Helmed
by a 35-year industry veteran with a continuous track record of success
managing and developing engineering companies, NV5 Holdings, Inc. (NASDAQ:
NVEE) has rapidly emerged as one of the leading providers of professional and
technical engineering, as well as consulting to the energy (33% of 2014 gross
revenues), infrastructure (24%), construction quality assurance (19%), program
management (18%), and environmental (6%) markets in the U.S., both for public
and private entities. President, CEO and Board Chairman, Dickerson Wright, who
founded NVEE back in 2009 before taking the company public shortly thereafter,
is the man who previously founded the highly successful construction validation
and structural materials integrity analysis firm, U.S. Laboratories, Inc. back
in 1993. U.S. Laboratories was later sold for $83 million in 2002, after a
highly successful IPO in 1999 and a superb run up from around $80M in revenues
to over $300M, to Bureau Veritas, which was subsequently rolled up into NVEE’s
construction quality assurance (CQA) division as of 2010.
NVEE
has the luxury of operating in a highly fragmented industry, where there are over
144k engineering firms throughout the U.S. alone according to IBIS World, a
fact which dovetails exceptionally well with the company’s acquisitive growth
strategy. Moreover, the company has executed an impressive storm of key
acquisitions already in just a handful of years, significantly expanding their
operating footprint, with 13% organic expansion into choice growth markets,
bottom line improvement of roughly 33% across the portfolio, and a robust
stable of acquisition opportunities to boot.
With
multiple parallel verticals and a healthy public/private client mix, NVEE has
the distinct advantage of being able to cross-sell its services, while also
benefitting from stable activity throughout varying economic cycles. This key
advantage is further enhanced by a wealth of local market expertise across
their operational footprint, which is defined by 28 offices throughout
California, Colorado, Florida, New Jersey, Ohio, Pennsylvania, and Utah. Many
of whom have a successful track record spanning over five decades and who are
recognized for their expertise, as well as high quality service, both by the
industries they serve and their peers. These cumulative tactical advantages,
combined with a wealth of experience residing in the company’s 700-plus
employees, has made NVEE an M&A powerhouse amid a fragmented industry.
The
company’s most recent acquisition, executed in early February of 2015, was
program management and owner’s representation consulting firm, Joslin, Lesser
& Associates, Inc. (JLA). An acquisition which will be immediately
accretive to NVEE’s earnings and which has annualized revenue in the
neighborhood of $10 million, as well as a considerable footprint in the Boston,
MA area servicing K-12 and government-owned facilities. This acquisition gives
NVEE a nice boost to their already solid presence in the northeastern U.S., as
JLA boasts a distinguished record of service managing public capital
improvement projects throughout the region.
Also
previously rolled up into the company’s program management vertical were
Zollinger Buric, Inc. and Buric Global, LLC, as well as Owner’s Representative
Services (all three in 2014), and Consilium Partners (2013). NVEE’s program
management division services a wide range of clients from federal, state and
municipal government agencies, to school districts, healthcare facilities and
hospitality companies, as well as insurance, REITs, and financial institutions,
providing a broad array of project initiation and preconstruction/construction
services, as well as FFE (furniture, fixtures, and equipment) services. From
building new hospitals and schools, to hotel renovations and various other
projects across multiple industries, NV5 Holdings delivers tailored program
management services that are fully customized to suit the individual client’s
needs.
The
company’s core division is focused on delivering cutting-edge energy project
construction, as well as distribution, generation and transmission engineering,
in addition to comprehensive consulting services – all targeted primarily on
the natural gas supply and associated energy generating markets. This fact has
allowed NVEE’s energy division to sidestep complications and flagging market
activity related to slumping oil prices. Having acquired AK Environmental in
2014, NV5 Holdings has subsequently set about positioning the company on the
leading edge of sustainable design and value-added services for the energy
sector, emphasizing their “Beyond Engineering” philosophy and deep bench of
talent in sustainable practices, which stretches back through over 25 LEED
(Leadership in Energy and Environmental Design) registered projects, including
Gold and Platinum projects certified by the U.S. Green Building Council. The
company has numerous LEED Accredited Professionals on staff and has established
a wining reputation for having sustainability champions in each of their
offices that actively promote sustainable business practices, as well as
overseeing associated reviews on client projects.
The
company’s commitment to sustainable infrastructure runs as deep as their roots
in the engineering sector and NV5 Holdings was actually one of the earliest
adopters of sustainable practices, long before it was made trendy, with
in-house R&D beginning in the 1990′s and the company’s first sustainable
design guide published back in 2004. NV5 Holdings has played crucial roles in
the development of thousands of megawatts of clean, renewable energy over the
years and the company was even recently honored by environmental industry
strategic business intelligence publication, Environmental Business Journal
(EBJ), with EBJ’s 2014 award for business achievement in M&A. This coveted
award signifies that NVEE is one of only a handful of companies recognized by
EBJ for their acquisitions and revenue growth during 2014, as well as for
having shown important industry leadership through innovative project design,
the application of emergent technologies, pioneering efforts into new
practices, and making proactive social contributions.
Speaking
of revenue growth, NVEE’s Q3 2014 performance was impressive indeed, with gross
revenue up 69% to $31.4 million, net income up 85% to $1.7 million, and a 34%
increase in the company’s backlog to $80.7 million when compared with end of
year 2013 figures. Income from operations was particularly strong year over
year, with $2.8 million reported, or an increase of 143%, and NVEE was also
pleased to be able raise their FY14 revenue guidance to as much as $108
million, with diluted EPS guidance of as much as $0.94/share. These are
attractive figures given the incredibly strong tailwinds represented by INGAA
Foundation estimates of some $641 billion in energy-related CAPEX that is
projected over the next two decades throughout the U.S. and Canada. Even more
so when one takes into account the whopping $3.6 trillion in investments INGAA
has estimated over the next five years alone here in the U.S., which will be
required in order to address rapidly deteriorating national infrastructure.
Nationwide
NV5 Holdings is truly an infrastructure development leader, with a focus on
turn-key solutions that are impeccably sustainable, making environmental,
economic, and social sense, both for the present and well on into the future.
This approach has won the company many adherents who look to NVEE as a
preferred provider across the gamut of infrastructure design, from energy and
program management, to forensic engineering, geographical information systems
(GIS), land development, surveying, transportation, and even water resource
management. The company made two key acquisitions in for their infrastructure
division historically, rolling up Pitman Hartenstein & Associates in 2013
and Nolte Associates during 2010.
As
a recent testament to the company’s extensive CQA expertise, particularly in
the field of geotechnical investigations, evaluations and materials testing,
NV5 was awarded a $1 million dollar contract in mid-February 2015 with the City
of El Centro, California to provide architectural design, geotechnical, inspection,
landscaping, on-call engineering, plan checking, and surveying services in
support of ongoing capital programs, development reviews, and major repair
projects. This deal handsomely extended the company’s existing working
relationship with the City of El Centro and allows the city to take full
advantage of NVEE’s impressive ability to efficiently and cost-effectively
deliver on mission critical projects. The company previously acquired the
central elements of their CQA division during 2012 and 2010 respectively, with
the Kaderabek Company and aforementioned Bureau Veritas acquisitions, which
have collectively placed NV5 in an ideal position to offer a multiplicity of
such services as those mentioned in the El Centro deal, as well as other
important services, like code compliance and technical drilling, to cities and
municipalities throughout the country.
Earlier
in 2015, the company was also selected by the City of Colorado Springs to
deliver capital program and construction management, as well as inspection
services and pavement management, under a contract which has the company
directly serving the Colorado Springs Streets Division PPRTA (Pikes Peak Rural
Transportation Authority). This is a huge deal for NVEE, as Colorado Springs is
the second largest city in the state, second only to Denver and because
Colorado Springs is the most expansive municipality in all of Colorado, with
over 200 square miles of land.
NV5
Holdings’ fifth and final division is their environmental services segment,
which is focused specifically on tasks like preserving cultural resources and
doing environmental risk management and permitting, as well as more specialized
services like archeological and wetland studies. The company’s environmental
division also handles hydrogeology and hydrogeological engineering tasks, and
it even provides comprehensive occupational health and safety services to NVEEs
clients.
Investors
will have a great opportunity to pop the hood on NVEE at the upcoming 27th
annual ROTH Capital Partners Growth Stock Conference this March 9, which is
being held at the Ritz-Carlton Laguna Niguel in Orange County, California.
California continues to be a primary operational center for NVEE and the
company’s rock-solid commitment to sustainability plays quite well to public
and private concerns in the environmentally conscious state. CEO Wright will be
making a presentation on the company at 12:30 p.m. PST and will then stick
around to do one-on-one meetings with interested parties for the rest of the
day. Interested investors and potential clients who want to schedule a meeting
should contact oneononerequests@roth.com or Lauren Wright at ir@nv5.com
For
more information on the company, visit www.NV5.com
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