NVEE - Earnings call transcript Q4 2018

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Operator

Good afternoon everyone, and thank you for participating in today's conference call to discuss NV5's Financial Results for the Fourth Quarter and Full Year ended December 29, 2018.

Joining us today are Dickerson Wright, Chairman and CEO of NV5; Michael Rama, CFO of NV5; Alex Hockman, President and COO of NV5; and Jenna Carrick, Investor Relations Manager at NV5. I would now like to turn the call over to Jenna Carrick.

Jenna Carrick

Thank you, Operator.

Before we proceed, I would like to remind everyone that this conference call may contain forward-looking statements within the meaning of the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995, including statements concerning future events and future financial performance. contained these actual qualified from results by forward-looking that that important those cautions the cause could to statements Company statements by are factors reflected The herein. differ materially on All forward-looking the hereof as update the and required available to the assumes obligation statements Company date no information Company such statements on to by based are except law. and everyone available the of this today's also be via I Company's link replay news section website. would call Investors webcast release like of the that a to in the remind provided will Any redistribution, of Incorporated this of any in is expressed call Global the written retransmission or NVX rebroadcast way without strictly prohibited. consent

turning comments of Rama, Michael call Financial We and will Hockman, and over Officer COO Alex Chief with XXXX. of review results for financial XXXX Wright, outlook before Chairman and quarter from for NVX; call the the and full-year and fourth CEO begin to President the a NVX Dickerson of

please call We will the open then questions. for go ahead. Dickerson, your

Dickerson Wright

Jenna you, quarter call. everyone and for XXXX us Thank full to year and NVX's conference fourth thank you joining

year are XXXX a to NVX. announce very successful pleased We for

XXXX on success Michael will should be measured our in all our by Rama, Our our detail areas financial of can accomplishments. provide and over accomplishments. more We CFO operations specific and improved results.

million for is $XX to million. in for for earnings However, to per XXXX XXXX. million or was XXXX. flow share for noteworthy revenues XX% share for revenues shares XX.X XXXX amortization XXXX. revenue Organic EBITDA $XXX or in increased to Cash shares tax, increased XXXX earnings Adjusted revenue XX% as $XX million for full increased compared million This to for was $XX per like $X.XX a interest, of million an to XXXX compared X%. total to growth or overview, say was net depreciation to XX% record because $XX.X XXXX, count compared XXXX. to XX.X $X.XX that I of share would compared net year over full before year XX% and million the

these existing business unit, by entities. accomplishing process our are process improvement acquired positive continued We results as as for improvement well for our

robust their our this We in between our regard. and for people internal cross-selling offices, all reward accomplishments incentivize we have of

We performance, initiatives our overall and to improve company-wide also our growth support fuel our results. improve

For not XXXX, we year competency initiative specific area, XXXX are markets gas us natural the plan or Engineering CHI NVX. conversion Services, is that distribution, Energy strengthens and transmission, that to of acquisition have of will liquefied electrical a only three-year in two NVX's gas on supported fully initiatives capitalize our opportunities. last to competencies natural storage. this and The new in LNG gas core The leads by but

Energenz in other subscription-based previous the services optimization. of opportunities XXXX focus area. energy The is energy acquisition efficiency. on us initiative Energenz many in The area a is this to Company our wide for leads leader in of

geographic we our continue growing strategic be that markets. services also verticals also new which At acquisitions services our In in base. very successful has acquired introduced Butsko acquisitions. our active delivery beginning We we electrical and existing made XXXX, Utility were and very four strengthened XXXX, utility the of our to Design to client strengthening to

Hong our growing design senior our for provided recognition early acquired a XXXX. entity services service in (M&E) engineering mechanical, also providing business long-tenured preference. Kong CSA electrical Asia. in and has in and We Limited CSA is deepens well-regarded Asia CSA leadership

acquired or in NVX of utilities services of This CHI use During XXXX, US. rapidly acquisition infrastructure part their to Engineers EPC Engineering and In introduce many existing LNG President CALYX state and engineering markets to to natural storage in introduced and now doors expand Services. to like quarter market. the latter our energy NVX He Consultants. of growing CHI gas. to for this specificity more and on acquired transportation comment would Alex? specializes The conversion XXXX, Southeastern the and operations has projects. the national our in platform I from we NVX, the growing opened we the and fourth of liquefied gas with services will Hockman. natural Alex

Alexander Hockman

good and Dickerson, you, Thank afternoon everyone.

nationwide to for addition geographic in technical California, particularly that expanded key mentioned Texas, we group, our our the In expertise expanded production platform and is power you have and include acquisitions, QX have has important This our of which have coverage. hires highlights a Colorado Pennsylvania. centers and areas

net recognized revenue. our is Synergy public this sub-contracted transition the associated importance constructing includes example, XXXX. permitted services. clients. are safety, includes Class space, a a to sector and office cost iconic This committed landmark most other doubling amenities. profit. developer prominent collaborative services value construction in introducing in been our sharing is group to cross-selling consultants have promote to QX, that markets initiative In and also represents amount California it and projects as net software is our with limited division pass-through of to but that converting services for our to not the to We buildings $XX of be a of contracted our testing sub-contracted XXXX A would projects revenue will Chief revenue consulting revenues, but invest concluded the sub work almost million without continued includes Considering array The in wide existing not introducing on NVX's not to that technical services. Officer Cross-selling of cross-sold hotels pass-through have significance is that Therefore

associated construction phase the participation, and project. wins in read The manual this due that our check several to schedule dedicated by to hardening contracts As one code a over result providing power fire total of million brings $XX of and $XX The services past contract fire and to to able This to lives key collaboration threat power by reduce years. statement. has result on two provided to a under amendment instructions our to and group a designed the mission include services the amendment million improving testament California the onsite lines, delays delivery our our the NVX's fire inspection with utility. hardening advisor for potential our minimize the Southern this are staff. solutions services value-added trusted protect demonstrate delivering Other months to a fast-track contract transmission plan developer is reducing is the public of

to engineering Our provide delivery. able these natural and services. power diverse quality also provide tighter transmission, on controls for Due delivery awarded offerings million to services integrity group us NVX in-house, ensure which and - $XX serving a and to services, was distribution pipeline gas we're timely to contract of range design have allows

buildings $X and program including other contract awarded the in large Our Colorado over the excess of management and in was contracts technology hospitality Board to healthcare addition in million, group and markets. $XX School million contracts

MEP in leveraging awarded contract While we NVX contract and our protection the organically million continues to with new in East for our expertise. of still and casino vertical urban and fire expansion our services was a awards for infrastructure large expanding geographical grow coverage, are flat, $X.X a and casino-resort excess design market engineering West is project. NVX's regions

a contract osmosis a water valued for million our an events $X.X for A include a state management $XXX,XXX plant. for reverse in $X.X road amendment bridge HOV program over for a for project million sliver treatment California notable contract and So major a team a replacement. laying interchange

United detailed Hong and the the maintain which the and Arab offices win Financial operations pupil ended also the And XXXX Kong, for provided a appointment the a UAE, I Hong Michael in shops contract XXX% is school, to plant Our of service requires projects that guidance in NVX replacement feasibility will Hotels over a the the an financial world's Replacement to around would challenging XXth, utilizing the engineering to year for campus, X,XXX Emirates Rama our free the financial the clock. Seasons like mall which December was Officer, A XXXX. is study call the awarded in International projects, Chief Asia which on be we Mainland for Sans-Macau Michael? for for awarded line we quarter Project team advanced that have technology. continues Mass were Transit very Four most in including a turn now for with fourth leading the internationally. results duty Railway. United Emirates a airports a more continuing major impressive for and throughout overview Kong contract

Michael Rama

Thank you, Alex, and good afternoon everyone.

year. or was million, including of fourth amortization $XX.X net XXXX. Gross of contribution the of of revenues, Act, I XX% the XXXX. the increase then the acquisitions XXXX $X.X outlook fourth during were Company's $XXX.X were the XXXX, compared of million First, the for XXXX XX% net XXXX XXXX. fourth Reform fourth million the organic of Net XXXX impact XXXX X% the reform that provide XXXX. for the review of quarter XX% for the in $XX.X of the from the quarter Fourth excluding of Net the fourth income net in Net increase EPS, growth an assets increase $XX.X million fourth to XX% revenues was fourth for $XX.X revenues well of the was to revenues million last Tax to quarter from XXXX is million, will adjusted XXXX $X.XX. quarter $X.X or in revenues of quarter and These fourth year $XX.X of of gross XX% $XX.X in results quarter a an in of the intangible income was XXXX. I net revenues as EBITDA increased million XXXX in quarter XX% for of compared from quarter million, quarter as fourth impact full XXXX. of of Tax were impact fourth due and will an increases excluding of income the million quarter closed and the of of quarter

of $X.XX Reform was the of XX% $X.XX share Excluding reform, the Tax impact Tax adjusted fourth quarter XXXX of per quarter $X.XX. XXXX. in earnings EPS in per XXXX. Adjusted per share the XXXX the share impact XXXX GAAP fourth EPS the was increased quarter from including Fourth of

impact of of Reform, in was GAAP share Excluding XXXX $X.XX $X.XX share including per reform quarter per from tax fourth share the the the earnings increased in Tax XXXX of fourth per of impact GAAP XXXX. the the quarter EPS XXXX. XX%

weighted share weighted million average of our reflects issuance fourth earnings outstanding The of shares million adjusted average shares months XX.X XXXX, million XXXX. compared Our from the in reflects the shares of offering weighted and XXXX XXXX. stock common secondary quarter outstanding outstanding August in per the of shares shares ended XXth, fourth December for XX.X three GAAP shares X.XX increase in of quarter to

compared when the due XXXX. X% to of the year-to-date Gross the revenues, year $XXX.X to an for million year the XXXX. full as These from for net XXXX full of the an and full was from was closed $XXX.X as full year growth or Now, of the results year of of $XX.X were the $XX.X XXXX. XX% full full year well XX% from revenues million XXXX net for XX% revenues during for of were acquisitions or we'll XXXX were organic XX% increases year million. year of million, EBITDA revenues contribution XXXX. full full of Net million, XXXX. increase for XXXX $XX.X for XXXX review Net year increase increase the XX% income an

million XXXX of Tax million for XXXX was in full Reform, income, Net net income XXXX. increased year Reform XX% from Excluding of per $XX the $XX.X XXXX including XXXX. the Adjusted $X.XX. earnings was share the Tax impact in impact

was impact share adjusted share share including per in the increased Adjusted EPS the share year XXXX of XXXX. for XXXX. earnings of per XX% per the per Reform $X.XX $X.XX share. per Tax impact Tax was earnings $X.XX Reform, of Excluding for full XXXX GAAP from

XX% Excluding Reform, per was in earnings in from the per share XXXX $X.XX per Tax including earnings per share the impact GAAP of XXXX. XXXX. GAAP share increased impact share Reform of Tax $X.XX

offering XX.X million increase weighted Our year-to-date full to of XXXX The shares XXXX in year adjusted full average the the million of compared average and XXXX. the shares from GAAP XX.X issuance shares shares secondary outstanding of XXXX. of X.XX outstanding for shares reflects reflects year the August million for weighted weighted shares our earnings in per outstanding of share

for to cash As XX, XXXX. December XXXX. million million XXXX, of of At year as from flows $XX we to compared cash in was an compared $XXX reported of million XXXX, million, flows cash $XX.X XX, of activities million of increase December operating as XX, XX% December XXXX. XXXX of XXth, million $XX.X our from December of equivalents were full Cash $XX.X the and backlog $XXX

to revenues of estimate an be is recognized backlog over period. Our XX-month a rolling

XXXX. Now for moving onto outlook our

and We share. are initiating XXXX guidance for per revenues earnings

XXXX XX% XX% million from from represents year to increase revenues in of million. gross full XXXX $XXX gross an $XXX to revenues range which of expect million, We to $XXX

range $XXX represents to XX% XXXX revenues net to to million net expect from from $XXX of increase of We revenues which $XXX XX% million, million. an

range We expect increase to an per share full from per year XXXX $X.XX XX%. share, to to adjusted earnings of $X.XX X%

We expect up guidance any per year to for of to XXXX open to This remarks prepared our now excludes GAAP share completes share remainder to full questions. range per share. This your anticipated XXXX. call the per $X.XX we'd from the earnings $X.XX acquisitions like and

Operator

[Operator Mr. Jeff first question Our Instructions] Capital Martin from ROTH Partners. comes with

Jeff Martin

you let go - into - Could could you Alex. them also, and

the are areas some goals into key hires, of and of key So alluded hires objectives maybe? those kind and the to tied those you What on could that primary what you to call. the in go

Dickerson Wright

me key that to people hires, looking come really because integrate Well, have to course, these leadership speak of let have through me we the for let from acquisition start, them. are and Jeff, -

have key leadership acquisitions alluded want LNG we to solidifying EPC the and really strength had name we were Southeast hires electrical both strengthening Southern four our but in - us Asia, California, attrition provided hires any special space from is going the division In really us. principles hires that that that look in that came very leadership we added regard. with with we helped personally, manager individual then I had our really and our market expanding our really has the CSA where us what far technical I only and really, engineering really that we of which differ to the very, and but in service that to utilities our engineering, what's we've recognition don't specific engineers is my geography going really in Florida, in And to In in those came, and initiative and on strengthened are key Butsko non-acquisition So, the have key comments CHI, in overview distribution added strength geo-technical offering principles we have But - strengthen where had in which from a founders have came infrastructure really Asia. to at which thought our really that. a are really services we in. that hires there we'd that in we the depth was license pleased not that for and key names, of work, there In of acquisition fight we've and and operations as Alex's leadership, as I on we've some hired related. and

Alexander Hockman

to, firm manager operations. have delivery a we geo-technical our Jeff, in to hires, We also had referred a key presence alluded with the now of some working Florida. that Florida that established had geo-technical So, our strengthens services. national have is do a I in power Florida for Central Dick that is who responsible is now

hired We group platform. power architect City, management an New in address delivery with to national allows us a have hires expanded and York at that we've facilities our also our really key also power delivery on - a for

to expanded you're nationwide have primarily our and aware, California, here had power As platform. delivery power focused truly Southern in now a on likely we initially we delivery

Jeff Martin

a there scale then maybe couple sense years bids you ago, how of could of dramatically. on versus contracts us competing And competitive now are give when a you're you've

more year? over has easier and process past the in if past you're been than If curious an your you're what competitive there? Just experience the finding

Dickerson Wright

that. to Alex on then let speak and I Well, will also initially defer me

You've and We and keep the and best organization, heard conference many to Jeff, meetings had, we our flat me that we very calls we speaking we've front to of in of people a investors. our client. say run, strive key have really

not that before. obviously in now we So geographies can were we as grow, compete leaders with these we

very, where weren't Southeast So, we we very are the we're before. now finding that competing strongly in

our that our do in also us through New leaders, We acquisition those us Midwest. lot advantage. let to do called and based England so competitive We we cues can came and Places much and are in people, we little New bid have speak which far competitive a Alex much have called not that competition now But Jersey put York the our that's footprint price, given on based bids work really have strengthened maybe and a an on competitive I'll in New a the qualifications so our qualifications our of of not bit or on price. to that. and on as but advantage, as

Alexander Hockman

of request as we at or a RFPs, our had one terms have of a operation taken that footprint to qualifications expertise use entire place the to and has acquisition. the in our to of US ability of So, the that to now ability opposed SOQ, the basically respond things for time is, particular they

power power that the we're invested change, we're the entire client in software able So city have to I the present Actually, the one because same but of we've set it of just areas the urban in I'm as company of have technical a in group. we we ability specifically, using project a doesn't have mentioned engineering really mentioned, we is technical the we Oakland, proposal skill take have The delivery way skill technical to a entire group California, won and is in marketing of our which the our also the and that set using in. that happening standards the not wide. that we delivery, collaborative particular

using and location, particular we're area actually work we're have use folks a not resources the seamlessly restricted the to performed. more being much where technical we that are only is particular that to able the in So in that

Jeff Martin

you any clarity Mike, with if the see provide release? then can side on there's material weakness the wanted mentioned in the just accounting to additional press And

Michael Rama

the material of it issues our in in of software related a of completion project as certain proactive over project Yes, well plan together, addressing system a been utilizing. set already We've management to enterprise and training additional deficiencies as remediation projects of was put we're documentation our internal certain with training, being control of a initial to the percentage contracts. enhancement adequacy able for and weakness the starting that and our managers really

Jeff Martin

to Is for there the expected effective? timeline an be remediation

Dickerson Wright

and we're we're XXXX. remediation the - current to were at. completed we're financials that's this of point results At - nor to it on financials none the expect we during our Yes, Then, working have the thereof. during expecting impacted of in historical

Operator

next comes question Our Lake from Brown Markets. Street Rob with Capital

Rob Brown

your you? outlook, the are growth market versus on for what your how they outlook, organic organic of expectations sort growth is and the in First looking

Dickerson Wright

But think offices to had we that that than we acquisitions of don't own the We X% going I compare Well, can the we those basis, and quarter? the through I to believe, very course think see large see high the in is on reported because projects. high speak much of make year our growth do we're I our not it still In organic Mike, is single-digits. construction the the I can't different that then really by we each the growth measured still that. ways, pure we two and and X% measured market single-digits, we robust outlook do this think we of feel consulting that are and our I year-over-year. still But

Michael Rama

Yes.

Dickerson Wright

is because high. for usually not December, that surprising December We wish - what's

So Rob, we've organic for that XXXX. digit see expecting high we're - growth single to still same

Rob Brown

obviously does but 'XX, how you pipeline, terms areas the of and pipeline? look still then a recently, has and 'XX energy of for at, that focus acquisition in are energy is in And terms the looking been what focus

Dickerson Wright

in power XX%. of has organic still focus, is a delivery engineering just and and organic servicing our it yes, energy, an had but Well systems our energy growth growth

natural smaller and So really many United that we in LNG that. utilities are LNG the encourage still we want We there. a gas-fired, see to an opportunity see States of opportunity tremendous with for the storage

building and we've much those. strategy that time, now long and had, you of overall more following strengthen for as strategic the we been be and building Rob, were we those our pillars us platform could five you've know, However,

international. acquisitions we reoccurring a efficiency, we specific revenue, that in doing have, So look specific more where technology, specific platforms for doing subscription we both that that are energy we're have things and that enhance acquisitions in domestic the will things and

platforms. So, existing acquisitions for higher would our look EBITDA support that I

Rob Brown

And margin, level level historical little gross quarter a then, the basis, should forward? in in down terms its new run resume bit rate of kind that on is a going was a of or

Dickerson Wright

A in Alex still that seeing gross from think a like we at - observant, his and - a in I historic. a I the we market Vegas. little certainly There down is and think, to the are of quarter, the that and particularly margin, we to very XX.X% some in are Las flattening casino XX% of say hospitality And in comments. alluded

and that growth we MEP and some So our to businesses business. as saw higher you'll acquisition we utilization But overall in we group. hopefully under that you see higher in a core utilization in both growth higher margin see, in will gross see a gross look margin

Operator

you. back Ladies - thank gentlemen, participating now to I'm would in over session. management you for question-and-answer sorry. call I to like turn today's the and Thank

Dickerson Wright

from time let's anyone. there's any more some ask if, give Let's questions - more if see

Operator

Keith Instructions] Cruiser. Rosenbloom [Operator with

Keith Rosenbloom

about I would rate, talking a curious a also a your you growing kicking it guide such great. XX% growth, next lift. XX% I as you gross on had leverage had EBITDA EPS the on is projecting revenue at operating is revenues revenues there's So here and which think net it, pretty you're for would about your that guys looks margin that get that EPS, for I And I'm like adjusted extraordinary think you I and it if little noticed greater guided in I'm year, was guide revenue as think curious midpoints which to And you XX%, was you'd also is XX%. and at the lower be high 'XX, at why as disparity, I'm are and

Dickerson Wright

Keith. we could scalability our bolt And just and initiatives you fit then we obviously it XXXX what this year that energy you're have initiative would Yes, two referring EBITDA. if on a higher heard acquisitions linear, those exactly and be it we was that funding initiative. to, if the and observant, it's But very

in prior Some XX% resources and we're that not of EBITDA. that a return will expecting we immediately to

cushion allowed may So then you sooner start we revenue so initiatives. scale as start a we to increase see the you'll and EBITDA little have growth as and we'll the - we see those

Keith Rosenbloom

I So, was the guidance, ex-acquisitions. think

that So what's for of inclusive acquisitions to the you're integration going called the earnings? the work J-curve delay saying that cause on you've that's just made, let's - the

Dickerson Wright

bit No Initiative both. some gave we Energy expecting a so million, - and $XXX our we're of come build those that. to little we're that that without guidance revenue that well, XXXX that, Efficiency of and to to staffing we're supporting we're building initiatives, of $XXX million We two that, Energy any from acquisition, Initiative the that giving guidance corporate, are

without business. acquisition as been immediate conservative, bit revenue we've expect initiatives it and for a but doing in, be it and that won't rather in be see see that The bit as kick efficiently the will little giving these kick in not come normal support. and think to I conservative we a the some also is think we'd acquisitions synergies in ongoing, revenue core revenue our So I scalability,

there, conservative rather I we're internally. we think I So way business as are be think growing that that, I'd our but

Keith Rosenbloom

Well, thank you.

Dick. growth, acquisitive impressive again really organic So and

Dickerson Wright

your Appreciate us. Keith. following and you, it. Appreciate support Thank

Operator

next Singular Our Lisa Springer with Research. comes from question

Lisa Springer

I'm wide the whether fairly and assumptions the EPS XXXX. for range high a in of wondering the adjusted differences between range? end low guidance the gave You and

Dickerson Wright

the year. it's beginning Well, the of

Lisa Springer

Yes.

Dickerson Wright

that I we have So, guess Lisa. divine I don't - mean, this prophecy, in the

rather see on range a both EPS little because, of what and the feel in from first we XXXX. the complete wider and even the that's have quarter into hopefully So we of not revenue this a just the point at we'd range good we're

So, we would get we get much year I - along don't as we'll get runway project. to course, tighter, further we don't when as think in have the of

Lisa Springer

recurring? want something recurring build you as is what you revenues Could mentioned to then being is me up? right you considered percentage And now tell of revenue

Dickerson Wright

Well, that's a great definition. - the

looking it's reoccurring we Energenz Clark do that a And about - - and a and and that with we're is our reoccurring of and & XX% group, in of group. Group good amount, reoccurring would surveys say lot which But work think it our for through revenue. Energy significant through ALTA Bock businesses amount I we're have much, very also our we off I there through total is revenue. whole of MEP that

Operator

comes [Richard Our next question from Eisenberg].

Unidentified Analyst

to the I per lower material low the reason accounting, the in why the weakness? the what what's amount XXXX, just like the for weakness - guidance want share for the know the - for for per - that's material is that share

Dickerson Wright

was of It's from positive anything these the it weakness that, in the if material our - and because recognized. minuscule we is accounting material it invoiced. contracts, at how what is look it found contract is and renewing really we we weakness setup in multiplier that material terms add will many And the fee then weakness, how net could was accelerations or being something where the initial to and contract Mike but speak is in not more times

earnings even - that be far get was don't if get it's because has it will of minuscule earnings pointed to to what so decimal cannot even and the our be We down out that it's been per can we point. anything, that strengthen share. So, covered it - cannot in

Unidentified Analyst

material in that but explained weakness. you should dropping the $X, because is stock have market, probably No, your introduction of - the because

opening explanation in have your remarks. You better a given should

Dickerson Wright

much. you very Well, thank

Operator

Thank would turn and back to over any gentlemen, I the remarks. you. now Ladies call like to closing management for

Dickerson Wright

to of take we our are have quarter to that grow appreciate - to as the listening all further questions. that feel thank this very we those a have forward together We further we you your truly we positive XXXX. want to you attendance speaking are Well, this And to the I about to work want and transparent us, that very fourth look with to you, to XXXX. shareholder and Thank our We to you thank thank everyone. feel investors, opportunities outlook for time employees your look us. to we though in with organization. forward a And thank and our with more us employees, into business that much. year, who follow and know as our strongly We move very also very in first we XXXX, speak but you

Operator

in Ladies This thank and concludes program. the today's gentlemen, participating for you conference.

all may a day. and wonderful disconnect You have

NV5 Global (NVEE) 7 Mar 192018 Q4 Earnings call transcript