August 7, 2018 | 4:15 AM by Fahad Khalid | fkhalid@jaguaranalytics.com

Behind The Numbers – NV5 Global (NVEE) More Contracts and More M&A

More than a year ago on May 4, 2017, we first presented a bull case for NVEE on Jaguar home page with stock trading at $38. See HERE. It has been one of most powerful fundamental and technical momentum growth stories to follow in small cap space and still largely remains off the radar. Since that write up, stock is up +134%, closing at $88.95 yesterday after reporting another strong quarter.

On August 2, company posted +11% organic growth, +24% revenue growth, +30% EBITDA growth and +63% EPS growth.

But it gets even better with management providing many forward looking comments that we believe are still not fully factored into consensus view.

Behind The Numbers – In California, company executed $24 million contract with Caltrans. In New York, company received $60 million multi-year contract. Power group, which was formed only 1 quarter ago, received its first $5 million contract from Southern California Gas to expand geographically into Texas. The building tech and science group (called BTS) continues to expand and was awarded MEP work at the LAX Terminal 4 as well as MEP work at the Charlotte Douglas International Airport in North Carolina. In Arlington, Virginia, received contract to help build Beirut US Embassy. BTS group recently acquired CSA Inc and now it has MEP work for 11 international airports at 420 duty-free locations. Hong Kong office is providing retro commissioning work on the Hong Kong-Macau Ferry Terminal. And management is still not done yet, looking for more tuck-in acquisitions as CEO commented:

“NV5 is still very focused on mergers and acquisitions. Our pipeline of opportunities is full and we anticipate additional acquisition opportunities for the balance of the year which should expand our geographic footprint and service lines.”

Micheal Shilsky of Seaport Global asked about M&A in earnings conference call to which the CEO responded as following:

“We have 10 to 15 opportunities that we’re looking at. We’re in due diligence on some now. We have some that are in various stages of this due diligence. So we’re not backing away from the acquisition front and it’s not linear. We can’t say in this quarter we’re to do two ad in the second quarter three, and then maybe in the third quarter four or five. It’s just when they happen and when we close. But Mike, we are very – still very, very aggressive in acquisitions and we think that we will continue to do that.”

There you go. Straight from the CEO. Doesn’t get any clearer than that. Expect more contracts and more M&A announcements in coming months.

#NVEE
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