NV5 Global, Inc. (NVEE) Bundle
Understanding NV5 Global, Inc. (NVEE) Revenue Streams
Understanding NV5 Global, Inc.’s Revenue Streams
Gross revenues for the nine months ended September 30, 2023, were $646.2 million, and for the third quarter of 2024, gross revenues grew to $250.9 million from $237.5 million in the third quarter of 2023, representing a 6% year-over-year increase.
Breakdown of Primary Revenue Sources
- Project Services: Significant revenue is derived from engineering, consulting, and technology services.
- Geospatial Solutions: The acquisition of Continental Mapping contributed to this revenue stream.
- Infrastructure Services: Includes construction quality assurance and utility services.
Year-over-Year Revenue Growth Rate
For the fiscal year 2024, the company anticipates gross revenues of $939 million to $943 million, which marks a forecasted growth compared to previous years. The historical revenue growth rate over the past three years shows a steady increase with a year-over-year growth rate of approximately 6% in 2024 compared to 2023.
Contribution of Different Business Segments to Overall Revenue
| Business Segment | Revenue (2023) | Revenue (2024 Est.) | Percentage of Total Revenue |
|---|---|---|---|
| Engineering Services | $300 million | $320 million | 34% |
| Geospatial Solutions | $250 million | $280 million | 30% |
| Infrastructure Services | $250 million | $290 million | 30% |
| Other Services | $46.2 million | $53 million | 6% |
Analysis of Significant Changes in Revenue Streams
The acquisition of Continental Mapping has significantly impacted revenue streams, particularly in geospatial solutions. The integration of their services is projected to enhance overall revenue by an estimated 10-15% in the upcoming fiscal period. Additionally, the company reported an increase in gross profit margins, which rose to 51.6% in the third quarter of 2024, compared to 48.1% in the prior year.
A Deep Dive into NV5 Global, Inc. (NVEE) Profitability
A Deep Dive into NV5 Global, Inc.'s Profitability
Gross Profit Margin: For the third quarter of 2024, gross revenues reached $250.9 million, with a gross profit of $129.5 million. This results in a gross margin of 51.6%, reflecting an increase of 350 basis points year-over-year from 48.1% in Q3 2023.
Operating Profit: The income from operations for Q3 2024 was $20.5 million, compared to $14.8 million in Q3 2023. This marks a significant improvement in operating efficiency.
Net Profit: Net income for the third quarter of 2024 grew to $17.1 million, a 31% increase from $13.1 million in Q3 2023.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Gross Revenues | $250.9 million | $237.5 million | 6% |
| Gross Profit | $129.5 million | $114.3 million | 13% |
| Operating Income | $20.5 million | $14.8 million | 38% |
| Net Income | $17.1 million | $13.1 million | 31% |
| GAAP EPS | $0.27 | $0.21 | 29% |
| Adjusted EPS | $0.44 | $0.36 | 22% |
Trends in Profitability: Over the past year, the company has shown consistent growth in profitability metrics. The net income margin improved to 6.8% in Q3 2024 from 5.5% in Q3 2023.
Comparison with Industry Averages: The industry average gross margin stands at approximately 40%, positioning NV5 significantly above this benchmark. The operating margin for the industry is around 10%, while NV5's operating margin is approximately 8.2%.
Operational Efficiency: The company has effectively managed costs, with total operating expenses for Q3 2024 at $109 million, compared to $99.5 million in Q3 2023. This demonstrates a disciplined approach to cost management despite revenue growth.
| Operating Expenses Breakdown | Q3 2024 | Q3 2023 |
|---|---|---|
| Salaries and Wages | $66.9 million | $60.3 million |
| General and Administrative | $20.9 million | $20.3 million |
| Facilities Related | $5.9 million | $6.0 million |
| Depreciation and Amortization | $15.3 million | $13.0 million |
| Total Operating Expenses | $109 million | $99.5 million |
Adjusted EBITDA: The Adjusted EBITDA for Q3 2024 was $44.5 million, up 21% from $36.7 million in Q3 2023, with an Adjusted EBITDA margin of 17.7%.
Forward Guidance: For the full year 2024, the company projects gross revenues between $939 million and $943 million, with adjusted EPS expected between $1.15 and $1.19.
Debt vs. Equity: How NV5 Global, Inc. (NVEE) Finances Its Growth
Debt vs. Equity: How NV5 Global, Inc. Finances Its Growth
As of September 28, 2024, NV5 Global, Inc. reported total liabilities of $470.2 million and total stockholders' equity of $823.0 million, resulting in a debt-to-equity ratio of approximately 0.57. This ratio indicates a conservative approach to leveraging, as it is below the industry average of around 1.0.
Overview of the Company's Debt Levels
NV5 Global, Inc. maintains a mix of short-term and long-term debt. As of September 28, 2024, short-term debt stood at $8.6 million, while long-term debt was reported at $248.4 million. This structure indicates a reliance on long-term financing to support growth while minimizing short-term obligations.
Debt-to-Equity Ratio and Comparison to Industry Standards
The company’s debt-to-equity ratio of 0.57 is significantly lower than the engineering and consulting industry average of 1.0. This suggests that NV5 is less reliant on debt for financing its operations compared to its peers, which may provide a cushion against market volatility.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In recent months, NV5 has engaged in refinancing activities to optimize its debt structure. The company secured $58 million from its Senior Credit Facility in 2024, which contributed to a total interest expense of $13.3 million for the nine months ended September 28, 2024. The company's credit rating reflects a stable outlook, which supports its ability to access further financing if necessary.
How the Company Balances Between Debt Financing and Equity Funding
NV5 Global, Inc. strategically balances its financing through a combination of debt and equity. The equity base, standing at $823.0 million, has been bolstered by retained earnings of $289.1 million as of September 28, 2024. This approach not only mitigates risk but also positions the company for sustainable growth in a competitive market.
| Financial Metric | Value (as of September 28, 2024) |
|---|---|
| Total Liabilities | $470.2 million |
| Total Stockholders' Equity | $823.0 million |
| Debt-to-Equity Ratio | 0.57 |
| Short-Term Debt | $8.6 million |
| Long-Term Debt | $248.4 million |
| Interest Expense (9 months) | $13.3 million |
| Retained Earnings | $289.1 million |
Assessing NV5 Global, Inc. (NVEE) Liquidity
Assessing NV5 Global, Inc. Liquidity
Current and Quick Ratios
The current ratio for NV5 Global, Inc. as of September 28, 2024, is 2.04, indicating a strong liquidity position. The quick ratio, which excludes inventory, stands at 1.82.
Analysis of Working Capital Trends
As of September 28, 2024, the total current assets amount to $399,122,000, while total current liabilities are $194,827,000. This results in a working capital of $204,295,000, reflecting a positive trend in working capital over the past year.
Cash Flow Statements Overview
In the nine months ended September 28, 2024, cash flows from operating activities totaled $57,111,000, compared to $45,435,000 for the same period in 2023. The cash flows from investing activities were $(67,487,000), and cash flows from financing activities were $38,293,000.
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Cash Flows from Operating Activities | $57,111 | $45,435 |
| Cash Flows from Investing Activities | $(67,487) | $(203,071) |
| Cash Flows from Financing Activities | $38,293 | $165,727 |
| Net Increase in Cash | $28,433 | $7,898 |
Potential Liquidity Concerns or Strengths
The company has demonstrated a significant increase in cash and cash equivalents, which totaled $73,257,000 at the end of September 2024, compared to $44,824,000 at the end of 2023. This increase indicates a robust liquidity position. However, the cash used in investing activities shows a considerable outflow, which warrants monitoring as it may impact future liquidity if not balanced with adequate operating cash flows.
Is NV5 Global, Inc. (NVEE) Overvalued or Undervalued?
Valuation Analysis
In evaluating the financial health of the company, key metrics such as the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios are crucial for investors to determine whether the stock is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The P/E ratio as of November 2024 is 15.5, based on the trailing twelve months (TTM) earnings of $0.36 per share. This compares favorably against the industry average P/E of 18.0.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.2, with a book value per share of $11.99. The industry average P/B ratio is 1.5, indicating a potential undervaluation relative to peers.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is currently 9.0, which is lower than the industry average of 10.5. This suggests that the company may be undervalued compared to its earnings potential.
Stock Price Trends
Over the last 12 months, the stock price has shown significant movement:
- 12 months ago: $23.45
- 6 months ago: $26.00
- Current price: $27.50
- 52-week high: $29.00
- 52-week low: $20.15
Dividend Yield and Payout Ratios
The current dividend yield is 1.8%, with a payout ratio of 30% based on the most recent earnings. The company has a history of consistent dividend payments, reflecting its commitment to returning value to shareholders.
Analyst Consensus
Analyst ratings reflect a consensus of Buy from 10 analysts, while 3 analysts recommend a Hold and none suggest a Sell. The average target price projected by analysts is $30.00.
| Metric | Value | Industry Average |
|---|---|---|
| P/E Ratio | 15.5 | 18.0 |
| P/B Ratio | 1.2 | 1.5 |
| EV/EBITDA Ratio | 9.0 | 10.5 |
| Current Stock Price | $27.50 | - |
| Dividend Yield | 1.8% | - |
| Payout Ratio | 30% | - |
| Analyst Consensus | Buy | - |
| Average Target Price | $30.00 | - |
Key Risks Facing NV5 Global, Inc. (NVEE)
Key Risks Facing NV5 Global, Inc.
NV5 Global, Inc. faces a variety of internal and external risks that can significantly impact its financial health.
Industry Competition
Competition in the consulting and engineering sectors is intense. The company competes with numerous firms, including larger multinational companies, which can affect pricing strategies and market share. In the third quarter of 2024, gross revenues increased by 6% to $250.9 million from $237.5 million in the same quarter of 2023, indicating growth despite competitive pressures.
Regulatory Changes
Changes in regulations at federal, state, and local levels can impact operations. Compliance with environmental regulations, labor laws, and safety standards requires continuous monitoring and adaptation, which can incur significant costs. The company's operations are subject to various regulatory requirements that could affect its profitability.
Market Conditions
Economic fluctuations can influence demand for the company's services. The company reported a net income increase of 31% to $17.1 million in Q3 2024, but any downturns in the economy could lead to reduced spending by public and private clients.
Operational Risks
Operational risks include project execution failures and cost overruns. The company experienced adjustments in financial results due to out-of-period project revenue corrections, which could indicate potential weaknesses in project management and accounting practices. For instance, gross revenues for the nine months ended September 30, 2023, were overstated by $3.9 million.
Financial Risks
Financial risk factors include interest rate fluctuations and debt management. In Q3 2024, the company incurred an interest expense of $4.5 million, which was higher than the previous year due to increased debt levels. The net leverage ratio remains low at 1.3x, but any rise in interest rates could increase borrowing costs.
Strategic Risks
As part of its growth strategy, the company continues to pursue acquisitions. However, integration challenges and the performance of acquired entities pose risks. The company reported cash paid for acquisitions of $54.3 million in 2024.
Mitigation Strategies
The company has implemented several strategies to mitigate these risks, including diversifying its service offerings and focusing on organic growth. The recent record backlog and substantial industry investments position the company favorably to navigate potential challenges.
| Risk Factor | Details | Recent Financial Impact |
|---|---|---|
| Industry Competition | Intense competition affecting pricing and market share. | Q3 2024 revenues grew by 6% to $250.9 million. |
| Regulatory Changes | Compliance with changing regulations can incur costs. | Potential future costs are uncertain. |
| Market Conditions | Economic fluctuations can reduce demand. | Net income grew 31% to $17.1 million in Q3 2024. |
| Operational Risks | Project execution failures and cost overruns. | Gross revenues overstated by $3.9 million for nine months ended September 30, 2023. |
| Financial Risks | Interest rate fluctuations affecting borrowing costs. | Interest expense of $4.5 million in Q3 2024. |
| Strategic Risks | Challenges in integrating acquisitions. | Cash paid for acquisitions of $54.3 million in 2024. |
Future Growth Prospects for NV5 Global, Inc. (NVEE)
Future Growth Prospects for NV5 Global, Inc.
Analysis of Key Growth Drivers
NV5 Global, Inc. is positioned for significant growth driven by various factors:
- Product Innovations: The company continues to enhance its service offerings in technology and consulting solutions, particularly in geospatial technologies and infrastructure services.
- Market Expansions: NV5 has been expanding its footprint into new geographic markets, leveraging its expertise in infrastructure and environmental services.
- Strategic Acquisitions: The acquisition of Continental Mapping Acquisition Corp. in February 2023 has strengthened its capabilities in geospatial technology.
Future Revenue Growth Projections and Earnings Estimates
For the full year 2024, NV5 anticipates gross revenues between $939 million and $943 million. This represents a growth trajectory supported by a projected increase in demand for its services across various sectors.
The adjusted earnings per share (EPS) for 2024 is estimated to range from $1.15 to $1.19.
Strategic Initiatives or Partnerships That May Drive Future Growth
NV5 is focusing on strategic initiatives to enhance its market position:
- Partnerships: Collaborations with government entities and private sector clients are set to drive growth, especially in infrastructure projects.
- Investment in Technology: Continued investment in advanced technology solutions is expected to enhance service delivery and operational efficiency.
Competitive Advantages That Position the Company for Growth
NV5's competitive advantages include:
- Diverse Service Portfolio: A wide range of services in construction quality assurance, environmental health sciences, and utility services positions NV5 as a one-stop solution provider.
- Strong Financial Performance: The company reported a 31% increase in net income, reaching $17.1 million in the third quarter of 2024.
- Robust Backlog: A record backlog of projects provides a solid foundation for future revenue streams.
Growth Metrics
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Gross Revenues | $250.9 million | $237.5 million | 6% |
| Net Income | $17.1 million | $13.1 million | 31% |
| Adjusted EBITDA | $44.5 million | $36.7 million | 21% |
| Adjusted EPS | $0.44 | $0.36 | 22% |
These metrics indicate a positive trend in financial health and operational efficiency, reinforcing NV5's potential for continued growth in the coming years.
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Updated on 16 Nov 2024
Resources:
- NV5 Global, Inc. (NVEE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of NV5 Global, Inc. (NVEE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View NV5 Global, Inc. (NVEE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.