NV5 Announces Record Second Quarter Results; Exceeds Analysts' Expectations

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, net131,255 131,041
Unbilled receivables, net80,269 79,428
Prepaid expenses and other current assets8,435 8,906
Total current assets285,171 251,200
Property and equipment, net29,404 25,733
Right-of-use lease assets, net45,175 46,313
Intangible assets, net191,126 255,961
Goodwill343,170 309,216
Other assets3,069 4,714
Total Assets$897,115 $893,137
    
Liabilities and Stockholders’ Equity   
    
Current liabilities:   
Accounts payable$36,741 $36,116
Accrued liabilities49,797 47,432
Income taxes payable613 
Billings in excess of costs and estimated earnings on uncompleted contracts8,544 3,303
Client deposits286 221
Current portion of contingent consideration1,079 1,954
Current portion of notes payable and other obligations22,176 25,332
Total current liabilities119,236 114,358
Contingent consideration, less current portion1,733 2,048
Other long-term liabilities37,181 34,573
Notes payable and other obligations, less current portion326,020 332,854
Deferred income tax liabilities, net40,575 53,341
Total liabilities524,745 537,174
    
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, respectively130 129
Additional paid-in capital258,902 251,187
Retained earnings113,338 104,647
Total stockholders’ equity372,370 355,963
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 wages45,079  38,080  90,114  73,337 
Sub-consultant services25,244  20,044  52,670  36,996 
Other direct costs8,914  8,410  17,402  18,106 
Total direct costs79,237  66,534  160,186  128,439 
        
Gross Profit83,452  61,440  167,983  116,870 
        
Operating Expenses:       
Salaries and wages, payroll taxes and benefits44,149  30,765  89,706  60,004 
General and administrative11,824  10,896  24,980  19,758 
Facilities and facilities related5,357  3,937  10,754  7,743 
Depreciation and amortization11,160  6,245  22,200  12,357 
Total operating expenses72,490  51,843  147,640  99,862 
        
Income from operations10,962  9,597  20,343  17,008 
        
Interest expense(4,403) (457) (8,190) (808)
        
Income before income tax expense6,559  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:       
Basic12,308,965  12,106,066  12,271,221  12,033,906 
Diluted12,609,918  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 amortization23,277  12,357 
Non-cash lease expense4,307  4,251 
Provision for doubtful accounts1,690  1,456 
Stock-based compensation6,880  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 costs442   
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 assets2,117  (9,413)
Accounts payable138  (3,816)
Accrued liabilities1,922  968 
Income taxes payable613  (2,338)
Billings in excess of costs and estimated earnings on uncompleted contracts5,241  (5,383)
Deposits66  47 
Net cash provided by operating activities50,745  17,434 
    
Cash Flows From Investing Activities:   
Cash paid for acquisitions (net of cash received from acquisitions)  (14,160)
Proceeds from sale of assets437   
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 Equivalents33,387  3,697 
Cash and cash equivalents – beginning of period31,825  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 expense4,403  457  8,190  808 
 Income tax expense2,056  346  3,462  1,863 
 Depreciation and Amortization12,237  6,245  23,277  12,357 
 Stock-based compensation3,501  2,369  6,880  4,167 
 Acquisition-related costs231  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 costs0.77  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 

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