NV5 Announces Second Quarter Results; Exceeds Analyst Consensus

Aug 09, 2023

HOLLYWOOD, Fla., Aug. 09, 2023 (GLOBE NEWSWIRE) -- NV5 Global, Inc. ( NVEE) ("NV5" or the "Company"), a provider of technology, conformity assessment, and consulting solutions, today reported financial results for the second quarter ended July 1, 2023.

"We are pleased with our second quarter results. Our business continues to demonstrate resilience in difficult market conditions as it grew over the first quarter. Sustainable infrastructure, ESG service offerings, and technology solutions as supplied by NV5 are in increasing demand. The addition of Axim Geospatial and Visual Information Solutions Geospatial Software have strengthened our leadership position in geospatial data analytics and the acquisition of Red Technologies expands our capabilities in the growing Asia-Pacific data center market. Overall, we are well-positioned for organic growth and acquisition expansion,” said Dickerson Wright, PE, Chairman and CEO of NV5.

Second Quarter 2023 Results

Gross revenues in the second quarter of 2023 were $222.6 million compared to $202.7 million in the second quarter of 2022, a 10% increase.
Gross profit in the second quarter of 2023 was $110.3 million compared to $99.2 million in the second quarter of 2022, an 11% increase.
Net income in the second quarter of 2023 was $15.4 million compared to $17.3 million in the second quarter of 2022. Net income was impacted by increases in amortization from acquisitions and interest expense, as well as lower income from operations in our real estate transactional and LNG businesses. Our real estate transactional business was affected by market reactions to increases in interest rates and our LNG business was affected by the timing of project cycles.
Adjusted EBITDA in the second quarter of 2023 was $35.0 million compared to $37.8 million in the second quarter of 2022. Adjusted EBITDA was impacted by lower income from operations in our real estate transactional and LNG businesses. Our real estate transactional business was affected by market reactions to increases in interest rates and our LNG business was affected by the timing of project cycles.
GAAP EPS in the second quarter of 2023 was $1.00 per share compared to $1.13 per share in the second quarter of 2022.
Adjusted EPS in the second quarter of 2023 was $1.29 per share compared to $1.49 per share in the second quarter of 2022.

Six Months Ended July 1, 2023 Results

Gross revenues for the six months ended July 1, 2023 were $407.0 million compared to $392.9 million in the six months ended July 2, 2022, a 4% increase.
Gross profit for the six months ended July 1, 2023 were $206.3 million compared to $193.1 million in the six months ended July 2, 2022, a 7% increase.
Net income for the six months ended July 1, 2023 was $21.4 million compared to $25.9 million in the six months ended July 2, 2022. Net income was impacted by increases in amortization from acquisitions and interest expense, as well as lower income from operations in our real estate transactional and LNG businesses. Our real estate transactional business was affected by market reactions to increases in interest rates and our LNG business was affected by the timing of project cycles.
Adjusted EBITDA for the six months ended July 1, 2023 was $62.7 million compared to $66.7 million in the six months ended July 2, 2022. Adjusted EBITDA was impacted by lower income from operations in our real estate transactional and LNG businesses. Our real estate transactional business was affected by market reactions to increases in interest rates and our LNG business was affected by the timing of project cycles.
GAAP EPS for the six months ended July 1, 2023 was $1.39 per share compared to $1.70 per share in the six months ended July 2, 2022.
Adjusted EPS for the six months ended July 1, 2023 was $2.16 per share compared to $2.48 per share in the six months ended July 2, 2022.

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 second quarter 2023 financial results at 4:30 p.m. (Eastern Time) on August 9, 2023. The accompanying presentation for the call is available by visiting http://ir.nv5.com.

Date: Time: Toll-free dial-in number: International dial-in number: Conference ID: Webcast:		Wednesday, August 9, 2023 4:30 p.m. Eastern +1 888-412-4117 +1 646-960-0284 6172299 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. ( 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: Construction quality assurance, infrastructure engineering, utility services, buildings & technology, 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: [email protected]

Source: NV5 Global, Inc.

NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share data)

July 1, 2023 December 31, 2022Assets Current assets: Cash and cash equivalents$28,827 $38,541 Billed receivables, net 149,110 145,637 Unbilled receivables, net 107,192 92,862 Prepaid expenses and other current assets 20,501 13,636 Total current assets 305,630 290,676 Property and equipment, net 49,392 41,640 Right-of-use lease assets, net 38,628 39,314 Intangible assets, net 243,579 160,431 Goodwill 526,848 400,957 Other assets 3,751 2,705 Total Assets$1,167,828 $935,723 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable$55,578 $57,771 Accrued liabilities 52,735 44,313 Billings in excess of costs and estimated earnings on uncompleted contracts 37,195 31,183 Other current liabilities 2,072 1,597 Current portion of contingent consideration 4,149 10,854 Current portion of notes payable and other obligations 14,800 15,176 Total current liabilities 166,529 160,894 Contingent consideration, less current portion 1,897 4,481 Other long-term liabilities 28,526 29,542 Notes payable and other obligations, less current portion 209,241 39,673 Deferred income tax liabilities, net 20,487 6,893 Total liabilities 426,680 241,483 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, 15,890,908 and 15,523,300 shares issued and outstanding as of July 1, 2023 and December 31, 2022, respectively 159 155 Additional paid-in capital 497,035 471,300 Accumulated other comprehensive income (loss) (191) — Retained earnings 244,145 222,785 Total stockholders’ equity 741,148 694,240 Total liabilities and stockholders’ equity$1,167,828 $935,723

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 July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022Gross revenues$222,638 $202,732 $406,955 $392,885 Direct costs: Salaries and wages 57,079 47,704 105,463 93,681 Sub-consultant services 39,690 40,479 67,304 75,305 Other direct costs 15,569 15,309 27,890 30,833 Total direct costs 112,338 103,492 200,657 199,819 Gross profit 110,300 99,240 206,298 193,066 Operating expenses: Salaries and wages, payroll taxes, and benefits 58,949 47,283 111,621 97,049 General and administrative 11,551 14,494 29,472 30,881 Facilities and facilities related 5,823 5,195 11,197 10,381 Depreciation and amortization 13,539 9,668 24,585 19,602 Total operating expenses 89,862 76,640 176,875 157,913 Income from operations 20,438 22,600 29,423 35,153 Interest expense (3,648) (887) (5,229) (1,801) Income before income tax expense 16,790 21,713 24,194 33,352 Income tax expense (1,377) (4,445) (2,834) (7,442)Net income$15,413 $17,268 $21,360 $25,910 Earnings per share: Basic$1.03 $1.17 $1.43 $1.76 Diluted$1.00 $1.13 $1.39 $1.70 Weighted average common shares outstanding: Basic 15,014,106 14,736,167 14,948,796 14,714,745 Diluted 15,451,788 15,232,157 15,421,535 15,211,835 Comprehensive income: Net income$15,413 $17,268 $21,360 $25,910 Foreign currency translation losses, net of tax (191) — (191) — Comprehensive income$15,222 $17,268 $21,169 $25,910

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

Six Months Ended July 1, 2023 July 2, 2022Cash flows from operating activities: Net income$21,360 $25,910 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 27,205 22,058 Non-cash lease expense 6,784 6,265 Provision for doubtful accounts 607 594 Stock-based compensation 10,728 9,615 Change in fair value of contingent consideration (7,514) (518)Gain on disposals of property and equipment (408) (61)Deferred income taxes (7,673) (3,014)Amortization of debt issuance costs 365 370 Changes in operating assets and liabilities, net of impact of acquisitions: Billed receivables 10,882 15,152 Unbilled receivables (9,842) (3,801)Prepaid expenses and other assets (4,691) (511)Accounts payable (8,164) (4,349)Accrued liabilities and other long-term liabilities (5,698) (6,309)Billings in excess of costs and estimated earnings on uncompleted contracts (7,606) (6,867)Contingent consideration (1,307) — Other current liabilities 474 (276)Net cash provided by operating activities 25,502 54,258 Cash flows from investing activities: Cash paid for acquisitions (net of cash received from acquisitions) (186,242) (4,670)Proceeds from sale of assets 295 48 Purchase of property and equipment (10,239) (10,379)Net cash used in investing activities (196,186) (15,001) Cash flows from financing activities: Borrowings from Senior Credit Facility 180,000 — Payments on notes payable (5,131) (6,218)Payments of contingent consideration (793) (1,597)Payments of borrowings from Senior Credit Facility (13,000) (35,000)Net cash provided by (used in) financing activities 161,076 (42,815) Effect of exchange rate changes on cash and cash equivalents (106) — Net decrease in cash and cash equivalents (9,714) (3,558)Cash and cash equivalents – beginning of period 38,541 47,980 Cash and cash equivalents – end of period$28,827 $44,422

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 Six Months Ended July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022Net Income$15,413 $17,268 $21,360 $25,910 Add:Interest expense 3,648 887 5,229 1,801 Income tax expense 1,377 4,445 2,834 7,442 Depreciation and amortization 14,905 10,891 27,205 22,058 Stock-based compensation 4,902 4,826 10,728 9,615 Acquisition-related costs* (5,294) (506) (4,661) (151)Adjusted EBITDA$34,951 $37,811 $62,695 $66,675

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

RECONCILIATION OF GAAP EPS TO ADJUSTED EPS

Three Months Ended Six Months Ended July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022Net Income - per diluted share$1.00 $1.13 $1.39 $1.70 Per diluted share adjustments: Add:Amortization expense of intangible assets and acquisition-related costs 0.49 0.50 1.13 1.06 Income tax expense (0.20) (0.14) (0.36) (0.28)Adjusted EPS$1.29 $1.49 $2.16 $2.48

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