NV5 Announces Record Third Quarter Results; Exceeds Analysts' Expectations


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, net122,678  131,041 
Unbilled receivables, net83,535  79,428 
Prepaid expenses and other current assets9,493  8,906 
Total current assets279,728  251,200 
Property and equipment, net27,957  25,733 
Right-of-use lease assets, net46,029  46,313 
Intangible assets, net182,830  255,961 
Goodwill344,003  309,216 
Other assets2,777  4,714 
Total Assets$883,324  $893,137 
    
Liabilities and Stockholders’ Equity   
    
Current liabilities:   
Accounts payable$33,842  $36,116 
Accrued liabilities46,810  47,432 
Billings in excess of costs and estimated earnings on uncompleted
contracts
9,009  3,303 
Client deposits382  221 
Current portion of contingent consideration1,334  1,954 
Current portion of notes payable and other obligations21,957  25,332 
Total current liabilities113,334  114,358 
Contingent consideration, less current portion1,733  2,048 
Other long-term liabilities42,130  34,573 
Notes payable and other obligations, less current portion306,606  332,854 
Deferred income tax liabilities, net34,956  53,341 
Total liabilities498,759  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 capital263,341  251,187 
Retained earnings121,092  104,647 
Total stockholders’ equity384,565  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 wages46,815  40,426  136,929  113,762 
Sub-consultant services26,003  19,972  78,673  56,969 
Other direct costs10,370  7,139  27,771  25,244 
Total direct costs83,188  67,536  243,373  195,975 
        
Gross Profit86,761  63,496  254,745  180,365 
        
Operating Expenses:       
Salaries and wages, payroll taxes and benefits43,750  33,428  133,456  93,431 
General and administrative13,216  11,028  38,196  30,786 
Facilities and facilities related5,370  4,664  16,125  12,407 
Depreciation and amortization10,187  6,551  32,387  18,908 
Total operating expenses72,523  55,671  220,164  155,533 
        
Income from operations14,238  7,825  34,581  24,832 
        
Interest expense(3,731) (421) (11,921) (1,230)
        
Income before income tax expense10,507  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:       
Basic12,434,600  12,191,405  12,328,448  12,086,588 
Diluted12,749,917  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 amortization34,680  18,908 
Non-cash lease expense6,731  6,770 
Provision for doubtful accounts3,127  1,725 
Stock-based compensation10,900  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 costs669   
Changes in operating assets and liabilities, net of impact of acquisitions:   
Billed receivables8,089  508 
Unbilled receivables(7,505) (4,490)
Prepaid expenses and other assets2,171  (5,279)
Accounts payable(2,780) (2,053)
Accrued liabilities322  (9,170)
Income taxes payable  (2,789)
Billings in excess of costs and estimated earnings on uncompleted contracts5,706  (5,972)
Deposits163  68 
Net cash provided by operating activities72,419  21,557 
    
Cash Flows From Investing Activities:   
Cash paid for acquisitions (net of cash received from acquisitions)(882) (29,365)
Proceeds from sale of assets1,053   
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 Equivalents32,197  (9,314)
Cash and cash equivalents – beginning of period31,825  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 expense3,731  421  11,921  1,230 
 Income tax expense2,753  1,560  6,215  3,422 
 Depreciation and amortization11,401  6,551  34,680  18,908 
 Stock-based compensation4,020  2,819  10,900  6,989 
 Acquisition-related costs274  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