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THIRD QUARTER 2020 RESULTSNovember 11, 2020
DISCLAIMER
This presentation contains forward-looking statements about the Company's future business and financial performance. These are based on management's current
expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these statements are included in today's
presentation slides and in our reports on file with the SEC. During this call, GAAP and non-GAAP financial measures will be discussed. A reconciliation between the
two is available in today's earnings release and on the Company's website at www.nv5.com. Please note that unless otherwise stated all references to third quarter
2020 comparisons are being made against the third quarter of 2019.
In this presentation, NV5 has included certain non-GAAP financial measures as defined in Regulation G promulgated under the Securities Exchange Act of 1934, as
amended. The non-GAAP financial measures included in this presentation are: (i) adjusted earnings per share, (ii) adjusted EBITDA, and (iii) adjusted EBITDA margin.
NV5 provides non-GAAP financial measures to supplement GAAP measures, as they provide additional insight into NV5’s financial results. However, non-GAAP
measures have limitations as analytical tools and should not be considered in isolation and are not in accordance, or a substitute for GAAP. In addition, other
companies may define non-GAAP measures differently, which limits the ability of investors to compare non-GAAP measures of NV5 to those used by peer companies.
A reconciliation of non-GAAP and GAAP measures is included in the appendix to this presentation.
2
AGENDA
3
Business OverviewDickerson Wright, Chairman & CEO
Financial OverviewEd Codispoti, CFO
Operational OverviewAlex Hockman, President & COO
Mark Abatto, President & COO, NV5 Geospatial Solutions
Growth PositioningDickerson Wright, Chairman & CEO
Dickerson WrightChairman & CEO
BUSINESS OVERVIEW
BUSINESS OVERVIEW – STRONG THIRD QUARTER RESULTS
Exceeded Analyst Consensus for Gross Revenue & Adjusted EPS
COVID-19 Update
• Employee Health & Safety is Utmost Concern
• Non-Discretionary Services & Scalable Model
• Maintained Adjusted EBITDA & Earnings
• Utilization Above Pre-COVID Levels
• No Significant Project Cancellations
• Airborne COVID & Pathogen Tracing for
Facilities
• Identifying Sustainable Margin
Improvements Post-COVID
• Office Consolidation & Administrative Costs
• Travel, Tradeshows & Conferences
5
Growth & Financial Position Pipeline & Backlog
• Solid Growth
• 30% Total Growth Over Q3 ‘19
• Strong Cash Flows
• $21.7 Million in Q3 Cash Flows from Operations
• $64.0 Million in Cash at End of Q3
• Reduction of Debt Leverage
• $27.8 Million Debt Reduction
• $18.9 Million in Q3
• $8.9 Million in October
• Anticipate Adjusted EBITDA/Debt Leverage
Around 3.0x by Year End
• Strong Backlog Entering Q4 & 2021
• +9% Backlog Growth Over Q2
• +23% Backlog Growth Over Q3 ‘19
• Increase in Geospatial Activity
• Secured Key Long-Term Contracts
• Utilities
• Geospatial
• Transportation
• Accelerated Cross-Selling Success
• $7.7 Million Q3 Achievement
• +28% Ahead of Q3 YTD Target
• +65% Increase Over Q3 YTD ‘19 Achievement
Q3Highlights
Real Estate Transaction Services
Increased volume of Q3 real estate transactions expected to continue in Q4 & 2021
Geospatial Services
• Double-digit organic growth
• Higher EBITDA margin
• Higher revenue generated from support of
core business
• Backlog & Pipeline
• Healthy backlog entering Q4 and 2021
• Strong pipeline of opportunities in Infrastructure,
Geospatial, TIC, and Utility Services
• Margin Improvement
• Sustainable scalability & limited fixed costs
• M&A Opportunities
• The M&A pipeline is healthy
• A number of opportunities at various stages of process
• Cash Flow & Cash Position Remain Strong
• Additional debt reduction & fund tuck-in acquisitions
• Public Sector Funding
• Potential stimulus, including infrastructure
• Recruiting & Retention
• Diversity program
• Increased hiring & reduced attrition
Public Project FundingPositioned for
Strong Future Results
Q3 HIGHLIGHTS & LOOKING AHEAD
California Wildfires
+ Opportunity for hardscaping &
design of underground utilities
-- Lost a week of geospatial
Flight time due to conditions
6
Public Sector, Non-Discretionary Business
• Continues to drive growth
• 70% public sector revenue
International Growth
• Multi projects in Middle East & Asia
• Competitive advantage of traditional MEP
design plus technology consulting from
Mediatech acquisition
Infrastructure
• West continues strong performance
• Activity increasing in Northeast
• Large NCDOT Contracts in Southeast
Q3 Adj. EBITDA:
$29.9MQ3 Adj. EPS:
$1.13
Ed CodispotiCFO
FINANCIAL OVERVIEW
THIRD QUARTER 2020 RESULTS
1. Adjusted EBITDA excludes stock compensation and acquisition-related costs.2. Adjusted EBITDA as a percentage of gross revenues. 3. Adjusted to eliminate amortization expense of intangible assets from acquisitions and acquisition related costs,
net of tax benefits.
2019
NV5 Consolidated Third Quarter
8
2020 Growth (YoY)
Adjusted EBITDA 1 70%
Gross Revenues 30%
Adjusted EBITDA Margin 2 410 bps
Cash Flows from Operations 429%
Adjusted EPS 3 40%
$29.9M
$169.9M
17.6%
$21.7M
$1.13
$17.6M
$131.0M
13.5%
$4.1M
$0.81
FINANCIAL OVERVIEW
9
NV5 Continues to
Accelerate Debt Payments Through Strong Cash Flows
Cash on Hand
End of Q3
Receivables, Net
Q3 Cash Flows
from Operations
$64.0 Million
$206.2 Million
$21.7 Million
Term Loan
Debt Reduction
July – October 2020
Revolver
Debt Reduction
July – October 2020
Total
Debt Reduction
July – October 2020
$3.8 Million
$24.0 Million
$27.8 Million
Accelerated Debt Revolver ReductionStrong Cash Position
Alex Hockman President & COO
OPERATIONAL OVERVIEWMark Abatto President & COO,
NV5 Geospatial Solutions
Municipalities
TransportationInfrastructure
Utility Services
TIC
Transaction Services
Buildings
OPERATIONS OVERVIEW – CORE BUSINESS
• Essential Services Continue to Drive Growth
• 70% of Revenues from Public Sector
• Minimal Dependence on Economic Cycles
• Real Estate Transactions Recovery, Hospitality & Commercial Market Down
• Reduction in Operating Costs
• Scale Costs by Business Unit
• Public Infrastructure & Municipal Funding
• Northeast & North Carolina
Funding Increases
• Maintaining Close Client Relationships to Protect
Share of Wallet
• Key Q3 Wins in CA, FL, NC, NJ, NM, and UT
11
Q3Highlights
Potential Challenges
Current & Future Opportunities
• ALTA surveys & environmental site assessments
tied to real estate transactions
• Began to see rebound in September, but will
depend on real estate portfolio volume
• Commercial development & hospitality
down in 2020
• Reduced MEP design volume expected to
continue into 2021
• Key wins with municipalities in California,
New Mexico, Utah, and New Jersey
• Acceleration in residential housing
funding municipalities & counties
• Northeast business picking up outside of NYC
• NCDOT funding level increase and secured
$26M in Q3 contracts
• West continues strong performance
• Conformity assessment of electrical
distribution
• Driven by aging grid & fire mitigation
• Secured several large design & surveying
contracts in Q3
• Forensics volume increasing
• TIC & geotechnical continue strong
performance
Network
• Cross-Selling
• Expanded client opportunities through
NV5 Geospatial relationships
CROSS-SELLING
12
Selling Across Verticals to Drive Growth & In-House Revenue
INFRASTRUCTURE
UTILITY
SERVICES
BUILDINGS &
PROGRAM
MANAGEMENT
TESTING,
INSPECTION &
CONSULTING
ENVIRONMENTAL
HEALTH
SCIENCES
GEOSPATIAL
TECHNOLOGY
Increased In-Sourcing
Competitive Advantage
Margin Improvement
Growth Opportunities
Ahead of Q3‘20 YTD Target
Q3’20 YTD vs.Q3‘19 YTD
2020 FY Target:
$26M
2020 Weekly Target:
$500k
2020 Q3 YTD Target:
$19.5M
2020 Q3 YTD Achievement:
$24.9M
California Utility - $20 millionCivil design and surveying services for fire hardening and
reliability improvements to electricity distribution grid.
Utility Services
Geospatial Technology
USACE & US Geological Survey- $28 millioneGIS application development and data management, utility
asset collection, and collection and processing of lidar and
topobathymetric data
Key Wins
500
BACKLOG & KEY WINS
13
200
300
400
100
600
0
Q3 ‘20Q3 ‘19Q3 ‘18Q3 ‘17Q3 ‘16Q3 ‘15
$572
$463
$342
$275
$205
$151
Backlog includes those contracts for which work authorizations or awards have been received, estimated recurring
revenue from one of the Company’s service lines that has a high volume of small contracts, and a quick-burn estimate.
($ in Millions)
North Carolina DOT - $26 millionEngineering design, surveying, plan review, and testing and
inspection services to support bridges, roadways, and other
transportation assets across North Carolina
New Jersey Utility - $3.4 millionCross-selling win including three NV5 business groups to
provide metering and regulating station improvements and
natural gas services
Infrastructure
vs. Q2 ‘20
vs. Q3 ‘19Healthy backlog for the
4th quarter & 2021
Utility Services
Backlog
OPERATIONS OVERVIEW – NV5 GEOSPATIAL TECHNOLOGY
• Execution at Scale Continues to Drive Strong Operating Leverage
• 16th Straight Quarter of YOY EBITDA Growth
• Completed Data Acquisition for Largest
Topobathymetric Lidar Program in U.S. History
• Diverse Portfolio Wins Reinforce Broad Geospatial Technology Opportunities
• Strong Q3 Bookings – End of Federal Fiscal Year,
Annual Utility Contract Renewal
• New Solutions & New Client Penetration Generated
16% of Q3 Bookings
• Traction in Canadian Market
• Stability of U.S. Defense & Intelligence
• Integration Strategy Successes
• Cross-Selling Wins & Growing Pipeline
• Expanded Multi-modal Remote Sensing Capabilities
Differentiating NV5
• Shared Proprietary Machine Learning Routines
Yielding Significant Efficiencies
14
Q3Highlights
Potential Challenges
Current & Future Opportunities
• Pandemic & extreme weather priorities
delaying contracting cycles
• New client penetration, new solution
adoption challenging in virtual sales
environment
• State & municipal government budget
challenges may delay projects
• Competition expected to intensify; placing
emphasis on qualification-based differentiation
& embedded relationships
• Pandemic & extreme weather priorities
delaying contracting cycles
• Potential redistribution of funding to
COVID-19 programs
Utilities
• Canada
• Europe
• APAC, MENA
• U.S. intelligence support
• GIS services
• Facility management
• Climate change adaptation
• Water availability & monitoring
• Natural resource management
• Compliance & risk management
• Aging infrastructure, 5G roll out
• Asset managementInfrastructure
Environmental
International
Defense
State
Federal
Network
• Cross-Selling
• Expanded client opportunities through
NV5 Core Business relationships
Dickerson WrightChairman & CEO
GROWTH POSITIONING
2024 GROWTH OBJECTIVE
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Leading Compliance, Technology & Engineering Consulting Platform
Driving Growth Through
Six Strategic Verticals
GOAL: $1 Billion Gross Revenue Run Rate by End of 2024
• Higher Margins Driven by Platform Scalability
• Compliance, Technology & Engineering Model
• Target Continued Organic Growth
1. Expand International Footprint
2. Introduce New Services
3. Support Domestic Platform
• Strategic Acquisition Approach
1. Strengthen Core Verticals
2. Expand High-Margin Technology & Compliance Services
3. Enter Higher-Growth Geographic Markets
QUESTIONS
APPENDIX
APPENDIX
19
in millions
Oct. 3, 2020 Sept. 28, 2019
Net Income - per diluted share 0.61$ 0.46$
Per diluted share adjustments:
Add:
Amortization expense of intangible assets and
acquisition-related costs 0.70 0.45
Income tax expense (0.18) (0.10)
Adjusted EPS 1.13$ 0.81$
Three Months Ended
RECONCILIATION OF GAAP EPS TO ADJUSTED EPS
in millions
Oct. 3, 2020 Sept. 28, 2019
Net Income 7,754$ 5,843$
Add: Interest expense 3,731 421
Income tax expense 2,753 1,560
Depreciation and amortization 11,401 6,551
Share-based compensation 4,020 2,819
Acquisition-related costs 274 433
Adjusted EBITDA 29,933$ 17,627$
Three Months Ended
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA