NV5 Global (NVEE)
Summary and History
My history with NV5 is only a couple days long. TracyK mentioned she’d bought shares, and when I asked about the company she replied that she heard about it on one of the Motley Fool podcasts. I tracked down the segment: https://www.fool.com/investing/2017/10/24/why-nv5-global-sho…
That’s a pretty good summary of what they do. Fairly compelling story. They’re an engineering and consulting services company in the infrastructure industry. They grow by many small acquisitions, but they increase profitability all the while. The founder/CEO owns 10% of the company and altogether insiders own 35%, I believe. That should align management’s interest with ours pretty well.
The slide deck also provides some very helpful company info: https://seekingalpha.com/article/4123490-nv5-holdings-2017-q…
100 locations worldwide
2,000 employees (1,300 technically licensed)
#13 on Fortune’s fastest growing companies 2017
#54 on ENR’s Top 500 Design Firms
#1 on Zweig’s 2017 Hot Firm list
#1 on BD+C’s Hotel Engineering Firms (https://www.bdcnetwork.com/top-30-hotel-engineering-firms)
Huge TAM – basically, infrastructure improvement is a job that’s never finished
Mkt Cap: 580M (ie, very very small)
Trailing PE Ratio (non-GAAP): 25
Revenue is given as “total” and “GAAP” but on their Income Statement they show GAAP. I’ll go with that for now. It’s not far off anyway, with “total” coming in at 242.4M YTD and “GAAP” coming in at 239.1M.
Revenue (in millions) Mar Jun Sep Dec 2016: 45 56 60 63 2017: 64 84 91 Revenue Growth Mar Jun Sep Dec 2016: 54% 62% 52% 49% 2017: 43% 50% 52%
Now make no mistake, this is due to acquisitions. They say it right on the press release:
Organic revenue growth for the first nine months of 2017 was 4%. Obviously 4% isn’t enough to get this board excited, but the job they’re doing with acquisitions (and hopefully can continue to do) is impressive. It bears out in the EPS numbers:
EPS (non-GAAP) Mar Jun Sep Dec 2016: 0.32 0.38 0.41 0.44 2017: 0.39 0.56 0.75 EPS Growth Mar Jun Sep Dec 2016: 39% 23% -7% 7% 2017: 22% 47% 83%
So it seems the acquisitions are accretive to EPS rather quickly. Also, I think it’s possible they could show more operating leverage in addition to the growth, resulting in the much beloved (for good reason) multiplier effect.
Unsurprisingly due to acquisitions, the balance sheet isn’t the best I’ve ever seen, but it doesn’t particularly scare me either, especially since they’re consistently profitable.
They just raised it. Current guidance is:
2017 Revenue: 340M - 358M
2017 EPS (non-GAAP): 2.30 - 2.46
They even go to the trouble to say this “excludes any acquisitions completed in the remainder of 2017.” Haha
I don’t see Q4 outlook listed, but doing a little math it would be:
Dec Q Revenue: 97.6M - 115.6M
Dec Q EPS (non-GAAP): 0.60 - 0.76
An engineering consulting company in the infrastructure industry is a pretty big divergence for me, but I liked the story enough to take a small position. If nothing else, I’ll learn something.