NV5 Announces Second Quarter Results and Raises Guidance

Rhea-AI Summary

NV5 Global, Inc. (Nasdaq GS: NVEE) reported strong Q2 2024 results and raised its full-year guidance. Gross revenues grew 6% to $236.3 million, with gross profit increasing 12% to $123.3 million. The company's gross margin expanded by 270 basis points to 52.2%. Adjusted EBITDA rose 10% to $38.5 million, with the margin expanding to 16.3%. However, net income and GAAP EPS decreased due to integration costs and higher interest expenses.

NV5 raised its 2024 full-year guidance, projecting gross revenue between $944 million and $950 million, and Adjusted EPS between $5.13 and $5.20 per share. The company's strong performance is attributed to its leadership in technology-driven services, including geospatial analytics and software applications.

Positive

• Gross revenues increased 6% year-over-year to $236.3 million
• Gross profit grew 12% to $123.3 million
• Gross margin expanded by 270 basis points to 52.2%
• Adjusted EBITDA increased 10% to $38.5 million
• Adjusted EBITDA margin expanded to 16.3% from 15.7%
• Full-year 2024 guidance raised for both revenue and Adjusted EPS
• Strong organic growth and profitability reported

Negative

• Net income decreased due to integration costs and reversal of contingent consideration
• GAAP EPS declined to $0.50 per share from $1.00 per share last year
• Higher interest expense of $1.0 million due to increased interest rates and debt balances
• Adjusted EPS slightly decreased to $1.24 per share from $1.29 per share in Q2 2023

Insights

Financial Analyst

NV5's Q2 results show positive momentum with 6% revenue growth to $236.3 million and 12% gross profit increase to $123.3 million. The gross margin expansion of 270 basis points to 52.2% is impressive, indicating improved operational efficiency. However, net income and GAAP EPS declined due to integration costs and the absence of a one-time gain from last year.

The company's Adjusted EBITDA growth of 10% to $38.5 million and margin expansion to 16.3% demonstrate strong underlying performance. The raised full-year guidance for revenue and Adjusted EPS signals management's confidence in future growth. With a low net leverage of 1.5x, NV5 maintains financial flexibility for potential acquisitions or investments in technology.

Tech Expert

NV5's focus on technology-driven services, particularly in geospatial analytics and software, is a key differentiator in the market. This strategic emphasis on innovative technologies across all service lines positions the company well for future growth and competitive advantage.

The integration of advanced tech solutions not only enhances service delivery but also potentially improves margins and client retention. As demand for tech-enabled consulting and assessment services grows, NV5's investment in this area could drive long-term value creation. However, investors should monitor the pace and effectiveness of technology integration, as well as any associated costs that may impact short-term profitability.

Market Research Analyst

NV5's raised guidance suggests a positive outlook for the second half of 2024, indicating strong market demand for its services. The company's diverse portfolio, spanning technology, conformity assessment and consulting solutions, provides resilience against sector-specific downturns.

The expected increase in demand aligns with broader industry trends, particularly in infrastructure and environmental services. NV5's leadership in technology-driven solutions positions it well to capitalize on the growing need for efficient, data-driven consulting services. Investors should watch for any shifts in government spending or regulatory changes that could impact project flows. The company's ability to maintain its technological edge will be important for sustaining growth and market share in a competitive landscape.

HOLLYWOOD, Fla., Aug. 07, 2024 (GLOBE NEWSWIRE) -- NV5 Global, Inc. (Nasdaq GS: NVEE) ("NV5" or the "Company"), a provider of technology, conformity assessment, consulting solutions, and software applications, today reported financial results for the second quarter ended June 29, 2024.

"NV5 continued to build upon its positive momentum in the second quarter, delivering strong organic growth and profitability. We are well-positioned to meet the expected increase in demand for our services in the second half of 2024, and we are raising guidance. As highlighted in our recent Investor Day, our leadership position in the use of technology to deliver our services, including geospatial analytics and software, provides competitive advantages and contributes to NV5's growth. We will continue to incorporate innovative technologies in all of our services in the years to come," said Dickerson Wright, Executive Chairman of NV5.

Second Quarter 2024 Results

Gross revenues in the second quarter of 2024 grew 6% to $236.3 million from $222.6 million in the second quarter of 2023 and our gross profit increased 12% to $123.3 million. This represents a gross margin expansion of 270 basis points to 52.2%.

Net income of $7.9 million reflects integration costs of our VIS acquisition during the second quarter this year and a $6.7 million reversal of contingent consideration during the same quarter last year. We also had $1.0 million of higher interest expense this quarter as a result of higher interest rates and debt balances, although our net leverage remains low at 1.5x. Our GAAP EPS during the second quarter was $0.50 per share compared to $1.00 per share last year due to the foregoing differences between the periods.

Our Adjusted EBITDA increased 10% to $38.5 million from $35.0 million, and our Adjusted EBITDA margin expanded to 16.3% from 15.7% in the prior year quarter. Our Adjusted EPS was $1.24 per share compared to $1.29 per share in the second quarter of 2023, reflecting higher share count.

Raising Guidance

We continue to foresee a strong second half of the year. Accordingly, we are raising 2024 full-year guidance for revenue and Adjusted Earnings per Share as follows:

• Gross revenue for the full year 2024 is now between $944 million and $950 million, an increase from $937 million and $942 million.
• 2024 GAAP EPS guidance remains $2.87 to $2.93 per share.
• 2024 Adjusted EPS guidance has been raised to $5.13 to $5.20 per share, an increase from $5.05 to $5.11 per share.
  

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 and acquisition-related costs, net of tax benefits. 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 2024 financial results at 4:30 p.m. (Eastern Time) on August 7, 2024. The accompanying presentation for the call is available by visiting http://ir.nv5.com.

Date:	Wednesday, August 7, 2024
Time:	4:30 p.m. Eastern
Toll-free dial-in number:	+1 800-715-9871
International dial-in number:	+1 646-307-1963
Conference ID:	2719957
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 GS: NVEE) is a provider of technology, conformity assessment, consulting solutions, and software applications 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: ir@nv5.com

Source: NV5 Global, Inc.

NV5 GLOBAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share data)
	June 29, 2024				December 30, 2023
Assets
Current assets:
Cash and cash equivalents	$	29,355			$	44,824
Billed receivables, net		161,894				152,593
Unbilled receivables, net		140,006				113,271
Prepaid expenses and other current assets		22,991				18,376
Total current assets		354,246				329,064
Property and equipment, net		55,675				50,268
Right-of-use lease assets, net		36,135				36,836
Intangible assets, net		237,789				226,702
Goodwill		543,708				524,573
Deferred income tax assets, net		4,744				—
Other assets		2,086				3,149
Total Assets	$	1,234,383			$	1,170,592
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	61,870			$	54,865
Accrued liabilities		44,202				47,423
Billings in excess of costs and estimated earnings on uncompleted contracts		35,441				41,679
Other current liabilities		2,348				2,263
Current portion of contingent consideration		2,436				3,922
Current portion of notes payable and other obligations		8,537				9,267
Total current liabilities		154,834				159,419
Contingent consideration, less current portion		2,328				143
Other long-term liabilities		25,935				26,930
Notes payable and other obligations, less current portion		248,687				205,468
Deferred income tax liabilities, net		—				2,837
Total liabilities		431,784				394,797
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, 16,280,601 and 15,895,255 shares issued and outstanding as of June 29, 2024 and December 30, 2023, respectively		163				159
Additional paid-in capital		527,418				508,256
Accumulated other comprehensive loss		(695	)			(18	)
Retained earnings		275,713				267,398
Total stockholders’ equity		802,599				775,795
Total liabilities and stockholders’ equity	$	1,234,383			$	1,170,592

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 29, 2024				July 1, 2023				June 29, 2024				July 1, 2023
Gross revenues	$	236,326			$	222,638			$	449,621			$	406,955
Direct costs:
Salaries and wages		61,390				57,079				117,845				105,463
Sub-consultant services		37,342				39,690				68,602				67,304
Other direct costs		14,323				15,569				27,074				27,890
Total direct costs		113,055				112,338				213,521				200,657
Gross profit		123,271				110,300				236,100				206,298
Operating expenses:
Salaries and wages, payroll taxes, and benefits		68,110				58,949				133,544				111,621
General and administrative		21,178				11,551				43,420				29,472
Facilities and facilities related		6,035				5,823				11,996				11,197
Depreciation and amortization		16,068				13,539				30,550				24,585
Total operating expenses		111,391				89,862				219,510				176,875
Income from operations		11,880				20,438				16,590				29,423
Interest expense		(4,606	)			(3,648	)			(8,797	)			(5,229	)
Income before income tax expense		7,274				16,790				7,793				24,194
Income tax benefit (expense)		633				(1,377	)			522				(2,834	)
Net income	$	7,907			$	15,413			$	8,315			$	21,360
Earnings per share:
Basic	$	0.51			$	1.03			$	0.54			$	1.43
Diluted	$	0.50			$	1.00			$	0.53			$	1.39
Weighted average common shares outstanding:
Basic		15,362,825				15,014,106				15,314,988				14,948,796
Diluted		15,671,176				15,451,788				15,657,632				15,421,535
Comprehensive income:
Net income	$	7,907			$	15,413			$	8,315			$	21,360
Foreign currency translation losses, net of tax		(176	)			(191	)			(677	)			(191	)
Comprehensive income	$	7,731			$	15,222			$	7,638			$	21,169

NV5 GLOBAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
	Six Months Ended
	June 29, 2024				July 1, 2023
Cash flows from operating activities:
Net income	$	8,315			$	21,360
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		33,635				27,205
Non-cash lease expense		6,401				6,784
Provision for doubtful accounts		723				607
Stock-based compensation		13,988				10,728
Change in fair value of contingent consideration		—				(7,514	)
Gain on disposals of property and equipment		(644	)			(408	)
Other		204				—
Deferred income taxes		(7,712	)			(7,673	)
Amortization of debt issuance costs		370				365
Changes in operating assets and liabilities, net of impact of acquisitions:
Billed receivables		(4,674	)			10,882
Unbilled receivables		(25,042	)			(9,842	)
Prepaid expenses and other assets		(1,619	)			(4,691	)
Accounts payable		4,555				(8,164	)
Accrued liabilities and other long-term liabilities		(11,507	)			(5,698	)
Billings in excess of costs and estimated earnings on uncompleted contracts		(7,384	)			(7,606	)
Contingent consideration		(1,455	)			(1,307	)
Other current liabilities		88				474
Net cash provided by operating activities		8,242				25,502
Cash flows from investing activities:
Cash paid for acquisitions (net of cash received from acquisitions)		(53,947	)			(186,242	)
Proceeds from sale of assets		249				295
Purchase of property and equipment		(8,905	)			(10,239	)
Net cash used in investing activities		(62,603	)			(196,186	)
Cash flows from financing activities:
Borrowings from Senior Credit Facility		58,000				180,000
Payments on notes payable and other obligations		(5,274	)			(5,131	)
Payments of contingent consideration		(1,585	)			(793	)
Payments of borrowings from Senior Credit Facility		(12,000	)			(13,000	)
Net cash provided by financing activities		39,141				161,076
Effect of exchange rate changes on cash and cash equivalents		(249	)			(106	)
Net decrease in cash and cash equivalents		(15,469	)			(9,714	)
Cash and cash equivalents – beginning of period		44,824				38,541
Cash and cash equivalents – end of period	$	29,355			$	28,827

NV5 GLOBAL, INC. AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO COMPARABLE GAAP FINANCIAL MEASURES (UNAUDITED) (in thousands, except share data)
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA
	Three Months Ended								Six Months Ended
	June 29, 2024				July 1, 2023				June 29, 2024				July 1, 2023
Net Income	$	7,907			$	15,413			$	8,315			$	21,360
Interest expense		4,606				3,648				8,797				5,229
Income tax (benefit) expense		(633	)			1,377				(522	)			2,834
Depreciation and amortization		17,592				14,905				33,635				27,205
Stock-based compensation		7,322				4,902				13,988				10,728
Acquisition-related costs*		1,704				(5,294	)			3,016				(4,661	)
Adjusted EBITDA	$	38,498			$	34,951			$	67,229			$	62,695

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

RECONCILIATION OF GAAP EPS TO ADJUSTED EPS
	Three Months Ended								Six Months Ended
	June 29, 2024				July 1, 2023				June 29, 2024				July 1, 2023
Net Income - per diluted share	$	0.50			$	1.00			$	0.53			$	1.39
Per diluted share adjustments:
Amortization expense of intangible assets and acquisition-related costs		0.97				0.49				1.81				1.13
Income tax expense		(0.23	)			(0.20	)			(0.43	)			(0.36	)
Adjusted EPS	$	1.24			$	1.29			$	1.91			$	2.16

FAQ

What were NV5's Q2 2024 financial results?

NV5 reported Q2 2024 gross revenues of $236.3 million, a 6% increase year-over-year. Gross profit grew 12% to $123.3 million, and Adjusted EBITDA increased 10% to $38.5 million. GAAP EPS was $0.50 per share, while Adjusted EPS was $1.24 per share.

Has NV5 (NVEE) updated its 2024 financial guidance?

Yes, NV5 raised its 2024 full-year guidance. The company now projects gross revenue between $944 million and $950 million, and Adjusted EPS between $5.13 and $5.20 per share. GAAP EPS guidance remains at $2.87 to $2.93 per share.

What factors contributed to NV5's (NVEE) growth in Q2 2024?

NV5's growth in Q2 2024 was driven by strong organic growth, improved profitability, and its leadership position in technology-driven services. The company's focus on geospatial analytics and software applications provided competitive advantages and contributed to its growth.

How did NV5's (NVEE) gross margin perform in Q2 2024?

NV5's gross margin expanded significantly in Q2 2024, increasing by 270 basis points to reach 52.2%. This improvement in gross margin contributed to the company's overall strong financial performance for the quarter.