NVEE NV5 Global Inc

NV5 Global, Inc. (Nasdaq: 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, 20234:30 p.m. Eastern+1 888-412-4117+1 646-960-02846172299http://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 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 CochranVice President, Marketing & Investor RelationsTel: +1-954-637-8048Email: ir@nv5.com

Source: NV5 Global, Inc.

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

	July 1, 2023				December 31, 2022
Assets
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 SUBSIDIARIESCONSOLIDATED 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, 2022
Gross 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 SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)(in thousands)

	Six Months Ended
	July 1, 2023				July 2, 2022
Cash 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 SUBSIDIARIESRECONCILIATION OF NON-GAAP FINANCIAL MEASURESTO 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, 2022
Net 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, 2022
Net 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