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NV5 Announces Record Third Quarter Results; Exceeds Analysts' Expectations

NV5 Global, Inc.
·12 min read

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, net

122,678

131,041

Unbilled receivables, net

83,535

79,428

Prepaid expenses and other current assets

9,493

8,906

Total current assets

279,728

251,200

Property and equipment, net

27,957

25,733

Right-of-use lease assets, net

46,029

46,313

Intangible assets, net

182,830

255,961

Goodwill

344,003

309,216

Other assets

2,777

4,714

Total Assets

$

883,324

$

893,137

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

33,842

$

36,116

Accrued liabilities

46,810

47,432

Billings in excess of costs and estimated earnings on uncompleted
contracts

9,009

3,303

Client deposits

382

221

Current portion of contingent consideration

1,334

1,954

Current portion of notes payable and other obligations

21,957

25,332

Total current liabilities

113,334

114,358

Contingent consideration, less current portion

1,733

2,048

Other long-term liabilities

42,130

34,573

Notes payable and other obligations, less current portion

306,606

332,854

Deferred income tax liabilities, net

34,956

53,341

Total liabilities

498,759

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 capital

263,341

251,187

Retained earnings

121,092

104,647

Total stockholders’ equity

384,565

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 wages

46,815

40,426

136,929

113,762

Sub-consultant services

26,003

19,972

78,673

56,969

Other direct costs

10,370

7,139

27,771

25,244

Total direct costs

83,188

67,536

243,373

195,975

Gross Profit

86,761

63,496

254,745

180,365

Operating Expenses:

Salaries and wages, payroll taxes and benefits

43,750

33,428

133,456

93,431

General and administrative

13,216

11,028

38,196

30,786

Facilities and facilities related

5,370

4,664

16,125

12,407

Depreciation and amortization

10,187

6,551

32,387

18,908

Total operating expenses

72,523

55,671

220,164

155,533

Income from operations

14,238

7,825

34,581

24,832

Interest expense

(3,731

)

(421

)

(11,921

)

(1,230

)

Income before income tax expense

10,507

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:

Basic

12,434,600

12,191,405

12,328,448

12,086,588

Diluted

12,749,917

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 amortization

34,680

18,908

Non-cash lease expense

6,731

6,770

Provision for doubtful accounts

3,127

1,725

Stock-based compensation

10,900

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 costs

669

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

Billed receivables

8,089

508

Unbilled receivables

(7,505

)

(4,490

)

Prepaid expenses and other assets

2,171

(5,279

)

Accounts payable

(2,780

)

(2,053

)

Accrued liabilities

322

(9,170

)

Income taxes payable

(2,789

)

Billings in excess of costs and estimated earnings on uncompleted contracts

5,706

(5,972

)

Deposits

163

68

Net cash provided by operating activities

72,419

21,557

Cash Flows From Investing Activities:

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

(882

)

(29,365

)

Proceeds from sale of assets

1,053

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 Equivalents

32,197

(9,314

)

Cash and cash equivalents – beginning of period

31,825

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 expense

3,731

421

11,921

1,230

Income tax expense

2,753

1,560

6,215

3,422

Depreciation and amortization

11,401

6,551

34,680

18,908

Stock-based compensation

4,020

2,819

10,900

6,989

Acquisition-related costs

274

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