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NV5 Announces Record Second Quarter Results; Exceeds Analysts' Expectations

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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