NV5 Global, Inc. (NVEE) research, news, and more from GeoInvesting

Company description

Thu, 29 Jan 2015 05:00:00 GMT

NV5 Holdings, Inc. provides professional and technical engineering, and consulting solutions to public and private sectors. The company offers infrastructure, engineering, and support services, such as site selection, design, construction and program management, water resources, transportation, structural engineering, land development, surveying, and other services. It also provides construction quality assurance services, including construction materials testing and engineering, geotechnical engineering and consulting, and forensic consulting; and program management services consisting of governmental outsourcing and consulting services, as well as technical outsourcing services, including traffic studies, building code plan review, code enforcement, permitting and inspections, and the administration of public works projects, building departments, and safety departments. In addition, the company offers energy services comprising inspection, program management, and assistance in permitting; and traditional engineering services, including energy transmission and distribution, underground transmission and distribution, substation engineering, power generation facility design services, and surveying. Further, it provides environmental services, such as investigating and analyzing environmental conditions both outside and inside a building, and recommending corrective measures and procedures; occupational health and safety services, including workplace safety audits, ergonomics studies, plans for emergency preparedness, and workplace monitoring; hydrogeological modeling and environmental programs for groundwater resource assessments; water resource planning, monitoring, and environmental management of wastewater facilities; solid waste landfill investigations; storm water pollution; environmental impact statement support; agricultural waste management and permitting; and wetland evaluations. The company was founded in 1949 and is based in Hollywood, Florida.

Research

Wed, 07 Jun 2017 14:44:59 GMT

NVEE ($36.50) announced it has acquired RDK Engineers, a provider of professional and technical engineering and consulting solutions with approximately $33 million in annual sales. NVEE will pay cash and stock for the acquisition and expects the deal to be immediately accretive.

Quotes from NVEE CEO Dickerson Wright:

“With the acquisition of RDK, NV5 is now one of the largest MEP engineering firms in the U.S. with immediate cross-selling opportunities within our existing network of 102 offices. RDK has a rapidly growing energy efficiency practice that has made the company a prevailing force in the design of energy saving applications throughout the Northeast. We believe that NV5 can help RDK expand these practices nationally, and that RDK’s highly experienced experts will be central to deepening our capabilities within our Energy vertical.”

We continue to watch NVEE as a possible buy on pullback candidate. Prior to this acquisition, the company had strong EPS estimates of $2.18 for 2017 (vs $1.53 in 2016) and $2.52 for fiscal 2018.

NVEE was a very successful GeoBargain which we had two strong runs in the past.

We first coded NVEE as a GeoBargain on January 29, 2015 when the stock was trading at $11.75. On 2/18/2015, the GeoTeam released its bullish article , “NV5 Holdings' Management: Been There, Done That, And Doing It Again”. The stock was trading at $12.95 at the time of publishing. We closed out our first long position in May of 2015 when the stock was trading $23.35.

On February 18, 2016, we stated we would look to re-initiate a long position in NVEE when the stock was trading at $19.00. The stock had another great run reaching new highs near $37.00 in early August 2016. We closed the last position in October 2016 when the stock was trading $29.00.

Research

Thu, 05 Jan 2017 16:32:34 GMT

NVEE ($35.30) announced it has exceeded its published goal to reach $300 million in annual revenues entering 2017 and states new goal of reaching $600 million by 2020. Quotes from management:

"Since our inception as a public company in March of 2013, we have continued to set ambitious goals for our professionals and managers that encourage constant growth and serve as benchmarks for our team and our investors to measure NV5's progress. We are pleased with our achievement and we are poised to grow far beyond $300 million. Today we are announcing a new goal to grow NV5 to $600 million in annual revenues by year 2020. Our new goal will be accomplished by adhering to the same basic business philosophy we have followed so far and maintaining a flat vertical organization that empowers entrepreneurial leaders. NV5's success continues to be a result of excellent performance in three functional areas: organic growth of our new and existing service lines, growth through our well-established acquisition program, and growth through our successful integration and cross-selling initiatives."

Research

Thu, 27 Oct 2016 15:16:43 GMT

NVEE ($24.64) - On October 21, 2016 email we stated we closed out our long position as we did not feel comfortable holding into Q3 2016 results.

Yesterday after the close the company announced the acquisition of JBA Consulting Engineers and provided preliminary Q3 2016 results. On acquisition:

“JBA Consulting Engineers, Inc. ("JBA"), a Las Vegas, Nevada-based MEP engineering, acoustics, technology, and fire protection consulting firm with approximately $33 million in annual revenue. The acquisition was primarily financed with cash on hand from the Company's balance sheet and is expected to be immediately accretive to NV5's earnings.”

Q3 2016 preliminary results:

Sales to be $62 million vs $42.3 million in the prior year and below analyst estimates of $65.9 million.
Non-GAAP EPS of $0.40 vs $0.33 in the prior year and below analyst estimates of $0.46

Revised 2016 guidance:

2016 sales to be $225 to $235 vs prior guidance of $230 to $250 million. Analyst estimates are for $235 million
Non-GAAP EPS to be $1.49 to $1.62 vs prior guidance of $1.57 to $1.70. Analyst estimates are for $1.65

The Company states the Q3 shortfall was due to a delay on an ongoing project which they fully expect to resume after the election. Management reconfirmed a run rate of $300 million by the end of 2016 and announced a new line of credit with Bank of America which the Company plans to use to help execute its acquisition strategy. The Company is working on closing other opportunities by year end that would add $35 to $50 million in annual revenue.

Research

Fri, 21 Oct 2016 14:30:42 GMT

Closed out NVEE

This was our second go around with NVEE. We first coded NVEE as a GeoBargain on January 29, 2015 when the stock was trading at $11.75. On 2/18/2015, the GeoTeam released its bullish article , “NV5 Holdings' Management: Been There, Done That, And Doing It Again”. The stock was trading at $12.95 at the time of publishing. We closed out our first long position in May of 2015 when the stock was trading $23.35.

On February 18, 2016, we stated we would look to re-initiate a long position in NVEE when the stock was trading at $19.00. The stock had another great run reaching new highs of $37.00 in early August 2016. We have now decided to close out our long position ahead of the Company’s upcoming Q3 2016 results. We will continue to track the stock closely for possible re-entry due to what we believe is a strong management team operating in a hot industry (infrastructure).

Research

Fri, 05 Aug 2016 15:41:33 GMT

NVEE ($33.19) reported Q2 2016results:

Sales of $57.1 million vs $34.5 million in the prior year and ahead of analyst estimates of $55.5 million
Non-GAAP EPS of $0.38 vs $0.31 in the prior year and ahead of analyst of $0.36
Raised annual revenue guidance to $230 to $250 million; analyst estimates are $233 million
Non-GAAP EPS guidance of $1.57 to $1.70; analyst estimates are $1.68.

Quotes from management:

"We continued to bring new, higher-margin work into all service lines in the second quarter, which has resulted in our gross margins increasing to 47% from 45%, EBITDA increasing to 14% of Net Revenues, and a 12% increase in our backlog," said Dickerson Wright, PE, Chairman and CEO of NV5. "The transformation of our natural gas pipeline business from a lower-margin staffing business to a higher-margin consulting business remains an ongoing process. We also experienced a delay in the start dates of our New Jersey Department of Transportation projects in the second quarter due to a legislative impasse regarding an increase in the gasoline tax. We expect these projects to get underway in Q3."

We feel shares of NVEE are fairly valued for the immediate near-term and may look to lighten up or close our position. However, if the Company meets its targets, we feel shares could be worth $40 by the time the Company reports year end 2016 results.

Research

Mon, 27 Jun 2016 15:12:55 GMT

NVEE ($27.07) - announced enhanced organizational structure to support growth:

"We were a much smaller company in 2013 when we announced our goal to more than triple our revenues to $300 million by the end of 2016. We are on track to meet or exceed that goal by the end of the year.

Analyst estimates for fiscal 2017 have the company doing $262.3M for the year. Analysts continue to underestimate the company’s ability to grow revenue and earnings and although NVEE is nearing our near term price targets, we believe that NVEE continues to warrant a look on pullbacks.

Acquisition Activity

Wed, 18 May 2016 18:17:34 GMT

HOLLYWOOD, FL--(Marketwired - May 18, 2016) - NV5 Global, Inc. (the "Company" or "NV5") (NASDAQ: NVEE), a provider of professional and technical engineering and consulting solutions, announced today that it has signed a definitive agreement to acquire Dade Moeller & Associates, Inc. (Dade Moeller), a Richland, Washington-based environmental health and safety firm with annualized revenues of approximately $25 million. The acquisition will be made through a combination of cash and stock and is expected to be immediately accretive to NV5's earnings.

Dade Moeller specializes in the provision of radiation exposure and protection services as well as nuclear safety and industrial hygiene analyses, a discipline in which the Company has built a significant federal government client base. Dade Moeller's 150 professionals include Certified Health Physicists, Certified Industrial Hygienists, Certified Safety Professionals and Professional Engineers and are based primarily in Washington, Maryland, Tennessee, and Nevada, although Dade Moeller also maintains project offices in Ohio and Louisiana.

Dickerson Wright, Chairman and CEO of NV5, said, "Dade Moeller will become NV5's platform organization in our Environmental Health and Safety business line. We could not be more pleased to begin working with their accomplished team, which we believe will be instrumental to NV5's growth, particularly in the federal and energy sectors. Dade Moeller has been under contract with the U.S. Department of Energy at the Hanford, Washington site since 1994, where NV5 is currently doing construction quality assurance work. Dade Moeller also has had multi-year involvement in the assessment of damage that resulted from the Deepwater Horizon oil spill in the Gulf. Other significant assignments include state compensation for worker radiation exposure, long-term assignments at the Tennessee Valley Authority nuclear research site, and radiation exposure protection assignments at national sporting events and concerts."

"We are proud to be joining NV5 and excited to create new opportunities for the team and our employees going forward," said Matt Moeller, a certified health physicist and CEO of Dade Moeller. "NV5 shares our vision of 'protecting people and the environment' and values our services supporting high-hazard and other challenging projects across the country. We look forward to introducing our many clients, teaming partners, and professional colleagues to the full range of our new company's capabilities and, similarly, introducing our new NV5 teammates to our people and skills. We believe the distinct client profiles of NV5 and of Dade Moeller will complement our combined organization. We are indeed enthusiastic to start this new chapter in our collective success stories."

Research

Fri, 13 May 2016 15:20:52 GMT

NVEE ($29.13; marked down to $27 pre market) - Shares of NVEE are marked down slightly over a $2 due to the announcement of a public offering of 1.7 million shares at a price of $26.25. Investors should note that management states it plans to use the funds for a potential acquisition of Dade Moller & Associates (private company) and other possible acquisitions. While we are never a fan of dilutive events, in NVEE’s case, with management's proven acquisition strategy we feel confident management will use the funds for what will ultimately be another accretive acquisition(s). Last May NVEE announced an offering of $1.4 million shares at a price of $19.50, shares were trading at around $21 at that time and dipped slightly on offering news. The Company announced two accretive acquisitions over the next two months that added over $45 million in revenues. The stock quickly recovered and has been hitting new highs. We would expect a similar occurrence with this offering. Please note that NVEE is up 40% since our February 2016 call to action, and shares are now trading at a more reasonable/fair P/E. We may look to add to our position on steep pullbacks.

Research

Mon, 09 May 2016 14:46:51 GMT

NVEE ($27.31) reported strongQ1 2016 results on May 6, 2016 with a 39% increase in EPS. Although the Company slightly missed analyst top line forecast, NVEE maintained its full year sales and earnings guidance of $220 million to $230 million and adjusted EPS of $1.67 to $1.81 vs analyst estimates of $223.5 million and EPS of $1.73. Management indicated on the conference call they take a conservative approach when discussing guidance and reiterated they expect to be at a $300 million run rate heading into 2017 (implying a near $75 Q4 well above analyst estimates of $57 million). Shares of NVEE are up 43.7% since we entered a long position in mid February.

Comments & Business Outlook

Fri, 06 May 2016 16:07:46 GMT

NVEE ($24.19) reported the first quarter 2016 financial results:

Revenues were $45.9 million vs $29.4 million in the same period last year, an increase of 56% year over year. Missed analyst estimate by $1.7 million.
Adjusted EPS was $0.32 vs $0.23 in the same period last year, an increase of 39%. Beat analyst estimate by $0.03.
The company reiterates its full-year 2016 guidance revenue range from $220 million to $230 million and adjusted EPS range from $1.67 to $1.81.

Management commentary:

"Q1 2016 was a very successful quarter for NV5," said Dickerson Wright, PE, Chairman and CEO of NV5. "We grew our gross profit by 16% from 44% to 51%. We are very encouraged by this result because the winter quarter is usually the slowest in our industry."

Comments & Business Outlook

Fri, 11 Mar 2016 20:01:51 GMT

Fourth Quarter 2015 Results

Sales of $42.3 million vs $28.7 million in the prior year
Non Gaap EPS of $0.41 vs $0.30 in the prior year period

Quotes from release:

"We experienced a transformative year at NV5 characterized chiefly by margin growth from cross-selling and synergy among our five service verticals and strategic growth from four key acquisitions we completed in 2015," said Dickerson Wright, PE, Chairman and CEO of NV5. "We posted another set of record financial results for the fourth quarter of 2015. Our organic growth of 9% for the full year 2015 far exceeded our industry's standard. However, a downturn in our natural gas pipeline services business, while it represents less than 10% of total revenues, resulted in organic growth of 3% for the quarter. We anticipate organic growth for the full year of 2016 to be similar to organic growth for the full year of 2015."

2016 Outlook

The Company's guidance for full-year 2016 Total Revenues, including the impact of acquisitions closed through February 29, 2016, ranges from $220 million to $230 million, which represents an increase of 41% to 48% from 2015 Total Revenues of $155.9 million. The Company expects that full-year 2016 GAAP EPS will range from $1.40 per share to $1.54 per share. Furthermore, the Company expects that full-year 2016 Adjusted EPS will range from $1.67 per share to $1.81 per share. This guidance for Total Revenues, GAAP EPS and Adjusted EPS excludes anticipated acquisitions for the remainder of 2016.

Research

Fri, 11 Mar 2016 15:41:53 GMT

NVEE ($22.08; marked up7% pre market)reported Q4 2015 financial results, missing on only revenue while Non-GAAP EPS and guidance both beat expectations:

Sales of $42.6 million vs $28.7 million and below analyst estimates of $45.0 million
Non-GAAP EPS of $0.41 vs $0.30 and ahead of analyst estimates of $0.35
2016 full year revenue guidance of $220 to $230 million above analyst estimates of $1.94.6 million
2016 non-GAAP EPS range of $1.67 to $1.81, well above analyst estimates of $1.36

Quotes from management:

"We experienced a transformative year at NV5 characterized chiefly by margin growth from cross-selling and synergy among our five service verticals and strategic growth from four key acquisitions we completed in 2015," said Dickerson Wright, PE, Chairman and CEO of NV5. "We posted another set of record financial results for the fourth quarter of 2015. Our organic growth of 9% for the full year 2015 far exceeded our industry's standard. However, a downturn in our natural gas pipeline services business, while it represents less than 10% of total revenues, resulted in organic growth of 3% for the quarter. We anticipate organic growth for the full year of 2016 to be similar to organic growth for the full year of 2015.

On the conference call, management reiterated its longer term guidance of having a $300 million revenue rate heading into 2017 and stated it will look to update its longer term prospects as these goals continue to be met.

On February 18, 2016, we stated we would look to re-initiate a long position in NVEE when the stock was trading at $18.94. NVEE was one of our best performing GeoBargains. We first coded NVEE as a GeoBargain on January 29, 2015 when the stock was trading at $11.75. On 2/18/2015, the GeoTeam released its bullisharticle , “NV5 Holdings' Management: Been There, Done That, And Doing It Again”. The stock was trading at $12.95 at the time of publishing. The stock reached a high of $28.07 July 6, 2015.

Just two weeks ago, Co-Founder and President Maj Soueidan interviewed CEO Dickerson Wright on “The Everyday Investor” a radio show on 740 AM in Boca Raton, FL. which Maj has been the featured guest of. For those who were not able to listen to the show live, an audio replay is nowavailable.

Based on the company’s 2016 non-GAAP EPS guidance of $1.67 to $1.81, we feel it is reasonable to assume shares could trade between $25 and $27 based on a forward P/E multiple of 15.

Contract Awards

Mon, 29 Feb 2016 16:16:15 GMT

HOLLYWOOD, FL--(Marketwired - February 29, 2016) - NV5 Global, Inc. (the "Company" or "NV5") (NASDAQ: NVEE), a provider of professional and technical engineering and consulting solutions, announced today that its contract was extended to provide comprehensive Project Management Services for the Vertical Expansion of The University of Kansas Hospital's Cambridge Tower. NV5 has been working with the Hospital as the Program Management Team for the Cambridge Tower since planning began for this expansion to the Hospital's campus, located in Kansas City, Kansas, in 2011.

The Vertical Expansion's 177,000 square foot, four floor expansion is scheduled to be finished in 2018. One new floor of the expansion will be immediately prepared for patient occupancy, adding 32 acute care beds. The other three floors will be shelled for future expansion as either acute care or intensive care patient rooms. NV5 has provided broad scope Owner's representative services to the Hospital beginning with Facilities Master Planning, which continued throughout the programming, design and construction phases of the project. In support of the Vertical Expansion, NV5's fees were increased by $640,000, to a total of approximately $4.3 million.

Dickerson Wright, PE, Chairman and CEO of NV5, said, "We are pleased that we continue to win repeat work for large-scale state-of-the-art healthcare facilities projects, in this case, for the expansion of one of the leading hospitals in the United States."

John Bills, LEED AP, COO of Building Program Management at NV5, added, "Continued work with long-term clients is a core focus for our team. This is a testament to our amazing team and their great work."

"Over the course of several major projects, it has been our privilege to serve The University of Kansas Hospital in the management and development of world class healthcare facilities," said Mark Tasker, RA, Project Director. "We are supporting the organization's mission of providing world class healthcare to the community it serves. We relish the opportunity to continue that record of success with the Cambridge Tower Vertical Expansion."

Research

Mon, 22 Feb 2016 16:23:31 GMT

Nibbled Shares of Ex-GeoBargain NVEE

On February 18, 2016 we stated that Ex-GeoBargain $NVEE ($19.38) was back on our radar after our finanical modeling of recent acquisition shows strong growth ahead for the company. Please see our full pro-forma calculations, taking into account NVEE’s recentacquisition of Sebesta, a St. Paul, Minnesota-based mechanical, electrical and plumbing (MEP) engineering and energy management company with annualized revenues of $35 million. We stated we may look to re-enter a long position. On Friday, we nibbled at shares.

Today, NVEE announced a $3 million contract win with Verizon.

Research

Thu, 18 Feb 2016 16:56:18 GMT

Financial Modeling

Yesterday, we stated we were working on financial modeling ex-GeoBargain $NVEE ($18.94). Below are our pro-forma calculations, taking into account NVEE’s recent acquisition of Sebesta, a St. Paul, Minnesota-based mechanical, electrical and plumbing (MEP) engineering and energy management company with annualized revenues of $35 million.

Recall, NVEE was one of our best performing GeoBargains. We first coded NVEE as a GeoBargain on January 29, 2015 when the stock was trading at $11.75. On 2/18/2015, the GeoTeam released its bullish article , “NV5 Holdings' Management: Been There, Done That, And Doing It Again”. The stock was trading at $12.95 at the time of publishing. The stock reached a high of $28.07 July 6, 2015 and now trades near $19. We may look to re-initiate a long position in NVEE.

Acquisition Activity

Tue, 02 Feb 2016 15:40:34 GMT

HOLLYWOOD, FL--(Marketwired - Feb 2, 2016) - NV5 Global, Inc. (the "Company" or "NV5") (NASDAQ: NVEE), a provider of professional and technical engineering and consulting solutions, announced today that it has acquired Sebesta, Inc. (Sebesta), a St. Paul, Minnesota-based mechanical, electrical and plumbing (MEP) engineering and energy management company with annualized revenues of $35 million. Primary clients include federal and state governments, power and utility companies, and major educational, healthcare, industrial and commercial property owners throughout the United States. Sebesta's staff numbers 175 and operates from 12 offices in the Midwest, Texas, Mid-Atlantic and Northeast. The acquisition was made entirely in cash from internal sources without using debt and will be immediately accretive to NV5's earnings.

"With the acquisition of Sebesta, we are creating value for our shareholders and diversifying our company: we are establishing a very scalable platform for growth for our energy service vertical, we are bringing NV5 into new geographical areas, and we are introducing NV5 to Sebesta's blue chip clients. We are especially pleased that we will be doing business with an impressive federal client base to which the barriers to entry are very high and where we know there will be significant opportunities for synergy and cross-selling among our other service verticals," said Dickerson Wright, P.E., Chairman and CEO of NV5. "NV5 already has the capabilities to do much of the work Sebesta's professionals were previously subcontracting to other infrastructure, program management, and architecture firms, and so in this way, we know we will be able to expand the exceptionally high-quality services Sebesta's experts have been providing to their clients for the last twenty

Rob Costello, President and CEO of Sebesta commented, "We feel Sebesta is poised for growth, and that is the primary reason why we are joining forces with NV5. We bring seasoned management and staff along with an impeccable reputation for serving our clients. We look forward to NV5's support and collaboration in order to realize the potential upside the combination of our two companies represents. We see tremendous opportunities for cross-marketing with NV5's other business lines. And, as we introduce our services to the NV5 offices in the West and Southeast, this will greatly enhance NV5's overall market presence in energy-related technical services."

Comments & Business Outlook

Thu, 12 Nov 2015 05:00:00 GMT

Third Quarter 2015 Results

Sales of $48.7 million vs $31.4 million in the prior year period
EPS of $0.38 vs $0.31 in the prior year period

Quotes from release:

"We had a great third quarter lead by our management team and the technical experts in our service verticals. Through our operating strategy and vision for organic and strategic growth, we are always looking for new opportunities to provide the best quality of service to our existing clients, and to bring in new clients and win new projects based on that reputation. The fact that NV5 has consistently increased earnings per share for our investors over a larger number of shares cannot be overemphasized," said Dickerson Wright, PE, Chairman and CEO of NV5.

2015 Outlook

The Company is raising its guidance for full-year 2015 gross revenues and diluted earnings per share. The Company expects full-year 2015 gross revenues, including the impact of acquisitions closed through October 31, 2015, to range from $155 million to $162 million, which represents an increase to 50% from 2014 gross revenues of $108.4 million. The Company further expects that full-year 2015 diluted earnings per share will range from $1.09 per share to $1.19 per share, representing an increase to 37% over diluted earnings per share of $0.87 for the full-year 2014. Included in the guidance for diluted earnings per share, is the impact by the addition of 1,644,500 shares issued from our secondary offering on May 28, 2015. Furthermore, this guidance for gross revenues and diluted earnings per share excludes anticipated acquisitions for the remainder of 2015.

Contract Awards

Fri, 28 Aug 2015 16:48:58 GMT

HOLLYWOOD, FL--(Marketwired - Aug 28, 2015) - NV5 Holdings, Inc. (the "Company") (NASDAQ: NVEE), a provider of professional and technical engineering and consulting solutions, announced today that it was recently awarded a contract for more than $10 million for the siting and design of right-of-way green infrastructure practices throughout 1,561 acres of Bayside, Queens, New York. The contract was won by the infrastructure and environmental services team at The RBA Group and is one of several green infrastructure projects awarded to RBA under the city-wide NYCDEP green infrastructure program. The project includes a comprehensive site selection process, with site investigations, historical data analysis, surface and subsurface drainage analysis, geotechnical investigation, site survey, and structural analysis followed by green infrastructure design and construction management support services.

Dickerson Wright, PE, Chairman and CEO of NV5, said, "In the mere month that has elapsed since RBA joined the NV5 family, we have learned of several new large-scale planning and design contract wins with prominent public clients and agencies in the Northeast. We are looking forward to sharing the news with our shareholders and also to realizing opportunities for cross-selling between RBA and our existing Northeastern operations."

David Lapping, PTP, President of RBA, and Linda Reardon, PE, Senior Vice President and Director of New York City, Long Island, Connecticut and Pennsylvania Operations at RBA, added, "This is a great opportunity for us to expand our growing Green Infrastructure practice in New York City and we hope it will be a springboard towards generating additional opportunities in other geographic markets."

"The City's Green Infrastructure program matches our philosophy of incorporating sustainable strategies into all of our design projects. In particular, this project will help mitigate combined sewer overflows by capturing and infiltrating stormwater before it enters the combined sewer system, reducing the amount of traditional grey infrastructure required and simultaneously greening the City in which we work and live," said David Ksyniak, PE, Project Manager at RBA.

Comments & Business Outlook

Thu, 13 Aug 2015 04:00:00 GMT

Second Quarter 2015 Results

Sales of $34.4 million vs $29.2 million in the prior year
EPS of $0.25 vs $0.19 in the prior year

Quotes from management:

"We are pleased to announce another record breaking quarter of earnings for our shareholders characterized by accelerated organic growth, M&A growth, and strong operational performance improvement," said Dickerson Wright, Chairman and CEO of NV5. "Some of our accomplishments included: executing our largest acquisition since 2010, RBA, realizing significant earnings growth over a substantial increase in total shares outstanding, and completing a successful secondary offering. As a result of our May 2015 secondary offering, we raised net proceeds of $29.4 million, which will support the execution of new accretive acquisitions during fiscal year 2015 and 2016. We also reported a sizeable increase in our backlog as a result of numerous new contracts and notable award wins."

2015 Outlook

The Company is raising its guidance for full-year 2015 gross revenues and diluted earnings per share. The Company now expects full-year 2015 gross revenues, including the impact of acquisitions closed through July 31, 2015, to range from $155 million to $160 million, which represents an increase to 48% from 2014 gross revenues of $108.4 million. The Company further expects that full-year 2015 diluted earnings per share will range from $1.07 per share to $1.17 per share, representing an increase to 34% over diluted earnings per share of $0.87 for the full-year 2014. Included in the guidance for diluted earnings per share, is the impact of 1,644,500 shares issued from our secondary offering on May 28, 2015. Furthermore, this guidance for gross revenues and diluted earnings per share excludes anticipated acquisitions for the remainder of 2015.

Research

Wed, 13 May 2015 04:00:00 GMT

GeoBargain $NVEE Reported record Q1 2015 results:

First Quarter 2015 Revenues Increased 54% to $29.2 Million from $19.0 Million, slightly below analyst estimates of $30.1 million.
Net income for the first quarter of 2015 was $1.1 million or $0.18 per diluted share, up from a net income of $707,000, or $0.13 per diluted share in the first quarter of 2014. Non-GAAP EPS of $0.23 vs $0.16, ahead of analyst estimates of $0.20.
Raises Full-Year 2015 Revenue Guidance up to $137 Million and Diluted EPS Guidance up to $1.15. Analyst estimates are for $139.2 and $1.12 respectively.

Comments from management:

"The strong financial results we are announcing for the first quarter of 2015 indicate that our steady growth strategy is working. By providing an excellent standard of service in the field, exploiting opportunities for cross-selling and synergy among our five verticals, and successfully integrating accretive acquisitions, we were able to win contracts with new clients, extend or expand our contracts with existing clients, and generate significant revenue growth and earnings per share once again for our investors," said Dickerson Wright, Chairman and CEO of NV5. "As a shareholder-value company, we succeed by setting and accomplishing ambitious but realistic organic growth and M&A goals, delivering our budget, and maintaining a clean and transparent balance sheet. We met and exceeded the goals we set for the first quarter of 2015 with revenue growth of 54% and backlog increases of 17%. The first quarter is historically our weakest performing quarter due to winter seasonality and fewer working days."

Two positive takeaways from conference call:

When talking about organic growth:

“We have bad weather and to see that 11% organic growth was very encouraging. So I think we’re comfortable with the guidance we’ve given for the organic growth, if not, we’re little more positive than the guidance – than what we’ve given.”

When asked about M&A and longer term goals:

“The guidance we gave, I think, we’ve challenged our team to be $300 million at the end of 2016 with the margin of 12% to 15% EBITDA. We still feel – we feel enthusiastic about that. Our pipeline is continue to be full, if anything we’re more encouraged with the acquisition opportunities we have in front of us. So we feel comfortable in what we’ve said as far as the future will go.”

In related news, Roth Capital and Maxim Group maintained “buy” ratings and increased price targets to $26 from $20.

Due to the stock's sharp run up in price over the last few months, we will likely look to close out our long position, drop its GeoBargain status, and move on to other opportunities. We will revisit the stock on pullbacks for a possible long term hold.

Comments & Business Outlook

Tue, 12 May 2015 04:00:00 GMT

First Quarter 2015 Results

Sales of $29.2 million vs $19.0 million in the prior year
EPS of $0.18 vs $0.13 in the prior year

Quotes from management:

2015 Outlook

The Company is raising its guidance for full-year 2015 gross revenues and diluted earnings per share. The Company now expects full-year 2015 gross revenues, including the impact of acquisitions closed through April 30, 2015, to range from $127 million to $137 million, which represents an increase of 17% to 26% from 2014 gross revenues of $108.4 million. The Company further expects that full-year 2015 diluted earnings per share will range from $1.05 per share to $1.15 per share, representing an increase of 21% to 32% over diluted earnings per share of $0.87 for the full-year 2014. This guidance for gross revenues and diluted earnings per share excludes anticipated acquisitions for the remainder of 2015.

Acquisition Activity

Thu, 23 Apr 2015 04:00:00 GMT

HOLLYWOOD, FL--(Marketwired - Apr 23, 2015) - NV5 Holdings, Inc. (the "Company" or "NV5") (NASDAQ: NVEE), a provider of professional and technical engineering and consulting solutions, announced today that it has acquired Richard J. Mendoza, Inc. ("Mendoza & Associates"), a program management firm that specializes in the provision of construction program consulting services to public and private clients in the transportation and clean water/wastewater industries. Mendoza & Associates is based in San Francisco and has seven offices throughout California. Mendoza's staff includes up to 95 professionals with annualized revenues of approximately $15 million.

The acquisition will be immediately accretive to NV5's earnings and was made through a combination of cash and notes.

"We could not be more pleased to welcome the Mendoza team to the NV5 family," said Dickerson Wright, PE, Chairman and CEO of NV5. "With this acquisition we are strengthening our foothold with transportation clients in California through the expansion of our service offerings to include a full range of program management capabilities. We believe the opportunity for synergy between our Infrastructure Transportation group and Mendoza's professionals is a particularly promising one, and we have appointed Todd George COO of Civil Program Management to ensure that NV5 continues to emerge as a leader in airport, roadway, bridge, and facilities construction management in California."

"I have worked closely with Mendoza & Associates for many years now and I am excited about this acquisition because they share many of the same values we consider so critical to our success. Their quality of service and attention to cost effective and timely solutions that has brought them business success and a great reputation with clients in California makes this the perfect addition to our Civil Program Management Practice," said Todd George, PE.

Jeff Pallesen, President of Mendoza & Associates added, "I have known and worked with Todd for more than 20 years, and we have worked with many members of the NV5 team for the last 15. Our firms have worked successfully together on numerous projects and we are looking forward to working together in the future. The two firms joining forces is a natural fit."

Research

Wed, 15 Apr 2015 04:00:00 GMT

NVEE (17.58)provides professional and technical engineering, as well as consulting solutions to public and private sector clients in the infrastructure, energy, construction, real estate and environmental markets. Yesterday, after the close NVEE filed an 8K/A showing the pro forma results of the recent acquisition of Joslin, Lesser & Associates announced on 2/2/2015.

Our initial calculations show that the acquisition will contribute roughly $0.20 to 2015 EPS (assuming near 11 months of contribution). NVEE reported $0.96 non-GAAP EPS for 2014, adding the EPS contribution of $0.20 from the acquisition would put NVEE at $1.16 which is ahead of the 2015 guidance of $1.01 to $1.09.

The financials of Joslin, Lesser & Associates reaffirm our belief the managements 2015 EPS guidance is conservative as it assumes no growth from its core business. Given the facts, we think there is a strong possibility that management will increase its 2015 EPS guidance at the time of NVEE’s Q1 2015 financial results. Its also possible that if more investors begin to analyze the 8/k/A as we our team did that shares could remain strong heading into Q1 2015 earnings.

Contract Awards

Tue, 14 Apr 2015 04:00:00 GMT

HOLLYWOOD, FL--(Marketwired - Apr 14, 2015) - NV5 Holdings, Inc. (the "Company") (NASDAQ: NVEE), a provider of professional and technical engineering and consulting solutions, today announced that the Company has been awarded a contract to provide as-built surveys and engineering drawings for construction of high pressure pipelines, pipeline facilities and gas engineering design standards throughout the Client's 23,000 square-mile service territory. Projects are expected to include pipeline or pipeline facility modifications, relocations and installations. The three-year contract, which was effective January 1, 2015, is valued at $4.5 million, with an option for an additional two-year extension.

"We are always very pleased to be selected to provide our professional services and expertise to natural gas distributors," said Dickerson Wright, Chairman and CEO of NV5. "More than half of American households and a rapidly growing proportion of businesses in the U.S. rely on natural gas for their heat and power needs, and our Client ensures its safe and reliable delivery to more than 20 million customers in Southern California. This contract represents another important contract win for our infrastructure vertical."

Comments & Business Outlook

Fri, 27 Mar 2015 04:00:00 GMT

$NVEE ($16.08) - GeoBargain NVEE provides professional and technical engineering, as well as consulting solutions to public and private sector clients in the infrastructure, energy, construction, real estate and environmental markets. Yesterday, NVEE announced record fourth quarter 2014 results:

Gross revenues for the fourth quarter of 2014 were $28.7 million, a 70% increase from the fourth quarter of 2013.
Net income for the fourth quarter of 2014 was $1.4 million or $0.25 per diluted share, up from a net income of $0.5 million, or $0.10 per diluted share in the fourth quarter of 2013.
Non-GAAP EPS of $0.35 vs $0.14 in the prior year period.
Issued full-Year 2015 Revenue Guidance of $124 Million to $132 Million and Diluted EPS Guidance of $1.01 to $1.09. Analyst estimates are $127 million and $1.04 respectively.

Some highlights from the Q4 conference call:

“Our acquisition opportunity pipeline remains full and we expect to complete additional acquisitions throughout the year….

...So the backlog we know is very conservative that was reported...

...A key aspect of our business model is that we empower our professionals to be a continual resource to our clients while expanding our business opportunities. This has resulted in larger proposals and subsequent contract awards...

...And I would like to say to all of those that have supported the stock that we will continue moving forward with our strategy and we're looking forward to have very positive results in 2015 and we're excited about the opportunities ahead for us.”

In related news, Roth Capital upgraded NV5 Holdings (NVEE), reiterating a BUY rating and raising their price target to $20, surpassing their previous price target of $17. Recall, on 2/18/2015, the GeoTeam released its bullisharticle, “NV5 Holdings' Management: Been There, Done That, And Doing It Again”. The stock was trading at $12.95 at the time of publishing. We will look to add to our position if shares pullback.

Contract Awards

Mon, 09 Mar 2015 04:00:00 GMT

HOLLYWOOD, FL--(Marketwired - Mar 9, 2015) - NV5 Holdings, Inc. (the "Company") (NASDAQ: NVEE), a provider of professional and technical engineering and consulting solutions, announced today that it has been awarded a contract totaling more than $23 million with the California Department of Transportation - District 10 ("Caltrans-District 10") to provide on-call construction engineering, inspection and materials sampling and testing services for three years. NV5 originally began working with Caltrans-District 10 in 2007. Caltrans-District 10 encompasses eight counties and more than 3,500 miles of state roads, stretching from Alpine to Merced and as far east as Mariposa.

"We have managed a significant amount of transportation infrastructure projects throughout California's Central Valley for many years. Our experience allows us to help Caltrans and other public agencies improve the quality of transportation in their regions," said Dickerson Wright, PE, Chairman and CEO of NV5.

"It is our priority to provide the best possible service to clients like Caltrans, and we are honored that NV5 has been selected as the best qualified to assist them in the delivery of their construction program," said Todd George, PE, Senior Vice President and Project Manager for the Contract.

Analyst Reports

Fri, 06 Mar 2015 05:00:00 GMT

$NVEE ($14.19) - Roth Capital reiterated NV5 Holdings (NVEE) coverage with a BUY rating and price target of $17, surpassing their previous price target of $15. Although analyst ratings can sometimes be questionable, we generally view scenarios where analysts increase estimates and ratings prior to earnings as a bullish signal.

Research

Wed, 04 Mar 2015 05:00:00 GMT

$NVEE ($13.22) - GeoBargain NVEE Chairman and CEO Dickerson Wright was interviewed by CEOCFO magazine. The article covers NV5’s vision, industry outlook, acquisition strategy and its value of shareholders, many of the very topics we discussed in our bullish article titled, “NV5 Holdings’ (NVEE) Management: Been There, Done That, and Doing it Again”. We first alerted members we were coding NV5 Holdings (NVEE) as a GeoBargain on January 29, 2015 when the stock was trading at $11.75.

Articles

Wed, 18 Feb 2015 05:00:00 GMT

NV5 Holdings’ (NVEE) Management: Been There, Done That, and Doing it Again

Summary

NV5 Holdings fits our criteria for a GeoBargain; it’s cheap and it’s led by a management team with significant pedigree and a proven track record.
Dickerson Wright, NVEE’s founder has a history of entrepreneurial success that we believe will continue with the growth of NVEE.
Management is targeting $300 million revenue and 12% to 15% EBITDA by 2016, a feat that we think they can achieve and is supported by industry dynamics.
We believe that recent cash from a warrant redemption will be put to good use as management continues to pursue accretive acquisitions.
Our price target of around $21.00 does not take into account future acquisitions that we think NVEE will complete that should be accretive to earnings.

NV5 Holdings Inc (NVEE), trading around $13, is our most recent GeoBargain.

The GeoTeam is always on the lookout, not only for good businesses to invest in but perhaps more importantly, businesses with proven management teams. This selection process led us to find GeoBargain Costar Tech Inc (CSTI), an idea we alerted premium GeoInvesting members to on August 16, 2013 at $4.10. Shares of CSTI are up 265% since then.

In NV5 Holdings, we have found a management team that has rapidly built the company from a startup in 2009 to a growing, highly profitable, and formidable firm that provides professional and technical engineering, as well as consulting solutions, to public and private sector clients in the infrastructure, energy, construction, real estate and environmental markets.

NVEE completed its IPO in March 2013, and the resulting performance of the company speaks for itself. The company initially offered 1.4 million units of common stock and warrants to investors for $6.00 per unit. The market cap at the time of the company's IPO was around $25 million. The market cap has recently hovered around $75 million. Since the IPO, that is a rate of return that is approaching 200%, and we think the company is just getting started. Our near-term price target of around $21.00 does not take into account future acquisitions that we think NVEE will complete that should be accretive to earnings . Shares are off about $2 from their recent high of $15.24, as investors have wrongly lumped the company into the pool of firms that will be negatively impacted by falling oil prices.

Before going into the particulars of NVEE's operations and performance, it is important that investors learn more about who manages the company, as well as some of the guiding philosophies that are driving NVEE's success.

Management Has Been There, Done That, and is Doing it Again

Often, companies have strong management teams with great plans for the future. They are highly poised and confident in their abilities to drive their businesses and build value for shareholders. There is a big difference, however, between committing to doing something without having done so before and having already accomplished in similar situations what you are setting out to do now. NVEE has a founder/leader and management team who are industry veterans that have already been highly successful in their previous entrepreneurial business endeavors.

NVEE was founded by Dickerson Wright, PE Chairman, CEO and President in 2009. Mr. Wright founded U.S. Laboratories Inc. in 1993, completed an IPO in 1999 and sold the company to Bureau Veritas in 2002 for $83 million cash, or $14.50 a share, a 48% premium over the price prior to the announcement of the transaction. He next served as CEO of Bureau Veritas ("BV") North America from 2002-2008 and grew the company's revenues from $80 million to $300 million. He continued to push his entrepreneurial endeavors forward when he founded NV5 in 2009, and started operations with the same key managers who served him so well in his previous companies.

To gain insight into Mr. Wright's business philosophy that has served him and his shareholders so well during his career, we referenced an interview of him done by The Wall Street Transcript in August 2001. What was true then still applies today, as he drives NVEE to what could potentially be an even greater success than what he achieved with US Laboratories. Specific quotes from his 2001 interview that piqued our interest include:

Acquisitions : "We will not buy a company that does not have a blue chip client base, does not have a long relationship with their clients, that does not have a history of making a profit, does not have a second tier management group that's willing to stay on with our company, and last, a company that we think that we can add value to."
Operating philosophy : "We run a very decentralized company and we are truly a practice. We have a very flat organization, we rely on our people, we rely on our operating principles, and we are really the only publicly traded company that I know of that is aggressively looking for acquisitions in a very fragmented industry."
Mangers with skin in the game : "We also drive stock ownership very, very deep into the company, so that when we bring people on, we bring people on in an equity position where they feel that they are working as owners of the company. We have wonderful bonus plans and a compensation plan with equity so that we bring on partners, we don't bring on employees." Note that according to NVEE's 2013 Form 10K, Mr. Wright owns 38.3% and directors and executive officers as a group 47.1% of NVEE's shares.

What NVEE Does and How it Bills Customers

NVEE's Form 10-K for the year ended December 31, 2013, gives an excellent description of what the company does for its clients:

"We are a provider of professional and technical engineering and consulting solutions to public and private sector clients. We focus on the infrastructure, construction, real estate, and environmental markets. The scope of our projects includes planning, design, consulting, permitting, inspection and field supervision, and management oversight. We also provide forensic engineering, litigation support, condition assessment, and compliance certification. Our primary clients include U.S. federal, state, municipal, and local governments; military and defense clients; and public agencies. We also serve quasi-public and private sector clients from the education, healthcare, energy, and utilities fields, including schools, universities, hospitals, health care providers, insurance providers, large utility service providers, and large and small energy producers."

The company conducts business by entering cost-reimbursable and fixed fee/lump-sum contracts with its clients. Fixed fee/lump sum contracts require that all work be performed under the contract for a specified lump-sum fee, subject to adjustment if the scope of the project changes or if unforeseen conditions arise. Cost-plus contracts are predominantly used by US federal, state and local governments. Under these arrangements, the company bills its customers for actual costs and overhead plus a predetermined fee. When using cost-reimbursable contracts, NVEE bills the customer for actual hours expended on a project at negotiated rates (time and materials arrangements) or at predetermined rates (cost plus) in which customers are billed for actual hours expended on a project. Fixed contracts introduce an element of risk if the company underbids a project that it has been awarded. It appears that NVEE management is aware of this risk, since fixed price contracts have historically not accounted for a major portion of revenues. Since 2011, NVEE's % of revenues generated by fixed fee contracts have ranged between 7% and 11%. In contrast, its closest competitors are much more exposed to fixed fee commitments - TRR @ 37% and WLDN @ 31%.

NVEE operates in five business verticals:

Infrastructure (24% of 2014 revenue): Civil engineering, structures, transportation, water resources, surveying, construction management.
Construction Quality Assurance ("CQA", 19%): Code compliance, forensics, geotechnical engineering, materials testing, special inspections, technical drilling.
Energy (33%): Environmental permitting, inspections, program management, design, surveying provided primarily to natural gas supply and energy generating companies.
Program Management (18%): Program management, owner's representative, preconstruction services, construction management.
Environmental (6%): Environmental, occupational health and safety, environmental risk management, cultural resources, wetland studies, archeological studies, hydrogeological engineering, environmental permitting.

Investors concerned about the recent decline in oil prices should note that the clients/sectors NVEE serves have nothing to do with oil and oil exploration. The company's clients are engaged in natural gas pipeline and services in the North East, Mid Atlantic and South East, and public utilities that generate energy.

Strategic Acquisitions Drive Growth Strategy

In a recent call with management, we learned that NVEE will aggressively seek strategic acquisitions that will enhance and expand the company's service offerings. At any given time, the company has several deals in its pipeline. In fact, since our call at the end of January, one transaction has already recently closed . Typically, the company will close transactions at 4X to 6X trailing earnings while NVEE itself currently trades at around 14X its estimated 2014 earnings.

There are almost boundless opportunities for NVEE to grow through accretive acquisitions.

The company estimates there are 144,000 engineering firms in the US with under 50,000 of those in NVEE's "sweet spot," which includes companies is posting revenues of $4 million to $40 million. Despite the large number of potential acquisition prospects, relatively few meet NVEE's requirements. The company describes its acquisition strategy on page 8 of its 2013 Form 10- K , which states:

"We intend to pursue the following growth strategies as we seek to expand our market share and position ourselves as a preferred, single-source provider of professional and technical consulting and certification services to our clients:

Seek strategic acquisitions to enhance or expand our services offerings . We seek acquisitions that allow us to expand or enhance our capabilities in our existing service offerings. In analyzing new acquisitions, we pursue opportunities that provide critical mass to function as a profitable stand-alone operation, are geographically situated to be complementary to our existing operations, and profitable with strong potential for organic growth. We believe that expanding our business through strategic acquisitions will enable us to exploit economies of scale in the areas of finance, human resources, marketing, administration, information technology, and legal, while also providing cross-selling opportunities among our vertical service offerings."

Increasing NVEE's Growth Profile While Mitigating Business Risk

Approximately two thirds of NVEE's revenues are derived from public (U.S. government) and quasi-public clients, but the private sector also provides great potential. We are impressed that the company has been able to grow its government business in times of tight budget conditions. This partly has to do with the fact that the public sector can no longer ignore the need to address the decaying U.S. infrastructure problem. Yet, management still understands that it needs to build up its private sector business to improve its growth outlook, reduce risk that comes with a reliance on the government and to experience an expansion of its valuation multiples. The investor kit on the company s website provides key information and data points for investors including the enormous scope of opportunities the company is positioned to pursue:

Private Sector Opportunity - $641 billion in energy-related capital expenditure forecast in U.S./Canada 2014-2035.
Public Sector Opportunity - The deteriorating U.S infrastructure will require $3.6 trillion of investment by 2020.

Management describes its business strategy in the 2013 Form 10-K, page 8, as follows:

"Continue to focus on public sector clients while building private sector client capabilities. We have historically derived the majority of our revenue from public and quasi-public sector clients. For the years ended December 31, 2013 and 2012, approximately 67% and 66%, respectively, of our gross revenues were attributable to public and quasi- public sector clients. Even during unsteady economic periods, we have capitalized on public sector business opportunities resulting from outsourcing initiatives, continued efforts to address the challenges presented by the nation's aging infrastructure system, and the need to provide solutions for transportation, energy, water, and waste water requirements. However, we also seek to obtain additional clients in the private sector, which typically experiences greater growth during times of economic expansion, by networking, participating in certain organizations, and monitoring private project databases. We will continue to pursue private sector clients when such opportunities present themselves. We believe our ability to service the needs of both public and private sector clients gives us the flexibility to seek and obtain engagements regardless of the current economic conditions."

NVEE in Sync with Industry Trends and Challenges

A recent article listed the top ten business trends engineering firms should look for in 2015. Three of those trends are particularly relevant to NVEE:

"2014 was a great year with a resurgent economy boosting profits of firms across the country. This will continue into 2015. Firms can't find enough talent quickly enough to meet demand -this simple equation will drive us toward a record profit year in 2015.
A big concern for firms is finding talent. It's back to the pre-recession market for talent.
Mergers and acquisitions will have a record year in 2015 and will increase some 25% over 2014. The industry is at a tipping point from a consolidation perspective. High-performing firms in hot markets and geographies will command record valuations."

NVEE's management has already demonstrated their prowess capitalizing on acquisition opportunities. The key challenge for any engineering firm that is growing rapidly is managing its human resources and making sure they have the talent their clients need when it is needed. NVEE is well in tune with this issue and a key component of the company's growth strategy is focused on its most critical asset - human capital. It is therefore not surprising that a top business priority is to:

"Strengthen and support our human capital . Our experienced employees and management team are our most valuable resources. Attracting, training, and retaining key personnel have been and will remain critical to our success. To achieve our human capital goals, we intend to remain focused on providing our personnel with entrepreneurial opportunities to increase client contact within their areas of expertise and to expand our business within our service offerings. We will also continue to provide our personnel with training, personal and professional growth opportunities, performance-based incentives, including opportunities for stock ownership, and other competitive benefits."

Operating Performance since IPO Indicates Business Strategy is Working

Factoring in NVEE's 2014 financial guidance , the company will have produced uninterrupted revenue and net income growth every quarter since its IPO on March 26, 2013, while 5 of 7 quarters will have shown sequential revenue growth (keeping in mind that Q4 is seasonally the company's weakest quarter).

In the most recently published financial results for the nine months ended September 30, 2014 , the company reported (page 25) that its revenues increased by $28.3 million, or 55.2%, compared to the same period in 2013. Acquisitions completed during the first nine months of 2014 accounted for $19 million or 67% of the year over year revenue increase. It's not just acquisitions, however, that are driving NVEE's revenue growth. Organically, the company has also been growing its business impressively. During first three quarters of 2014, the company's existing business platform, excluding acquisitions closed in 2014, grew by $9.1 million or 18%.

Overall, NVEE has shown impressive revenue, EBITDA and net income growth since completing its IPO in March 2013. Particularly noteworthy is that CAGR for revenues: EBITDA and net income since the IPO were 33.5%, 61.7% and 96.5%, respectively.

The fact that EBITDA is growing at a more rapid rate than revenues and net income more than EBITDA validates management's ability to acquire net income streams at lesser multiples than NVEE's shares command in the market. It also indicates the company has an organizational structure that enables management to absorb an ever increasing number of complementary businesses and greater revenues across its existing infrastructure.

The following charts reflect quarterly (Q IV 2014 estimated) revenues, EBITDA and net income for the period 2012- 2014.

Management's Ambitious Growth Targets are Achievable

Management is targeting $300 million revenue and 12% to 15% EBITDA by 2016. The EBITDA % target is certainly reasonable as in Q III and Q IV(e) the EBITDA % was over 10% and it was over 9% for all of 2014. NVEE's EBITDA target % is also comfortably within the range of its closest competitors that range from 6% to 10% for TRR and WLDN.

The $300 million revenue target is much more aggressive. The current annual run rate for revenues, including the recent acquisition of a $10 million business, is around $120 million. If we allow for 18% organic growth in 2015 and 2016, the existing business platform should generate around $170 million in 2016. That means management will have to complete acquisitions that will generate $130 million revenue in 2016. Based on management's track record, we believe they will achieve that.

If NVEE reaches the stated revenue target of $300 million in 2016, generates 12% EBITDA, depreciation and interest expenses are $4 million, the effective tax rate remains at 37%, and the share count is 8 million after inevitably issuing new shares to help fund acquisitions (currently 6.1 million after exercise of warrants), EPS two years from now could be $2.50 or more.

Warrant Redemption Leads to 99% Exercise Rate

Investors recently gave NVEE a vote of confidence.

The company successfully redeemed all of its outstanding public warrants . 99% of the warrants were exercised at $6.80, generating approximately $3.2 million. We have confidence that this cash will be put to good use as management continues to pursue accretive acquisitions.

Some Caveats

In order to provide balance and objectivity, the following are among the risk factors investors should consider:

Human resources : Growing its business and winning new contracts does NVEE little good if they don't have the professional staff needed to do the work. The loss of key personnel or inability to attract and retain qualified personnel when required to meet client needs could disrupt and ultimately damage the business. This is a critical issue because as the macro economy improves the demand for topflight engineers will only become more intense. This environment will inevitably lead to not only competition to recruit talent but also drive compensation higher ultimately squeezing margins if NVEE is unable to pass costs on to clients.
Key personnel : NVEE depends on the continued services of its Chairman, Chief Executive Officer, and President, Mr. Dickerson Wright, and the management team he has assembled. Mr. Wright is the visionary and driving force behind NVEE and its success. His unique knowledge, experience, skills, and relationships with major clients and other members of the management team have been a key factor in NVEE's success to date. Although this dependence will become less critical longer term the loss of his services in the near or intermediate term would adversely affect operations.
Concentration of business with government agencies : NVEE derives two-thirds of its revenues from public and quasi-public clients the majority of which (over 80%) are in California. A significant amount of the revenue is derived from multi-year contracts with many appropriated on an annual basis. Consequently, at the beginning of a project, the related contract may be only partially funded, and additional funding is normally committed only as appropriations are made in each subsequent year. NVEE is therefore vulnerable to the vagaries of government politics and spending.
Gross Margins : NVEE's Gross margin is double that of some of its competitors, which could lead some investors to speculate that this level of margin may not be sustainable over the longer-term.

Estimated Valuation

We believe that based on NVEE's current operations, 2014 operating performance and relative valuations of other companies engaged in professional services businesses, that NVEE's stock is undervalued. NVEE's Filings list the following companies as being among its principal competitors:

Jacobs Engineering Group Inc (JEC)
Tetra Tech Inc. (TTEK)
TRC Companies Inc. (TRR)
Willdan Group, Inc. (WLDN)

We threw out JEC and TTEK as valuation comps since they are multi-billion dollar companies. That leaves us with TRR and WLDN. We put greater emphasis WLDN since it has experienced consistent growth over the past several quarters compared to TRR. (Although on a sub-note, TRR might be a stock to watch if the company can begin to deliver consistent top and bottom line growth, helped along by acquisition activity).

We believe that NVEE should ultimately trade at a premium valuation for the following reasons:

NVEE has shown the most consistent growth in both revenue and net income since 2012
NVEE management pedigree and track record
Less risk in business plan due to lower emphasis on fixed-price contract projects
Comparable gross margins
Aggressive growth planned for next two years from a management team that has delivered in the past

We used two measures to arrive at what we believe to be achievable multiples and we peg NVEE's value at around 70% more than its recent trading price of around $12.50 per share; EV/EBITDA of 10X, and P/E of 20. Our target price for NVEE, based on the median of these three metrics, is approximately $21.00.

Contract Awards

Wed, 11 Feb 2015 05:00:00 GMT

HOLLYWOOD, FL--(Marketwired - Feb 10, 2015) - NV5 Holdings, Inc. (the "Company" or "NV5") (NASDAQ: NVEE), a provider of professional and technical engineering and consulting solutions, announced today that it has been awarded a contract valued at more than $1 million with the City of El Centro, California, to provide On-Call Engineering, Plan Check, Surveying, Inspection, Geotechnical, Landscape and Architectural Design Services.
"We are very pleased to be continuing our working relationship with the City of El Centro," said Ernesto Aguilar, PE, COO of Infrastructure at NV5, Inc.
"We are excited and strongly committed to being able to support the City in their capital programs, major repair projects and development review processes," said Phil Kern, PE, Engineering Manager at NV5. "We believe our firm brings a unique set of talents that will assist the City in meeting their needs efficiently and cost effectively."

Share Structure

Fri, 06 Feb 2015 05:00:00 GMT

HOLLYWOOD, FL--(Marketwired - Feb 5, 2015) - NV5 Holdings, Inc. (the "Company" or "NV5") (NASDAQ: NVEE), a provider of professional and technical engineering and consulting solutions, announced today that the Company has completed the previously announced redemption of all of its outstanding public warrants. The redemption date for the public warrants was February 5, 2015. Each public warrant entitled the holder to purchase one share of the Company's common stock at an exercise price of $7.80 per share. The redemption resulted in 408,412, or approximately 99%, of its outstanding public warrants being exercised prior to the expiration time and generated gross proceeds to the Company of approximately $3.2 million. The remaining 4,002 public warrants that were not exercised by the expiration time were cancelled and redeemed by the Company for the sum of $0.01 per public warrant.

After taking into account the issuance of shares pursuant to the exercise of the public warrants, the total number of shares of the Company's common stock outstanding is approximately 6.2 million.

Acquisition Activity

Mon, 02 Feb 2015 05:00:00 GMT

HOLLYWOOD, FL--(Marketwired - Feb 2, 2015) - NV5 Holdings, Inc. (the "Company" or "NV5") (NASDAQ: NVEE), a provider of professional and technical engineering and consulting solutions, has acquired Joslin, Lesser & Associates, Inc. (JLA), a program management and owner's representation consulting firm that primarily services government owned facilities and public K through 12 school districts in the Boston, MA area. JLA's staff includes 30 professionals with annualized revenues approaching $10 million.

The acquisition was made with a combination of cash, notes and stock and will be immediately accretive to NV5's earnings.

"We are pleased to add JLA to the NV5 team. The acquisition of JLA is an exciting opportunity for NV5 to expand our presence in a major metropolitan area in the northeast and further add to our public and governmental client base," said Dickerson Wright, P.E., Chairman and CEO of NV5. "JLA has a distinguished history of managing public capital improvement projects and shares NV5's commitment to providing clients the highest quality program management services possible. JLA will make a great addition to our program management vertical."

Stuart Lesser, President of JLA, commented, "Our decision to join NV5 was primarily due to their excellent track record in developing key niches in their program management vertical and a philosophy of creating unparalleled service to their clients. We believe now with NV5 we have a unique opportunity to increase our presence in the northeast United States. We welcome the opportunity to be a part of the NV5 team."

Research

Thu, 29 Jan 2015 05:00:00 GMT

We are coding $NVEE as a GeoBargain at $11.75 - NVEE provides professional and technical engineering, and consulting solutions to public and private sectors. Strong Q3 2014 results, raised guidance and aggressive acquisition strategy has piqued our interest. Our interview with management strengthens our confidence in the story.

NVEE has been unfairly tattooed with the plunging price of oil. The company does in fact generate 33% of its revenues from the energy sector but the sectors it serves have nothing to do with oil and oil exploration. NVEE provides environmental permitting, inspections, program management, design and surveying services to natural gas pipeline and service providers in the North East, Mid Atlantic and South East, and public utilities that generate energy.
NVEE reported Q3 revenues of $31.4 million, a 69% increase vs the prior year.

Diluted EPS for the quarter increased 35% to $0.31.

The company has produced uninterrupted revenue and net income growth every quarter since inception. (8 qtrs of year over year growth and 6 of 7 with sequential growth)

Raised full year 2014 revenue guidance to be between $102 million and $108 million, representing an increase of approximately 49% to 58% over full-year 2013 gross revenues of $68.2 million. Full year guidance in Q1 2014 was $94 million to $104 million.

Raised full-year 2014 diluted earnings per share guidance range to between $0.84 per share and $0.94 per share, representing an increase of 20% to 34% over diluted earnings per share of $0.70 for the full-year 2013. Full year EPS guidance in Q1 2014 was $0.80 to $0.90

Raised guidance slightly in both the second and third quarter releases.

Management has a successful track record. Dickerson Wright, the company's CEO was president and founder of US Laboratories, a company that was acquired by Bureau Veritas for about $83 million in cash or $14.50 per share, which represented a 48% premium at the time.
The company should benefit from the build out of infrastructure in the sectors it serves.

Management has an aggressive acquisition strategy. Comments from Q3 release:

"As we enter into 2015, our acquisition pipeline remains robust, and our current balance sheet positions us to capitalize on these accretive opportunities."

We feel the stock should gradually approach its recent high of near $15.00, However, we also think the stock will be able to trade at a P/E multiple of 20 to 25 on 2014 EPS (expected release in March). This means EPS guidance provided by the company is $0.89 which would lead to a near term price target range of $17.80 to $22.25. We will provide more color as we continue our due diligence.

Caveats:

Proper execution of acquisition strategy.

We presume that the company is dealing with large contracts, thus the timing of revenue recognition could lead to a lumpy quarter from time to time.

Disclosure: Long NVEE