial Highlights

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, net109,590  98,324 
Unbilled receivables, net53,819  43,411 
Prepaid expenses and other current assets9,198  2,582 
Total current assets204,031  185,056 
Property and equipment, net12,349  11,677 
Right-of-use lease asset, net42,366   
Intangible assets, net100,688  99,756 
Goodwill158,423  140,930 
Other assets2,886  2,002 
Total Assets520,743  $439,421 
    
Liabilities and Stockholders’ Equity   
    
Current liabilities:   
Accounts payable$23,082  $22,588 
Accrued liabilities33,654  20,853 
Income taxes payable  2,697 
Billings in excess of costs and estimated earnings on uncompleted contracts2,241  7,625 
Client deposits276  208 
Current portion of contingent consideration3,351  1,845 
Current portion of notes payable and other obligations17,578  17,139 
Total current liabilities80,182  72,955 
Contingent consideration, less current portion2,195  2,853 
Long-term lease liability32,781   
Notes payable and other obligations, less current portion40,638  29,847 
Deferred income tax liabilities, net16,881  16,224 
Total liabilities172,676  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 capital246,869  236,525 
Retained earnings101,070  80,891 
Total stockholders’ equity348,067  317,542 
Total liabilities and stockholders’ equity520,743  $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 wages40,426  34,475  113,762  98,542 
Sub-consultant services19,972  14,989  56,969  43,349 
Other direct costs7,139  4,747  25,244  13,539 
Total direct costs67,536  54,211  195,975  155,430 
        
Gross Profit63,496  49,974  180,365  147,307 
        
Operating Expenses:       
Salaries and wages, payroll taxes and benefits33,428  24,897  93,431  76,122 
General and administrative11,028  7,556  30,786  23,348 
Facilities and facilities related4,664  3,490  12,407  10,552 
Depreciation and amortization6,551  4,057  18,908  11,660 
Total operating expenses55,671  40,000  155,533  121,682 
        
Income from operations7,825  9,974  24,832  25,625 
        
Interest expense(421) (451) (1,230) (1,712)
        
Income before income tax expense7,403  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:       
Basic12,191,405  11,256,946  12,086,588  10,686,040 
Diluted12,566,966  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 amortization18,908  11,660 
Non-cash lease expense6,770   
Provision for doubtful accounts1,725  843 
Stock based compensation6,989  4,541 
Change in fair value of contingent consideration49  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 receivables508  (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 
Deposits68   
Net cash provided by operating activities21,557  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 Facility10,000   
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 activities304  49,923 
    
Net (decrease) increase in Cash and Cash Equivalents(9,314) 37,451 
Cash and cash equivalents – beginning of period40,739  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-consultants1,063 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 expense421  451  1,230  1,712 
 Income tax expense1,560  2,238  3,422  4,716 
 Depreciation and Amortization6,551  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 assets0.42  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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