NV5 Holdings Inc ((NVEE)) has held its Q4 earnings call. Read on for the main highlights of the call.
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NV5 Holdings Inc’s recent earnings call painted a picture of mixed outcomes for the company. While strong revenue growth and expanded margins were evident, challenges such as declining net income and cash flow issues were equally noted. The largest backlog in the company’s history and successful cross-selling initiatives provide optimism for future growth, yet the impact of acquisition costs and a drop in net income remain areas of concern.
Record Revenue Growth
NV5 Holdings Inc achieved a notable milestone with record revenue growth of 10% year-over-year. The company’s revenue increased from $857 million in 2023 to $941 million in 2024, which speaks to its solid performance in the face of industry challenges.
Gross Margin Expansion
The earnings call highlighted a significant achievement in gross margin expansion, which rose from 49.7% in 2023 to 51.3% in 2024. This improvement underscores NV5’s ability to optimize operations and drive profitability.
Largest Backlog in Company History
Entering 2025, NV5 boasts its largest backlog ever, amounting to $904 million. This backlog represents 88% of the low end of the 2025 revenue guidance and is a testament to the company’s robust project pipeline and future revenue potential.
Successful Cross-Selling Initiatives
NV5’s cross-selling efforts have borne fruit, particularly in high-margin recurring services like fire protection consulting. Notably, these initiatives yielded $1 million in cross-selling revenue within its first month, highlighting the success of this strategy.
Geospatial Segment International Expansion
The Geospatial segment’s international expansion was marked by securing a multimillion-dollar contract for Topobathymetric LiDAR mapping in New Zealand. This achievement showcases NV5’s capability to extend its reach and expertise across global markets.
Net Income Decline
Despite positive revenue growth, NV5 experienced a decline in net income, which fell from $43.7 million in 2023 to $28 million in 2024. This decrease, accompanied by a drop in GAAP diluted EPS from $0.71 to $0.44, raises concerns about profitability.
Impact of Acquisition-Related Costs
The financial outcomes were impacted by acquisition-related costs amounting to $3.9 million and $2.3 million in intangible amortization expenses during Q4 2024. These costs weighed on GAAP results, presenting challenges in maintaining profitability.
Decline in Cash from Operations
Cash from operations saw a decrease from $62.2 million in 2023 to $57.3 million in 2024, primarily attributed to working capital timing issues. This decline highlights the need for effective cash flow management.
Forward-Looking Guidance
In their forward-looking statements, NV5 provided an optimistic outlook for 2025 and beyond. The company set a revenue target of $1.6 billion by 2028, with expectations of mid to high-single-digit organic growth and strategic acquisitions. Additionally, NV5 plans to enhance EBITDA margins by 150 basis points through cost optimization and leveraging their Geospatial technology across segments. The revenue guidance for 2025 is set between $1.026 billion and $1.045 billion, with adjusted earnings per share projected between $1.27 and $1.37.
In conclusion, NV5 Holdings Inc’s earnings call reveals a company navigating both opportunities and challenges. The strong revenue growth and backlog provide a solid foundation for future expansion, yet the decline in net income and cash flow issues warrant attention. As NV5 continues to implement strategic initiatives, its commitment to enhancing profitability and growth remains clear.
