NV5 Announces Record Fourth Quarter and Full Year 2018 Financial Results; Issues 2019 Guidance

HOLLYWOOD, Fla., March 07, 2019 (GLOBE NEWSWIRE) -- NV5 Global, Inc. NVEE ("NV5" or the "Company"), a provider of professional and technical engineering and consulting solutions, today reported financial results for the fourth quarter and year ended December 29, 2018.

"We are pleased to announce continued strong performance in revenues and earnings in the fourth quarter and full year 2018 and we are looking forward to continued strong organic, acquisition and strategic growth in 2019. Our success in the fourth quarter and full year 2018 was reflected in our strong backlog, profitability, and substantial growth in our strategic geographic presence and service offerings," said Dickerson Wright, PE Chairman and CEO of NV5. "In the fourth quarter, Gross Revenues increased 23%, EBITDA increased 34% and Net Income increased 38%, excluding the impact of the Tax Cuts and Jobs Act of 2017 ("2017 Tax Reform"). In the full year 2018, Gross Revenues increased 26%, EBITDA increased 34% and Net Income increased 49%, excluding the impact of the 2017 Tax Reform. Our core business remains robust and organic growth for the full year 2018 was 8%. Additionally, our acquisition pipeline is active and we are confident about the strategic investments we are making to further grow our infrastructure and energy business throughout the United States."

Fourth Quarter 2018 Financial Highlights

• Total Revenues for the quarter were $116.1 million, an increase of 22% year-over-year. Gross Revenues – GAAP for the quarter were $115.3 million, an increase of 23% year-over-year.
• Net Revenues for the quarter were $88.5 million, an increase of 21% year-over-year.
• Organic revenue growth for the quarter was 5%. Organic growth is measured by internal growth of our existing business plus growth from acquisitions from the time of acquisition.
• EBITDA for the quarter was $15.8 million or 18% of Net Revenues, an increase of 34% from $11.8 million, or 16% of Net Revenues in the fourth quarter of 2017.
• Income before income tax expense for the quarter was $9.8 million, an increase of $2.5 million, or 34% compared to $7.3 million in the fourth quarter of 2017.
• Net Income for the quarter was $7.7 million. Excluding the impact of the 2017 Tax Reform, Net Income increased 38% over the fourth quarter of 2017 from $5.6 million. Net Income, including the impact of the 2017 Tax Reform, was $11.5 million in the fourth quarter of 2017.
• Adjusted EPS for the quarter was $0.91 per diluted share. Excluding the impact of the 2017 Tax Reform, Adjusted EPS increased 28% from $0.71 per share in the fourth quarter of 2017. Adjusted EPS, including the impact of the 2017 Tax Reform, was $1.26 per diluted share in the fourth quarter of 2017.
• GAAP EPS for the quarter was $0.62 per diluted share over 12.4 million shares. Excluding the impact of the 2017 Tax Reform, GAAP EPS increased 22% from $0.51 per share in the fourth quarter of 2017. GAAP EPS, including the impact of the 2017 Tax Reform, was $1.06 per diluted share over 10.9 million shares in the fourth quarter of 2017.
• Backlog was $390 million as of December 29, 2018, a 32% increase from $296 million as of December 30, 2017.
• Cash flow from operating activities increased $5.5 million, or 46% to $17.4 million for the quarter compared to $12.0 million in the fourth quarter of 2017.

Full Year 2018 Financial Highlights

• 2018 Total Revenues were $422.1 million, an increase of 25% from 2017 Total Revenues of $337.5 million. Gross Revenues – GAAP were $418.1 million for 2018, an increase of 26% from $333.0 million in 2017.
• Net Revenues for 2018 were $334.3 million, an increase of 25% from $268.3 million in 2017.
• Organic revenue growth for 2018 was 8%.
• EBITDA for 2018 was $53.1 million, or 16% of Net Revenues, an increase of 34% from $39.7 million or 15% of Net Revenues in 2017.
• Income before income tax expense for 2018 was $33.7 million, an increase of $9.1 million, or 37% compared to $24.6 million in 2017.
• Net Income was $26.9 million in 2018. Excluding the impact of the 2017 Tax Reform, Net Income increased 48% from $18.1 million in 2017. Net Income, including the impact of the 2017 Tax Reform, was $24.0 million in 2017.
• Adjusted EPS for 2018 was $3.24 per diluted share. Excluding the impact of the 2017 Tax Reform, Adjusted EPS increased 36% from $2.38 for 2017. Adjusted EPS for 2017, including the impact of the 2017 Tax Reform, was $2.93 per diluted share.
• GAAP EPS for 2018 was $2.33 over 11.5 million shares. Excluding the impact of the 2017 Tax Reform, GAAP EPS increased 39% from $1.68 per share in 2017. GAAP EPS for 2017, including the impact of the 2017 Tax Reform, was $2.23 per diluted share over 10.8 million shares.
• Cash flow from operating activities increased $17.4 million, or 99% to $35.0 million in 2018 compared to $17.6 million in 2017.

2019 Outlook

The Company is initiating guidance for full year 2019 Gross Revenues, Net Revenues, Adjusted EPS and GAAP EPS, including the impact of acquisitions closed through February 28, 2019. The Company expects Gross Revenues to range from $485 million to $520 million, which represents an increase of 16% to 24% from 2018 Gross Revenues of $418 million. Net Revenues are expected to range from $385 million to $414 million, which represents an increase of 15% to 24% from 2018 Net Revenues of $334 million. The Company expects full year 2019 Adjusted EPS to range from $3.51 per share to $3.93 per share, an increase of 8% to 21%. Furthermore, the Company expects full year 2019 GAAP EPS to range from $2.44 per share to $2.85 per share. This guidance for Total Revenues, Net Revenues, Adjusted EPS and GAAP EPS excludes anticipated acquisitions for the remainder of 2019.

Matters Relating to Internal Controls

The Company expects to report a material weakness in its upcoming Annual Report on Form 10-K relating to the initial set up of project contracts and analysis of certain percentage of completion projects. A thorough review of these matters has not resulted in the identification of any material misstatements in the Company's financial statements for 2018 or any prior period and the Company expects a timely filing of its Form 10-K. Remediation efforts have begun and management expects the material weakness to be remediated during 2019.

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. Therefore, 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 its 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 NV5's financial and operating performance and its 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 data ("Adjusted EPS") is not a measure of financial performance under GAAP. Adjusted EPS reflects adjustments to reported diluted earnings per share ("GAAP EPS") data to eliminate amortization expense of intangible assets from acquisitions, net of tax benefits. As the Company continues its acquisition strategy, the growth in Adjusted EPS will likely increase at a greater rate than GAAP EPS as reported in accordance with GAAP. A reconciliation of GAAP EPS as reported in accordance with GAAP to Adjusted EPS is provided at the end of this news release.

NV5's 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 contract revenues, Net Income and diluted earnings per share.

Conference Call

NV5 will host a conference call to discuss its fourth quarter and full year 2018 financial results at 4:30 p.m. (Eastern Time) on March 7, 2019.

Date:				Thursday, March 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:				5026016
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. NVEE is a provider of professional and technical engineering and consulting solutions ranked #45 in the Engineering News Record 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.

Jenna Carrick

Investor Relations Manager

Tel: +1-916-641-9124

Email: ir@nv5.com

Source: NV5 Global, Inc.

NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
		December 29, 2018			December 30, 2017
Assets
Current assets:
Cash and cash equivalents	$	40,739		$	18,751
Billed receivables, net		98,324			70,686
Unbilled receivables, net		43,411			39,401
Prepaid expenses and other current assets		2,582			2,555
Total current assets		185,056			131,393
Property and equipment, net		11,677			8,731
Intangible assets, net		99,756			65,754
Goodwill		140,930			98,899
Other assets		2,002			1,003
Total Assets	$	439,421		$	305,780
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	22,588		$	18,373
Accrued liabilities		20,853			18,994
Income taxes payable		2,697			6,102
Billings in excess of costs and estimated earnings on uncompleted contracts		7,625			665
Client deposits		208			197
Current portion of contingent consideration		1,845			977
Current portion of notes payable and other obligations		17,139			11,127
Total current liabilities		72,955			56,435
Contingent consideration, less current portion		2,853			913
Notes payable and other obligations, less current portion		29,847			57,430
Deferred income tax liabilities, net		16,224			10,905
Total liabilities		121,879			125,683
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, 12,550,771 and 10,834,770 shares issued and outstanding as of December 29, 2018 and December 30, 2017, respectively		126			108
Additional paid-in capital		236,525			125,954
Retained earnings		80,891			54,035
Total stockholders' equity		317,542			180,097
Total liabilities and stockholders' equity	$	439,421		$	305,780

 

NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME
(in thousands, except share data)
(Unaudited)
		Three Months Ended								Years Ended
		December 29,				December 30,				December 29,				December 30,
		2018				2017				2018				2017
Gross revenues		$	115,344			$	93,976			$	418,081			$	333,034
Direct costs (excluding depreciation and amortization):
Salaries and wages			34,380				27,776				132,922				103,011
Sub-consultant services			18,869				16,452				62,218				50,171
Other direct costs			7,998				4,322				21,537				14,598
Total direct costs			61,247				48,550				216,677				167,780
Gross Profit			54,097				45,426				201,404				165,254
Operating Expenses:
Salaries and wages, payroll taxes and benefits			26,099				23,375				102,221				86,222
General and administrative			8,365				6,816				31,713				26,747
Facilities and facilities related			3,849				3,427				14,401				12,589
Depreciation and amortization			5,724				3,586				17,384				13,128
Total operating expenses			44,037				37,204				165,719				138,686
Income from operations			10,060				8,222				35,685				26,568
Interest expense			(254	)			(893	)			(1,966	)			(1,935	)
Income before income tax expense			9,806				7,329				33,719				24,633
Income tax expense			(2,147	)			4,176				(6,863	)			(627	)
Net Income and Comprehensive Income		$	7,659			$	11,505			$	26,856			$	24,006
Earnings per share:
Basic		$	0.64			$	1.12			$	2.44			$	2.36
Diluted		$	0.62			$	1.06			$	2.33			$	2.23
Weighted average common shares outstanding:
Basic			11,916,546				10,243,409				10,991,124				10,178,901
Diluted			12,418,788				10,867,713				11,506,466				10,777,806

 

NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
		Years Ended
		December 29, 2018				December 30, 2017
Cash Flows From Operating Activities:
Net income	$	26,856			$	24,006
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		17,384				13,128
Provision for doubtful accounts		797				586
Stock based compensation		6,697				4,011
Change in fair value of contingent consideration		424				(832	)
Loss on disposal property and equipment		26				35
Deferred income taxes		(3,585	)			(11,242	)
Changes in operating assets and liabilities, net of impact of acquisitions:
Billed receivables		(8,662	)			(10,911	)
Unbilled receivables		(2,813	)			(3,802	)
Prepaid expenses and other assets		(109	)			295
Accounts payable		398				(1,495	)
Accrued liabilities		(2,984	)			(2,442	)
Income taxes payable		(3,405	)			4,969
Billings in excess of costs and estimated earnings on uncompleted contracts		3,964				436
Client deposits		11				883
Net cash provided by operating activities		34,999				17,625
Cash Flows From Investing Activities:
Cash paid for acquisitions (net of cash received from acquisitions)		(58,155	)			(60,633	)
Purchase of property and equipment		(2,203	)			(2,239	)
Net cash used in investing activities		(60,358	)			(62,872	)
Cash Flows From Financing Activities:
Proceeds from common stock offering		100,330				-
Payments of borrowings from Senior Credit Facility		(36,500	)			(10,500	)
Payments on notes payable		(9,741	)			(7,605	)
Proceeds from exercise of warrant		1,093				-
Payments of contingent consideration		(728	)			(563	)
Payments on common stock offering		(6,861	)			-
Proceeds from borrowings from Senior Credit Facility		-				47,000
Payments of debt issuance costs		(246	)			-
Net cash provided by financing activities		47,347				28,332
Net increase (decrease) in Cash and Cash Equivalents		21,988				(16,915	)
Cash and cash equivalents – beginning of period		18,751				35,666
Cash and cash equivalents – end of period	$	40,739			$	18,751
NV5 GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
		Years Ended
		December 29, 2018				December 30, 2017
Supplemental disclosures of cash flow information:
Cash paid for interest	$	1,895			$	1,508
Cash paid for income taxes	$	13,634			$	7,607
Non-cash investing and financing activities:
Contingent consideration (earn-out)	$	3,112			$	908
Notes payable and other obligations issued for acquisitions	$	23,987			$	9,371
Stock issuance for acquisitions	$	9,330			$	3,856
Capital leases	$	2,884			$	-
Payment of contingent consideration and other obligations with common stock	$	-			$	63

 

NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GROSS REVENUES TO TOTAL REVENUES
(in thousands)
(Unaudited)
			Three Months Ended						Years Ended
			December 29,			December 30,			December 29,			December 30,
			2018			2017			2018			2017
Gross Revenues - GAAP		$	115,344		$	93,976		$	418,081		$	333,034
Add:	Intercompany revenues in lieu of sub-consultants		793			1,123			4,011			4,508
Total Revenues		$	116,137		$	95,099		$	422,092		$	337,542

 

NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GROSS REVENUES TO NET REVENUES
(in thousands)
(Unaudited)
			Three Months Ended								Years Ended
			December 29,				December 30,				December 29,				December 30,
			2018				2017				2018				2017
Gross Revenues - GAAP		$	115,344			$	93,976			$	418,081			$	333,034
Less:	Sub-consultant services		(18,869	)			(16,452	)			(62,218	)			(50,171	)
	Other direct costs		(7,998	)			(4,322	)			(21,537	)			(14,598	)
Net Revenues		$	88,477			$	73,202			$	334,326			$	268,265

 

NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO EBITDA
(in thousands)
(Unaudited)
			Three Months Ended							Twelve Months Ended
			December 29,			December 30,				December 29,			December 30,
			2018			2017				2018			2017
Net Income		$	7,659		$	11,505			$	26,856		$	24,006
Add:	Interest expense		254			893				1,966			1,935
	Income tax expense		2,147			(4,176	)			6,863			627
	Depreciation and Amortization		5,724			3,586				17,384			13,128
EBITDA		$	15,784		$	11,808			$	53,069		$	39,696

 

NV5 GLOBAL, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP EPS TO ADJUSTED EPS
(Unaudited)
			Three Months Ended								Twelve Months Ended
			December 29,				December 30,				December 29,			December 30,
			2018				2017				2018			2017
Net Income - per diluted share				0.62			$	1.06			2.33			$	2.23
Per diluted share adjustments:
Add:	Amortization expense of intangible assets			0.36				0.26			1.14				0.96
	Income tax expense			(0.07	)			(0.06	)		(0.23	)			(0.26	)
Adjusted EPS				0.91			$	1.26			3.24			$	2.93
Less: Impact of 2017 Tax Reform,				-				(0.55	)		-				(0.55	)
Adjusted EPS, excluding impact of 2017 Tax Reform			$	0.91			$	0.71			3.24			$	2.38