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($$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.)
The Red Sox keep winning, so what's wrong with some Kenmore Square action. Trillions of dollars will be spent on infrastructure between now and 2020. Anyone involved in the infrastructure industry just gets a little taste. A little taste can go a long way. Large scale investment in transportation, energy, water and other infrastructure systems is important to the U.S. economy’s competitive position and future growth. The shift in focus from monetary to fiscal stimulus in the U.S. raises the prospect of this infrastructure investment becoming a reality. If we’re going to blow up the national debt, I might as well get paid while they are doing it.
Today I bought stock in NV5 (NVEE) at 82.34. That’s right, I got it on the secondary offering dip…hoorah. I will sell it in 4 to 6 weeks at 94.88. Here’s why I like NVEE:
It always starts with the chart…now this one year chart is a little fugly, but if you look at its performace over the last 6 months…yowsa:
NV5 stock is up 110% over the last 12 months, with a trailing PE of only 30.7 and it is certainly riding the anticipated wave of spend spend spend.
NV5 focuses primarily on five business verticals: construction quality assurance, infrastructure engineering and support services, energy, program management and environmental solutions. Projects can include planning, design, engineering, permitting, inspec-tion and field supervision, and management oversight of transportation systems, water/waste-water systems, sports facilities, military base renovations, utilities expansion, renewable energy, pipelines, and education and healthcare facilities.
NV5 has an interesting growth strategy. Naturally their existing project management team goes after bigger and better projects but they also deploy the Pacman strategy, gobbling up smaller companies which already have a backlog of work. Dickerson Wright, the 71 year old CEO, has been playing Pac man for years and years. He’s still here, so he must be good at it. There are over 100,000 engineering firms in the US and these companies are often owned by a guy who has already put his kids through college and wants to play more golf. It’s a never ending supply of growth opportunity for NV5. Dickerson owns over 20% of this company, and he’s in it to win it. He’s not going to be playing golf any time soon. He’ll be doing this until he’s wicked old and looks like Mr. Magoo. Since NV5 went public in 2013, the stock is up 12x. Not bad…not bad at all.
Here are the recently reported Second Quarter 2018 Financial Highlights
How do they get these kinds of number?
This ain’t no secret. NV5’s growth has been recognized publicly. NV5 was ranked #13 on Fortune Magazine’s “Fastest Growing Companies 2017” list and topped the Zweig Group’s “Hot Firm List” for 2017.
In 2017, NV5 made seven strategic acquisitions:
Note the diversified array of services, yet all under the same infrastructure growth scheme. It’s like all of the ingredients in a giant wedding cake. Here comes the bride!
NV5’s primary clients include United States (“U.S.”) federal, state, municipal, and local government agencies, and military and defense clients. They also serve quasi-public and private sector clients from the education, healthcare, energy, and public utilities, including schools, universities, hospitals, health care providers, insurance providers, large utility service providers, and large to small energy producers. That’s right….your tax dollars hard at work!
Want to get a sample of some of the stuff they’ve done? It’s ridiculously impressive:
● Atlantic City Tunnel Connection, NJ
● Port of Miami, Tunnel and Capital Improvement to Pier Wharfs, FL
● Borgata Hotel and Casino, NJ
● Madison Rail Station, NJ
● Boston Logan Airport, MA
● Manhattan Waterfront Greenway Improvement, NY
● Bronx Zoo Astor Court Reconstruction, NY
● Miami International Airport, FL
● Chicago O’Hare International Airport, IL
● New Jersey Turnpike Authority, NJ
● U.S. Department of Veteran Affairs
● New York City Economic Development Corporation, NY
● U.S. Environmental Protection Agency
● New York City Housing Authority, NY
● Utah Department of Transportation, UT
● New York Department of Environmental Protection, NY
● Wynn Resorts, NV
We can go on and on and on and on and on….
NV5 has the following competitive strengths:
Their most skilled engineers and professionals in each service sector work directly with the clients requesting those services, which facilitates relationship based interactions between key employees and their clients, and promotes long-term client relationships.
They have 89 locations in the United States (“U.S.”) and four locations abroad, including offices in Macau, Shanghai, Hong Kong, and the UAE staffed with licensed or certified professionals who understand the local and regional markets in which they serve. This allows the project managers to be with the customers all the time and develop strong, long-term client relationships. Some of their professionals have worked with key clients for decades, which include government transportation agencies, public utilities and local or state municipalities. These kinds of customers never have turnover…they have employees who work for a bazillion years and never want to do anything different. Once NV5 has them, they have them for good bro.
Industry-recognized quality of service. NV5 has developed a strong reputation for quality service based upon their industry-recognized depth of experience, ability to attract and retain quality professionals, expertise across multiple service sectors, and their commitment to strategic growth. Look at all of these industry awards!:
● Engineering News-Record Top 500 Design Firms (#54 in 2017, #75 in 2016, #124 in 2015)
● Engineering News-Record Top 150 Global Firms (#100 in 2017, #141 in 2016)
● Zweig Group 2017 Hot Firm List - #1
● Fortune Magazine’s 2017 100 Fastest Growing Firms List - #13
● Environmental Business Journal Gold Achievement Award in Business Achievement (2017, 2016)
● Environmental Business Journal Achievement Award in Mergers & Acquisitions (2017, 2016, 2015, 2014, 2013)
● Building Design + Construction Magazine’s 2017 Giants 300 Report - #12 Engineering/ Architecture Firm
● Building Design + Construction Magazine’s 2017 Top 30 Hotel Engineering Firms - #1
● American Society of Civil Engineers (ASCE) San Diego 2017 Outstanding Civil Engineering Project Award –Mid-Coast Corridor Pipeline Project
● American Public Works Association (APWA) San Diego 2017 Project of the Year Award – Mid-Coast Corridor Pipeline Project
● American Council of Engineering Companies New Jersey (ACENJ) 2017 Honor Award for the Replacement of Barnegat Bridge project
It’s just ridiculous how good these guys are. They possess the professional and technical expertise necessary to design and manage clients’ infrastructure projects from start to finish. This integrated approach provides the clients with consistency and accountability for the duration of their projects and allows NV5 to create value by maximizing efficiencies of scale.
For NV5 Global in particular, profit margins moving forward are forecasted to expand along with the margins in the Construction industry, whilst at the same time, NVEE’s forecasted ROE of 12.42% exceeds that of the expected 10.23% ROE of the industry (note that this observation is also influenced by relative debt levels). This suggests that ANAL-ysts expect NV5 Global’s return per dollar of equity will exceed the industry due to the earnings attributes identified in our margin analysis.
2018 Outlook
The Company is raising its guidance for Full Year 2018 Gross Revenues, Net Revenues, Adjusted EPS and GAAP EPS, including the impact of acquisitions closed through July 31, 2018. The Company expects Gross Revenues will range from $390 million to $425 million, which represents an increase of 17% to 28% from 2017 Gross Revenues of $333 million. Net Revenues is expected to range from $312 million to $340 million, which represents an increase of 16% to 27% from 2017 Net Revenues of $268 million. The Company expects that Full Year 2018 Adjusted EPS will range from $3.04 per share to $3.35 per share, an increase of 28% to 41%. Furthermore, the Company expects that Full Year 2018 GAAP EPS will range from $2.29 per share to $2.57 per share. This guidance for Gross Revenues, Net Revenues, Adjusted EPS and GAAP EPS excludes anticipated acquisitions for the remainder of 2018. These guys always beat their guidance and all I see is double digit growth numbers. No need for a calculation here. Just putting my money on the window and expect to get it back, and then some, in a couple of months. Here’s what old man Wright had to say:
“We are once again pleased to report excellent performance for the 2018 second quarter, which include positive contributions from all of our operating verticals,” said Dickerson Wright, PE, Chairman and CEO of NV5. “Our employees are very engaged in leading a uniform service delivery to our clients. As a result, we continue to experience increases in revenues, organic growth, EBITDA, net income, earnings per share and backlog.”
So dig those ditches, build those bridges, lay that pipe. I’ll be on the beach drinking a beer and watching the NVEE stock price go up and up and up.
I am HUGE!
$$$MR. MARKET$$$$
The Red Sox keep winning, so what's wrong with some Kenmore Square action. Trillions of dollars will be spent on infrastructure between now and 2020. Anyone involved in the infrastructure industry just gets a little taste. A little taste can go a long way. Large scale investment in transportation, energy, water and other infrastructure systems is important to the U.S. economy’s competitive position and future growth. The shift in focus from monetary to fiscal stimulus in the U.S. raises the prospect of this infrastructure investment becoming a reality. If we’re going to blow up the national debt, I might as well get paid while they are doing it.
Today I bought stock in NV5 (NVEE) at 82.34. That’s right, I got it on the secondary offering dip…hoorah. I will sell it in 4 to 6 weeks at 94.88. Here’s why I like NVEE:
It always starts with the chart…now this one year chart is a little fugly, but if you look at its performace over the last 6 months…yowsa:
NV5 stock is up 110% over the last 12 months, with a trailing PE of only 30.7 and it is certainly riding the anticipated wave of spend spend spend.
NV5 focuses primarily on five business verticals: construction quality assurance, infrastructure engineering and support services, energy, program management and environmental solutions. Projects can include planning, design, engineering, permitting, inspec-tion and field supervision, and management oversight of transportation systems, water/waste-water systems, sports facilities, military base renovations, utilities expansion, renewable energy, pipelines, and education and healthcare facilities.
NV5 has an interesting growth strategy. Naturally their existing project management team goes after bigger and better projects but they also deploy the Pacman strategy, gobbling up smaller companies which already have a backlog of work. Dickerson Wright, the 71 year old CEO, has been playing Pac man for years and years. He’s still here, so he must be good at it. There are over 100,000 engineering firms in the US and these companies are often owned by a guy who has already put his kids through college and wants to play more golf. It’s a never ending supply of growth opportunity for NV5. Dickerson owns over 20% of this company, and he’s in it to win it. He’s not going to be playing golf any time soon. He’ll be doing this until he’s wicked old and looks like Mr. Magoo. Since NV5 went public in 2013, the stock is up 12x. Not bad…not bad at all.
Here are the recently reported Second Quarter 2018 Financial Highlights
- Total Revenues for the quarter were $105.0 million, an increase of 23% year-over-year. Gross Revenues – GAAP for the quarter were $104.0 million, an increase of 24% year-over-year.
- Net Revenues for the quarter were $84.2 million, an increase of 26% year-over-year.
- Organic growth for the quarter was 11%, an increase of 175% compared to the second quarter of 2017.
- EBITDA for the quarter was $13.2 million, or 16% of Net Revenues, an increase of 30% from $10.1 million or 15% of Net Revenues in the second quarter of 2017.
- Net income for the quarter was $7.6 million, an increase of 76% from $4.3 million in the second quarter of 2017.
- Adjusted EPS for the quarter was $0.91 per diluted share, an increase of 63%. from $0.56 per diluted share in the second quarter of 2017.
- GAAP EPS for the quarter was $0.69 per diluted share over 11.0 million shares, an increase of 73% from $0.40 per diluted share over 10.7 million shares in the second quarter of 2017.
- Backlog was $315 million as of June 30, 2018 compared to $261 million as of July 1, 2017.
How do they get these kinds of number?
- Strong management team with 200 years of combined industry experience
- Vertically-structured around 5 core service offerings, rather than geographically like many competitors
- Combination of public and private clients offers stability through business cycles
- Management with skin in the Game - Management and employees own approximately 35% of the company’s shares
- Flat organization and rely on entrepreneurial leaders in each vertical to drive earnings
- On target for goal to reach $600 million in revenues by the end of 2020.
This ain’t no secret. NV5’s growth has been recognized publicly. NV5 was ranked #13 on Fortune Magazine’s “Fastest Growing Companies 2017” list and topped the Zweig Group’s “Hot Firm List” for 2017.
In 2017, NV5 made seven strategic acquisitions:
- Bock & Clark is an American Land Title Association (ALTA) surveying, commercial zoning, and environmental services firm.
- Holdrege & Kull (H&K) is a full service geotechnical engineering firm based in Northern California.
- Lochrane is a civil engineering firm based in Orlando, Florida.
- Energenz is an international energy services company based in Irvine, California.
- RDK Engineers is an East Coast design firm specializing in HVAC, electrical, plumbing, fire protection, commissioning, technology and energy engineering services.
- Marron & Associates is an environmental services firm in New Mexico that provides environmental planning, natural and cultural resources, environmental site assessment, and GIS services.
- Skyscene is a Southern California based aerial mapping company.
Note the diversified array of services, yet all under the same infrastructure growth scheme. It’s like all of the ingredients in a giant wedding cake. Here comes the bride!
NV5’s primary clients include United States (“U.S.”) federal, state, municipal, and local government agencies, and military and defense clients. They also serve quasi-public and private sector clients from the education, healthcare, energy, and public utilities, including schools, universities, hospitals, health care providers, insurance providers, large utility service providers, and large to small energy producers. That’s right….your tax dollars hard at work!
Want to get a sample of some of the stuff they’ve done? It’s ridiculously impressive:
● Atlantic City Tunnel Connection, NJ
● Port of Miami, Tunnel and Capital Improvement to Pier Wharfs, FL
● Borgata Hotel and Casino, NJ
● Madison Rail Station, NJ
● Boston Logan Airport, MA
● Manhattan Waterfront Greenway Improvement, NY
● Bronx Zoo Astor Court Reconstruction, NY
● Miami International Airport, FL
● Chicago O’Hare International Airport, IL
● New Jersey Turnpike Authority, NJ
● U.S. Department of Veteran Affairs
● New York City Economic Development Corporation, NY
● U.S. Environmental Protection Agency
● New York City Housing Authority, NY
● Utah Department of Transportation, UT
● New York Department of Environmental Protection, NY
● Wynn Resorts, NV
We can go on and on and on and on and on….
NV5 has the following competitive strengths:
Their most skilled engineers and professionals in each service sector work directly with the clients requesting those services, which facilitates relationship based interactions between key employees and their clients, and promotes long-term client relationships.
They have 89 locations in the United States (“U.S.”) and four locations abroad, including offices in Macau, Shanghai, Hong Kong, and the UAE staffed with licensed or certified professionals who understand the local and regional markets in which they serve. This allows the project managers to be with the customers all the time and develop strong, long-term client relationships. Some of their professionals have worked with key clients for decades, which include government transportation agencies, public utilities and local or state municipalities. These kinds of customers never have turnover…they have employees who work for a bazillion years and never want to do anything different. Once NV5 has them, they have them for good bro.
Industry-recognized quality of service. NV5 has developed a strong reputation for quality service based upon their industry-recognized depth of experience, ability to attract and retain quality professionals, expertise across multiple service sectors, and their commitment to strategic growth. Look at all of these industry awards!:
● Engineering News-Record Top 500 Design Firms (#54 in 2017, #75 in 2016, #124 in 2015)
● Engineering News-Record Top 150 Global Firms (#100 in 2017, #141 in 2016)
● Zweig Group 2017 Hot Firm List - #1
● Fortune Magazine’s 2017 100 Fastest Growing Firms List - #13
● Environmental Business Journal Gold Achievement Award in Business Achievement (2017, 2016)
● Environmental Business Journal Achievement Award in Mergers & Acquisitions (2017, 2016, 2015, 2014, 2013)
● Building Design + Construction Magazine’s 2017 Giants 300 Report - #12 Engineering/ Architecture Firm
● Building Design + Construction Magazine’s 2017 Top 30 Hotel Engineering Firms - #1
● American Society of Civil Engineers (ASCE) San Diego 2017 Outstanding Civil Engineering Project Award –Mid-Coast Corridor Pipeline Project
● American Public Works Association (APWA) San Diego 2017 Project of the Year Award – Mid-Coast Corridor Pipeline Project
● American Council of Engineering Companies New Jersey (ACENJ) 2017 Honor Award for the Replacement of Barnegat Bridge project
It’s just ridiculous how good these guys are. They possess the professional and technical expertise necessary to design and manage clients’ infrastructure projects from start to finish. This integrated approach provides the clients with consistency and accountability for the duration of their projects and allows NV5 to create value by maximizing efficiencies of scale.
For NV5 Global in particular, profit margins moving forward are forecasted to expand along with the margins in the Construction industry, whilst at the same time, NVEE’s forecasted ROE of 12.42% exceeds that of the expected 10.23% ROE of the industry (note that this observation is also influenced by relative debt levels). This suggests that ANAL-ysts expect NV5 Global’s return per dollar of equity will exceed the industry due to the earnings attributes identified in our margin analysis.
2018 Outlook
The Company is raising its guidance for Full Year 2018 Gross Revenues, Net Revenues, Adjusted EPS and GAAP EPS, including the impact of acquisitions closed through July 31, 2018. The Company expects Gross Revenues will range from $390 million to $425 million, which represents an increase of 17% to 28% from 2017 Gross Revenues of $333 million. Net Revenues is expected to range from $312 million to $340 million, which represents an increase of 16% to 27% from 2017 Net Revenues of $268 million. The Company expects that Full Year 2018 Adjusted EPS will range from $3.04 per share to $3.35 per share, an increase of 28% to 41%. Furthermore, the Company expects that Full Year 2018 GAAP EPS will range from $2.29 per share to $2.57 per share. This guidance for Gross Revenues, Net Revenues, Adjusted EPS and GAAP EPS excludes anticipated acquisitions for the remainder of 2018. These guys always beat their guidance and all I see is double digit growth numbers. No need for a calculation here. Just putting my money on the window and expect to get it back, and then some, in a couple of months. Here’s what old man Wright had to say:
“We are once again pleased to report excellent performance for the 2018 second quarter, which include positive contributions from all of our operating verticals,” said Dickerson Wright, PE, Chairman and CEO of NV5. “Our employees are very engaged in leading a uniform service delivery to our clients. As a result, we continue to experience increases in revenues, organic growth, EBITDA, net income, earnings per share and backlog.”
So dig those ditches, build those bridges, lay that pipe. I’ll be on the beach drinking a beer and watching the NVEE stock price go up and up and up.
I am HUGE!
$$$MR. MARKET$$$$
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