Exhibit 99.1
 
 

NV5 ANNOUNCES RECORD THIRD QUARTER 2019 REVENUE RESULTS AND LOWERS GUIDANCE DUE TO HEADWINDS
 
 
Hollywood, FL – November 7, 2019 – NV5 Global, Inc. (Nasdaq: NVEE) (“NV5” or the “Company”), a provider of professional and technical engineering and consulting solutions, today reported financial results for the third quarter ended September 28, 2019.
 
In the third quarter 2019, Gross Revenues - GAAP increased 26% year-over-year, EBITDA increased 3%, Net Income decreased 20% and Net Income adjusted for the impact of intangible amortization increased 3%. Our backlog as of September 28, 2019 increased 35% compared to September 29, 2018 and cash flows from operating activities for the nine months ended September 28, 2019 increased 23% compared to the nine months ended September 29, 2018.

In July 2019, the Company acquired two companies, GeoDesign, Inc. and WH Pacific, Inc., expanding NV5’s infrastructure design, surveying and construction quality assurance capabilities in the Pacific Northwest and supporting the Company’s ENERGY 2021 initiative. Operating results for the third quarter of 2019 were negatively affected, however, by both an unexpected delay in the Company’s liquefied natural gas (“LNG”) service line and declining revenue from contracts with the North Carolina Department of Transportation (“NCDOT”), as projects throughout the state were put on temporary hold pending funding. We expect that the project delay in our LNG service line and the NCDOT are temporary in nature. Decreases in other areas were partially offset by healthy upward trends in our power and construction quality assurance divisions. Erosion of utilization, along with integration of four acquisitions in the late second quarter and early third quarter, resulted in increased overhead costs in the third quarter. Scalable indirect costs are expected to begin in the fourth quarter, and full synergy is anticipated in 2020.

NV5 today also announced the signing of a definitive agreement to acquire Quantum Spatial, Inc. (“QSI”), the largest full-service geospatial solutions provider in North America, with approximately 600 employees operating out of 8 offices in the United States, Canada, and India. QSI combines advanced remote sensing technologies and proprietary processes, analytics tools, and algorithms to transform the way client utilize and value geospatial data, including subscription software. QSI’s client base contributes significant recurring revenue and includes federal agencies, major utility companies, and state and regional government authorities. QSI is an all cash transaction for $303 million. QSI is expected to generate $30 million of EBITDA on 2019 expected gross revenues of $128 million.

“NV5 continues to strategically invest in technical capabilities that add value to our clients and deepen our relationships, have significant barriers to entry, and provide margins that are higher than the industry average. Our seven acquisitions in 2019 only contributed partial year revenue, but have given us a significant presence in the Pacific Northwest, provided us with access to key DOTs and utilities, and made us the leading provider of geospatial solutions, a rapidly-growing, specialized service that impacts important fields such as power transmission line fire mitigation, pipeline asset management, and forestry management, said Dickerson Wright, PE, Chairman and CEO of NV5. “NV5 is at the forefront of advancements in service delivery and data management solutions, an example of which is our monitoring-based energy efficiency commissioning services. We are excited for QSI to lead our new Technology service line, a suite of technologically advanced service offerings that provide unique value for our clients.”

Peter LaMontagne, President and CEO of QSI added, “Our employees are looking forward to contributing to NV5’s strategy of adding value to client relationships through technology. We have worked with NV5 over the past few years and are very enthusiastic about the new value that we can provide to our expanding list of federal, state, and commercial clients.”

Houlihan Lokey served as the exclusive financial advisor to QSI.  Sheppard Mullin served as legal advisor to QSI.


 
Third Quarter 2019 Financial Highlights
Total Revenues for the quarter were $132.1 million, an increase of 25% year-over-year. Gross Revenues - GAAP for the quarter were $131.0 million, an increase of 26% year-over-year.





Net Revenues for the quarter were $103.9 million, an increase of 23% year-over-year.
EBITDA for the quarter was $14.4 million or 14% of Net Revenues, an increase of 3% from $14.0 million, or 17% of Net Revenues in the third quarter of 2018.
Net Income for the quarter was $5.8 million, a decrease of 20% compared to $7.3 million in the third quarter of 2018. Adjusting for the impact of intangible amortization, which results from acquisitions, net income for the quarter was $9.7 million, a 3% increase compared to the third quarter of 2018.  
Adjusted EPS for the quarter was $0.78 per diluted share, a decrease of 5% from $0.82 in the third quarter of 2018.
Backlog was $463 million as of September 28, 2019, a 35% increase from $342 million as of September 29, 2018. Backlog includes those contracts for which work authorizations or awards have been received, estimated recurring revenue from one of the Company’s service lines that has a high volume of small contracts and a quick-burn estimate.
Organic growth when compared to the quarter end June 28, 2019 and September 29, 2018 was flat when adjusting for customer delays and decreases in Asia attributable to geopolitical events.

Nine Months Ended September 28, 2019 Financial Highlights
Total Revenues for the nine months ended September 28, 2019 were $379.1 million, an increase of 24% year-over-year. Gross Revenues - GAAP for the nine months ended September 28, 2019 were $376.3 million, an increase of 24% year-over-year.
Net Revenues for the nine months ended September 28, 2019 were $294.1 million, an increase of 20% year-over-year.
EBITDA for the nine months ended September 28, 2019 was $43.7 million or 15% of Net Revenues, an increase of 17% from $37.3 million, or 15% of Net Revenues for the nine months ended September 29, 2018.
Net Income for the nine months ended September 28, 2019 was $20.2 million, an increase of 5% compared to $19.2 million for the nine months ended September 29, 2018. Adjusting for the impact of intangible amortization, net income was $31.7 million, a 24% increase compared to the nine months ended September 29, 2018.
Adjusted EPS for the nine months ended September 28, 2019 was $2.56 per diluted share, an increase of 10% from $2.33 for the nine months ended September 29, 2018.
Cash flows from operating activities increased 23% to $21.6 million for the nine months ended September 28, 2019 compared to $17.6 million for the nine months ended September 29, 2018.





2019 Outlook
 
As a result of the previously mentioned developments affecting revenue, the Company is lowering guidance for full year 2019 Gross Revenues - GAAP, Net Revenues, GAAP earnings per share and Adjusted EPS, including the impact of acquisitions closed or signed as of today. The Company now expects Gross Revenues - GAAP to range from $511 million to $527 million, which represents an increase of 22% to 26% from 2018 Gross Revenues of $418 million. Net Revenues are expected to range from $401 million to $415 million, which represents an increase of 20% to 24% from 2018 Net Revenues of $334 million. The Company expects full year 2019 Adjusted EPS to range from $3.18 per share to $3.42 per share, a decrease of 2% to an increase of 6% over 2018 adjusted EPS of $3.24 per share. Furthermore, the Company expects full year 2019 GAAP EPS to range from $1.91 per share to $2.15 per share. This guidance for Gross Revenues, Net Revenues, Adjusted EPS and GAAP EPS includes acquisitions that are expected to be closed during the remainder of 2019.

Preliminary 2020 Outlook

By adding QSI, NV5 expects 2020 gross revenues to range from $655 million to $710 million, excluding future acquisitions. The company expects full year 2020 Adjusted EPS to range from $3.42 per share to $3.98 per share.
 
Use of Non-GAAP Financial Measures
 
Total Revenues and Net Revenues are not measures of financial performance under U.S. generally accepted accounting principles (“GAAP”). Gross Revenues - GAAP include sub-consultant costs and other direct costs, which are generally pass-through costs. Furthermore, Gross Revenues - GAAP eliminates intercompany revenues where the Company performed the service in lieu of utilizing third-party sub-consultants. The Company believes that Total Revenues and Net Revenues, which are non-GAAP financial measures commonly used in our industry, provide a meaningful perspective on our business results. A reconciliation of Gross Revenues as reported in accordance with GAAP to Total Revenues and 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. Management believes 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 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. 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 Total Revenues, Net Revenues, 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 third quarter 2019 financial results at 4:30 p.m. (Eastern Time) on November 7, 2019. The accompanying presentation for the call is available by visiting http://ir.nv5.com.

Date:    Thursday, November 7, 2019
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:    1898764
Webcast:    http://ir.nv5.com
 
 
Please dial-in at least 5-10 minutes prior to the start time in order for 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 and consulting solutions ranked #34 on the Engineering News-Record’s Top 500 Design Firms list. NV5 serves public and private sector clients in the infrastructure, energy, construction, real estate and environmental markets. NV5 primarily focuses on five business verticals: construction quality assurance, infrastructure engineering and support services, energy, program management, and environmental solutions. 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
(in thousands, except share data)
(Unaudited) 
 
September 28, 2019
 
December 29, 2018
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
31,425

 
$
40,739

Billed receivables, net
109,590

 
98,324

Unbilled receivables, net
53,818

 
43,411

Prepaid expenses and other current assets
9,198

 
2,582

Total current assets
204,031

 
185,056

Property and equipment, net
12,349

 
11,677

Right-of-use lease asset, net
42,366

 

Intangible assets, net
100,688

 
99,756

Goodwill
158,423

 
140,930

Other assets
2,886

 
2,002

Total Assets
520,743

 
$
439,421

 
 
 
 
Liabilities and Stockholders’ Equity
 
 
 
 
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
23,082

 
$
22,588

Accrued liabilities
33,654

 
20,853

Income taxes payable

 
2,697

Billings in excess of costs and estimated earnings on uncompleted contracts
2,241

 
7,625

Client deposits
276

 
208

Current portion of contingent consideration
3,351

 
1,845

Current portion of notes payable and other obligations
17,578

 
17,139

Total current liabilities
80,182

 
72,955

Contingent consideration, less current portion
2,195

 
2,853

Long-term lease liability
32,781

 

Notes payable and other obligations, less current portion
40,638

 
29,847

Deferred income tax liabilities, net
16,881

 
16,224

Total liabilities
172,676

 
121,879

 
 
 
 
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, 12,818,919 and 12,550,711 shares issued and outstanding as of September 28, 2019 and December 29, 2018, respectively
128

 
126

Additional paid-in capital
246,869

 
236,525

Retained earnings
101,070

 
80,891

Total stockholders’ equity
348,067

 
317,542

Total liabilities and stockholders’ equity
520,743

 
$
439,421






NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME
(in thousands, except share data)
(Unaudited) 
 
Three Months Ended
 
Nine Months Ended
 
September 28, 2019
 
September 29, 2018
 
September 28, 2019
 
September 29, 2018
Gross revenues
$
131,032

 
$
104,185

 
$
376,340

 
$
302,737

 
 
 
 
 
 
 
 
Direct costs (excluding depreciation and amortization):
 
 
 
 
 
 
 
Salaries and wages
40,426

 
34,475

 
113,762

 
98,542

Sub-consultant services
19,972

 
14,989

 
56,969

 
43,349

Other direct costs
7,139

 
4,747

 
25,244

 
13,539

Total direct costs
67,536

 
54,211

 
195,975

 
155,430

 
 
 
 
 
 
 
 
Gross Profit
63,496

 
49,974

 
180,365

 
147,307

 
 
 
 
 
 
 
 
Operating Expenses:
 
 
 
 
 
 
 
Salaries and wages, payroll taxes and benefits
33,428

 
24,897

 
93,431

 
76,122

General and administrative
11,028

 
7,556

 
30,786

 
23,348

Facilities and facilities related
4,664

 
3,490

 
12,407

 
10,552

Depreciation and amortization
6,551

 
4,057

 
18,908

 
11,660

Total operating expenses
55,671

 
40,000

 
155,533

 
121,682

 
 
 
 
 
 
 
 
Income from operations
7,825

 
9,974

 
24,832

 
25,625

 
 
 
 
 
 
 
 
Interest expense
(421
)
 
(451
)
 
(1,230
)
 
(1,712
)
 
 
 
 
 
 
 
 
Income before income tax expense
7,403

 
9,523

 
23,602

 
23,913

Income tax expense
(1,560
)
 
(2,238
)
 
(3,422
)
 
(4,716
)
Net Income and Comprehensive Income
$
5,843

 
$
7,285

 
$
20,180

 
$
19,197

 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.48

 
$
0.65

 
$
1.67

 
$
1.80

Diluted
$
0.46

 
$
0.62

 
$
1.62

 
$
1.71

 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
12,191,405

 
11,256,946

 
12,086,588

 
10,686,040

Diluted
12,566,966

 
11,701,394

 
12,485,049

 
11,205,748






NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
Nine Months Ended
 
September 28, 2019
 
September 29, 2018
Cash Flows From Operating Activities:
 
 
 
Net income
$
20,180

 
$
19,197

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
18,908

 
11,660

Non-cash lease expense
6,770

 

Provision for doubtful accounts
1,725

 
843

Stock based compensation
6,989

 
4,541

Change in fair value of contingent consideration
49

 
267

Gain on disposals of property and equipment
(48
)
 

Deferred income taxes
(3,839
)
 
564

Changes in operating assets and liabilities, net of impact of acquisitions:
 
 
 
Billed receivables
508

 
(6,396
)
Unbilled receivables
(4,490
)
 
(3,759
)
Prepaid expenses and other assets
(5,279
)
 
819

Accounts payable
(2,053
)
 
(679
)
Accrued liabilities
(9,170
)
 
(3,259
)
Income taxes payable
(2,789
)
 
(6,713
)
Billings in excess of costs and estimated earnings on uncompleted contracts
(5,972
)
 
485

Deposits
68

 

Net cash provided by operating activities
21,557

 
17,570

 
 
 
 
Cash Flows From Investing Activities:
 
 
 
Cash paid for acquisitions (net of cash received from acquisitions)
(29,365
)
 
(28,460
)
Purchase of property and equipment
(1,810
)
 
(1,582
)
Net cash used in investing activities
(31,175
)
 
(30,042
)
 
 
 
 
Cash Flows From Financing Activities:
 
 
 
Proceeds from secondary offering

 
93,469

Borrowings from Senior Credit Facility
10,000

 

Payments on notes payable
(8,483
)
 
(7,410
)
Payments of contingent consideration
(1,213
)
 
(728
)
Proceeds from exercise of warrant

 
1,092

Payments of borrowings from Senior Credit Facility

 
(36,500
)
Net cash provided by financing activities
304

 
49,923

 
 
 
 
Net (decrease) increase in Cash and Cash Equivalents
(9,314
)
 
37,451

Cash and cash equivalents – beginning of period
40,739

 
18,751

Cash and cash equivalents – end of period
$
31,425

 
$
56,202






NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GROSS REVENUES TO TOTAL REVENUES
(in thousands)
(Unaudited)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 28, 2019

September 29, 2018
 
September 28, 2019
 
September 29, 2018
Gross Revenues - GAAP
$
131,032

 
$
104,185

 
$
376,340

 
$
302,737

Add:
Intercompany revenues in lieu of sub-consultants
1,063
 
1,309

 
2,720

 
3,218

Total Revenues
$
132,095

 
$
105,494

 
$
379,060

 
$
305,955






  NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GROSS REVENUES TO NET REVENUES
(in thousands)
   (Unaudited)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 28, 2019

September 29, 2018
 
September 28, 2019
 
September 29, 2018
Gross Revenues - GAAP
$
131,032

 
$
104,185

 
$
376,340

 
$
302,737

Less:
Sub-consultant services
(19,972
)
 
(14,989
)
 
(56,969
)
 
(43,349
)
 
Other direct costs
(7,139
)
 
(4,747
)
 
(25,244
)
 
(13,539
)
Net Revenues
$
103,921

 
$
84,449

 
$
294,127

 
$
245,849






NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO EBITDA
(in thousands)
(Unaudited)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 28, 2019

September 29, 2018
 
September 28, 2019
 
September 29, 2018
Net Income
$
5,843

 
$
7,285

 
$
20,180

 
$
19,197

Add:
Interest expense
421

 
451

 
1,230

 
1,712

 
Income tax expense
1,560

 
2,238

 
3,422

 
4,716

 
Depreciation and Amortization
6,551

 
4,057

 
18,908

 
11,660

EBITDA
$
14,375

 
$
14,031

 
$
43,740

 
$
37,285






NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EPS TO ADJUSTED EPS
(Unaudited)
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 28, 2019
 
September 29, 2018
 
September 28, 2019
 
September 29, 2018
Net Income - per diluted share
$
0.46

 
$
0.62

 
$
1.62

 
$
1.71

Per diluted share adjustments:
 
 
 
 
 
 
 
Add:
Amortization expense of intangible assets
0.42

 
0.26

 
1.23

 
0.77

 
Income tax expense
(0.10
)
 
(0.06
)
 
(0.29
)
 
(0.15
)
Adjusted EPS
$
0.78

 
$
0.82

 
$
2.56

 
$
2.33






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