NV5 Announces Record Third Quarter Results; Exceeds Analyst Consensus

NV5 Global, Inc.

HOLLYWOOD, Fla., Nov. 03, 2022 (GLOBE NEWSWIRE) -- NV5 Global, Inc. (Nasdaq: NVEE) ("NV5" or the "Company"), a provider of technology, conformity assessment, and consulting solutions, today reported financial results for the third quarter ended October 1, 2022.

"NV5’s growth in both revenues and profitability in the third quarter resulted in another record quarter and once again demonstrates the success of the NV5 business model. Utilities continue to be a driver of NV5’s business, and our geospatial vertical delivered its strongest quarter ever in revenue and new contract bookings. NV5 has consistently delivered growth and profitability exceeding the industry average and has demonstrated resilience to changing economic conditions. We enter the fourth quarter with a strong backlog, a healthy acquisition pipeline, and potential high-margin, non-discretionary service offerings," said Dickerson Wright, PE, Chairman and CEO of NV5.

Third Quarter 2022 Results

• Gross revenues in the third quarter of 2022 were $204.1 million compared to $185.6 million in the third quarter of 2021, a 10% increase.

• Net income in the third quarter of 2022 was $16.1 million compared to $12.6 million in the third quarter of 2021, a 28% increase.

• Adjusted EBITDA in the third quarter of 2022 was $36.0 million compared to $34.7 million in the third quarter of 2021, a 4% increase.

• GAAP EPS in the third quarter of 2022 was $1.05 per share compared to $0.83 per share in the third quarter of 2021, a 27% increase.

• Adjusted EPS in the third quarter of 2022 was $1.50 per share compared to $1.25 per share in the third quarter of 2021, a 20% increase. Diluted weighted average shares were 15,301,545 in the third quarter of 2022 compared to 15,069,660 in the third quarter of 2021.

• Cash flows provided by operations were $26.1 million in the third quarter of 2022 compared to $15.8 million in the third quarter of 2021, a 65% increase.

• Reduced net debt leverage to 0.28x, a 33% decrease when compared to the second quarter of 2022.
  

Nine Months Ended October 1, 2022 Results

• Gross revenues for the nine months ended October 1, 2022 were $597.0 million compared to $518.2 million in the nine months ended October 2, 2021, a 15% increase.

• Net income for the nine months ended October 1, 2022 was $42.0 million compared to $31.7 million in the nine months ended October 2, 2021, a 32% increase.

• Adjusted EBITDA for the nine months ended October 1, 2022 was $102.7 million compared to $93.1 million in the nine months ended October 2, 2021, a 10% increase.

• GAAP EPS for the nine months ended October 1, 2022 was $2.75 per share compared to $2.19 per share in the nine months ended October 2, 2021, a 26% increase.

• Adjusted EPS for the nine months ended October 1, 2022 was $3.99 per share compared to $3.50 per share in the nine months ended October 2, 2021, a 14% increase. Diluted weighted average shares were 15,242,453 for the nine months ended October 1, 2022, compared to 14,486,683 in the nine months ended October 2, 2021.

• Cash flows provided by operations for the nine months ended October 1, 2022 were $80.4 million compared to $78.1 million in the nine months ended October 2, 2021.

• Organic growth for the nine months ended October 1, 2022 was 7%.
  

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 may 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. In addition, when presenting forward-looking non-GAAP metrics, we are unable to provide quantitative reconciliations to the most closely correlated GAAP measure due to the uncertainty in the timing, amount or nature of any adjustments, which could be material in any period.

Conference Call

NV5 will host a conference call to discuss its third quarter 2022 financial results at 4:30 p.m. (Eastern Time) on November 3, 2022. The accompanying presentation for the call is available by visiting http://ir.nv5.com.

Date:	Thursday, November 3, 2022
Time:	4:30 p.m. Eastern
Toll-free dial-in number:	+1 888-412-4117
International dial-in number:	+1 646-960-0284
Conference ID:	6172299
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 technology, conformity assessment, and consulting solutions for public and private sector clients supporting sustainable infrastructure, utility, and building assets and systems. The Company focuses on multiple verticals: testing, inspection & consulting, infrastructure engineering, utility services, buildings & program management, environmental health sciences, and geospatial technology services to deliver innovative, sustainable solutions to complex issues and improve lives in our communities. NV5 operates out of more than 100 offices nationwide and internationally. For additional information, please visit the Company’s website at www.NV5.com. Also visit the Company on LinkedIn, Twitter, Facebook, and Instagram.

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 1, 2022				January 1, 2022
Assets
Current assets:
Cash and cash equivalents	$	54,171			$	47,980
Billed receivables, net		141,308				153,814
Unbilled receivables, net		98,081				89,734
Prepaid expenses and other current assets		20,896				12,442
Total current assets		314,456				303,970
Property and equipment, net		41,042				32,729
Right-of-use lease assets, net		38,008				44,260
Intangible assets, net		167,592				188,224
Goodwill		398,614				389,916
Other assets		2,427				2,844
Total Assets	$	962,139			$	961,943
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	48,722			$	55,954
Accrued liabilities		58,481				50,461
Billings in excess of costs and estimated earnings on uncompleted contracts		27,886				29,444
Other current liabilities		1,421				1,551
Current portion of contingent consideration		9,224				5,807
Current portion of notes payable and other obligations		18,140				20,734
Total current liabilities		163,874				163,951
Contingent consideration, less current portion		2,813				2,521
Other long-term liabilities		28,760				34,304
Notes payable and other obligations, less current portion		63,238				111,062
Deferred income tax liabilities, net		21,097				25,385
Total liabilities		279,782				337,223
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, 15,559,921 and 15,414,005 shares issued and outstanding as of October 1, 2022 and January 1, 2022, respectively		156				154
Additional paid-in capital		467,416				451,754
Retained earnings		214,785				172,812
Total stockholders’ equity		682,357				624,720
Total liabilities and stockholders’ equity	$	962,139			$	961,943

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 1, 2022				October 2, 2021				October 1, 2022				October 2, 2021
Gross revenues	$	204,075			$	185,553			$	596,960			$	518,151
Direct costs:
Salaries and wages		48,295				45,145				141,976				131,630
Sub-consultant services		41,253				35,779				116,557				89,003
Other direct costs		14,592				12,802				45,426				35,714
Total direct costs		104,140				93,726				303,959				256,347
Gross profit		99,935				91,827				293,001				261,804
Operating expenses:
Salaries and wages, payroll taxes and benefits		49,670				44,597				146,719				131,761
General and administrative		16,730				12,978				47,611				37,891
Facilities and facilities related		5,441				5,194				15,822				15,330
Depreciation and amortization		9,771				10,108				29,373				29,764
Total operating expenses		81,612				72,877				239,525				214,746
Income from operations		18,323				18,950				53,476				47,058
Interest expense		(1,003	)			(1,475	)			(2,804	)			(5,362	)
Income before income tax expense		17,320				17,475				50,672				41,696
Income tax expense		(1,257	)			(4,902	)			(8,699	)			(10,005	)
Net income and comprehensive income	$	16,063			$	12,573			$	41,973			$	31,691
Earnings per share:
Basic	$	1.09			$	0.86			$	2.85			$	2.27
Diluted	$	1.05			$	0.83			$	2.75			$	2.19
Weighted average common shares outstanding:
Basic		14,768,689				14,593,623				14,732,726				13,963,372
Diluted		15,301,545				15,069,660				15,242,453				14,486,683

NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)

	Nine Months Ended
	October 1, 2022				October 2, 2021
Cash flows from operating activities:
Net income	$	41,973			$	31,691
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		33,091				33,397
Non-cash lease expense		9,409				7,941
Provision for doubtful accounts		1,252				1,077
Stock-based compensation		15,249				12,087
Change in fair value of contingent consideration		(543	)			(67	)
Gain on disposals of property and equipment		(100	)			(1,059	)
Deferred income taxes		(4,288	)			(4,318	)
Amortization of debt issuance costs		556				1,024
Changes in operating assets and liabilities, net of impact of acquisitions:
Billed receivables		13,281				16,728
Unbilled receivables		(8,633	)			(10,024	)
Prepaid expenses and other assets		(8,105	)			(4,160	)
Accounts payable		(7,937	)			1,366
Accrued liabilities		(1,608	)			403
Billings in excess of costs and estimated earnings on uncompleted contracts		(2,902	)			(8,233	)
Other current liabilities		(304	)			218
Net cash provided by operating activities		80,391				78,071
Cash flows from investing activities:
Cash paid for acquisitions (net of cash received from acquisitions)		(5,020	)			(23,569	)
Proceeds from sale of assets		87				843
Purchase of property and equipment		(14,874	)			(6,714	)
Net cash used in investing activities		(19,807	)			(29,440	)
Cash flows from financing activities:
Proceeds from common stock offering		—				172,500
Borrowings from Senior Credit Facility		—				138,750
Payments on notes payable		(7,796	)			(7,299	)
Payments of contingent consideration		(1,597	)			(663	)
Payments of borrowings from Senior Credit Facility		(45,000	)			(283,832	)
Payments of common stock offering costs		—				(10,657	)
Purchases of common stock tendered by employees to satisfy the required withholding taxes related to stock-based compensation		—				(52	)
Payments of debt issuance costs		—				(890	)
Net cash (used in) provided by financing activities		(54,393	)			7,857
Net increase in cash and cash equivalents		6,191				56,488
Cash and cash equivalents – beginning of period		47,980				64,909
Cash and cash equivalents – end of period	$	54,171			$	121,397

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 1, 2022				October 2, 2021				October 1, 2022				October 2, 2021
Net Income		$	16,063			$	12,573			$	41,973			$	31,691
Add:	Interest expense		1,003				1,475				2,804				5,362
	Income tax expense		1,257				4,902				8,699				10,005
	Depreciation and amortization		11,033				11,461				33,091				33,397
	Stock-based compensation		5,634				4,297				15,249				12,087
	Acquisition-related costs*		1,043				(23	)			892				607
Adjusted EBITDA		$	36,033			$	34,685			$	102,708			$	93,149

* Acquisition-related costs include contingent consideration fair value adjustments.

RECONCILIATION OF GAAP EPS TO ADJUSTED EPS

		Three Months Ended								Nine Months Ended
		October 1, 2022				October 2, 2021				October 1, 2022				October 2, 2021
Net Income - per diluted share		$	1.05			$	0.83			$	2.75			$	2.19
Per diluted share adjustments:
Add:	Amortization expense of intangible assets and acquisition-related costs		0.59				0.57				1.66				1.77
	Income tax expense		(0.14	)			(0.15	)			(0.42	)			(0.46	)
Adjusted EPS		$	1.50			$	1.25			$	3.99			$	3.50