NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
Note 1 – Organization and Nature of Business Operations
Business
NV5 Global, Inc. and its subsidiaries (collectively, the “Company,” or “NV5 Global”) is a provider of professional and technical engineering and consulting solutions to public and private sector clients in the infrastructure, utility services, construction, real estate, and environmental markets, operating nationwide and abroad. The Company’s clients include the U.S. federal, state and local governments, and the private sector. NV5 Global provides a wide range of services, including, but not limited to:
|
|
|
|
|
|
|
|
|
|
|
|
●
|
Utility services
|
●
|
MEP & technology engineering
|
●
|
LNG services
|
●
|
Commissioning
|
●
|
Engineering
|
●
|
Program management
|
●
|
Civil program management
|
●
|
Environmental health & safety
|
●
|
Surveying
|
●
|
Real estate transaction services
|
●
|
Testing, inspection & consulting (TIC)
|
●
|
Energy efficiency services
|
●
|
Code compliance consulting
|
●
|
3D geospatial data modeling
|
●
|
Forensic engineering
|
●
|
Environmental & natural resources
|
●
|
Litigation support
|
●
|
Robotic survey solutions
|
●
|
Ecological studies
|
●
|
Geospatial data applications & software
|
Fiscal Year
The Company operates on a "52/53 week" fiscal year ending on the Saturday closest to the calendar quarter end, and fiscal 2021 contains 52 weeks compared to fiscal 2020, which contained 53 weeks. As a result, the third quarter of fiscal 2021 ended October 2, 2021 included 13 weeks compared to the third quarter of fiscal 2020 ended October 3, 2020, which included 14 weeks.
Impact of COVID-19 on Our Business
The COVID-19 pandemic has significantly impacted global stock markets and economies. The Company is closely monitoring the impact of the outbreak of COVID-19 on all aspects of its business, including how it will impact the Company's customers and employees. Some of the Company's services were affected, primarily its Geospatial segment, real estate transactional services and hospitality-related services. In particular, due to COVID-19 restrictions, some of the Company's casino and hotel projects have been delayed. As U.S. and international economies begin to reopen and with a vaccine underway, real estate transactional services have recovered, however the Company is unable to predict the ultimate impact that it may have on its business, future results of operations, financial position, or cash flows. The extent to which the Company's operations may be impacted by the COVID-19 pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the outbreak and actions by government authorities to contain the outbreak or treat its impact. The Company intends to continue to monitor the impact of COVID-19 pandemic on its business closely.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The consolidated financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting of interim financial information. Pursuant to such rules and
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
In the opinion of management, the accompanying unaudited interim consolidated financial statements of the Company contain all adjustments necessary to present fairly the financial position and results of operations of the Company as of the dates and for the periods presented. Accordingly, these statements should be read in conjunction with the consolidated financial statements and notes contained in the Company’s Annual Report on Form 10-K for the year ended January 2, 2021 (the “2020 Form 10-K”). The results of operations and cash flows for the interim periods presented are not necessarily indicative of the results to be expected for any future interim period or for the full 2021 fiscal year.
Performance Obligations
To determine the proper revenue recognition method, the Company evaluates whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. The majority of the Company's contracts have a single performance obligation as the promise to transfer the individual goods or services that is not separately identifiable from other promises in the contracts and therefore, is not distinct.
The Company’s performance obligations are satisfied as work progresses or at a point in time. Revenue on the Company's cost-reimbursable contracts is recognized over time using direct costs incurred or direct costs incurred to date as compared to the estimated total direct costs for performance obligations because it depicts the transfer of control to the customer. Contract costs include labor, sub-consultant services, and other direct costs.
Gross revenue from services transferred to customers at a point in time is recognized when the customer obtains control of the asset, which is generally upon delivery and acceptance by the customer of the reports and/or analysis performed.
As of October 2, 2021, the Company had $740,043 of remaining performance obligations, of which $613,813 is expected to be recognized over the next 12 months and the majority of the balance over the next 24 months. Contracts for which work authorizations have been received are included in performance obligations. Most of the Company's government contracts are multi-year contracts for which funding is appropriated on an annual basis, therefore performance obligations include only those amounts that have been funded and authorized and does not reflect the full amounts the Company may receive over the term of such contracts. In the case of non-government contracts and project awards, performance obligations include future revenue at contract or customary rates, excluding contract renewals or extensions that are at the discretion of the client. For contracts with a not-to-exceed maximum amount, the Company includes revenue from such contracts in performance obligations to the extent of the remaining estimated amount.
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed receivables, unbilled receivables (contract assets), and billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities) on the Consolidated Balance Sheet. The liability “Billings in excess of costs and estimated earnings on uncompleted contracts” represents billings in excess of revenues recognized on these contracts as of the reporting date. This liability is generally classified as current. Revenue recognized that was included in the contract liability balance at the beginning of the fiscal year was $524 and $23,882 for the three and nine months ended October 2, 2021.
Goodwill and Intangible Assets
Goodwill is the excess of consideration paid for an acquired entity over the amounts assigned to assets acquired, including other identifiable intangible assets and liabilities assumed in a business combination. To determine the amount of goodwill resulting from a business combination, the Company performs an assessment to determine the acquisition date fair value of the acquired company’s tangible and identifiable intangible assets and liabilities.
Goodwill is required to be evaluated for impairment on an annual basis or whenever events or changes in circumstances indicate the asset may be impaired. An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
carrying amount. These qualitative factors include: macroeconomic and industry conditions, cost factors, overall financial performance and other relevant entity-specific events. If the entity determines that this threshold is met, then the Company may apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The Company determines fair value through multiple valuation techniques, and weights the results accordingly. NV5 Global is required to make certain subjective and complex judgments in assessing whether an event of impairment of goodwill has occurred, including assumptions and estimates used to determine the fair value of its reporting units. The Company has elected to perform its annual goodwill impairment review as of August 1 of each year. The Company conducts its annual impairment tests on the goodwill using the quantitative method of evaluating goodwill.
As of August 1, 2021, the Company conducted its annual impairment tests using the quantitative method of evaluating goodwill. Based on the quantitative analyses the Company determined the fair value of each of the reporting units exceeded its carrying value. Therefore, the goodwill was not impaired and the Company did not recognize an impairment charge relating to goodwill as of August 1, 2021. Furthermore, there were no indicators, events or changes in circumstances that would indicate goodwill was impaired during the period from August 2, 2021 through October 2, 2021.
Identifiable intangible assets primarily include customer backlog, customer relationships, trade names, non-compete agreements, and developed technology. Amortizable intangible assets are amortized on a straight-line basis over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the assets may be impaired. If an indicator of impairment exists, the Company compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then impairment, if any, is measured as the difference between fair value and carrying value, with fair value typically based on a discounted cash flow model. There were no indicators, events or changes in circumstances that would indicate intangible assets were impaired during the nine months ended October 2, 2021.
See Note 8, Goodwill and Intangible Assets, for further information on goodwill and identified intangibles.
There have been no material changes in the Company's significant accounting policies described in the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended January 2, 2021.
Note 3 – Recent Accounting Pronouncements
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848) ("ASU 2020-04"). This ASU provides optional expedients and exceptions to the current guidance on contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts and hedging relationships that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued due to reference rate reform. The guidance was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. The Company applied this guidance to its Second A&R Credit Agreement and there was no impact to its financial statements as a result.
Note 4 – Earnings per Share
Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period, excluding unvested restricted shares. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. The effect of potentially dilutive securities is not considered during periods of loss or if the effect is anti-dilutive.
The weighted average number of shares outstanding in calculating basic earnings per share for the nine months ended October 2, 2021 and October 3, 2020 exclude 767,622 and 806,457 non-vested restricted shares, respectively. During the three and nine months ended October 2, 2021, there were 11,081 and 6,612 weighted average securities which are not included in the calculation of diluted weighted average shares outstanding because their impact is anti-dilutive or their performance conditions have not been met. During the three and nine months ended October 3, 2020, there were 32,859 and 72,634 weighted average securities which are not included in the calculation of diluted weighted average shares outstanding because their impact is anti-dilutive.
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
The following table represents a reconciliation of the net income and weighted average shares outstanding for the calculation of basic and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
October 2, 2021
|
|
October 3, 2020
|
|
October 2, 2021
|
|
October 3, 2020
|
Numerator:
|
|
|
|
|
|
|
|
Net income – basic and diluted
|
$
|
12,573
|
|
|
$
|
7,754
|
|
|
$
|
31,691
|
|
|
$
|
16,445
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding
|
14,593,623
|
|
|
12,434,600
|
|
|
13,963,372
|
|
|
12,328,448
|
|
Effect of dilutive non-vested restricted shares and units
|
451,892
|
|
|
269,713
|
|
|
497,287
|
|
|
267,130
|
|
Effect of issuable shares related to acquisitions
|
24,145
|
|
|
45,604
|
|
|
26,024
|
|
|
54,529
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding
|
15,069,660
|
|
|
12,749,917
|
|
|
14,486,683
|
|
|
12,650,107
|
|
Secondary Offering
On March 10, 2021, the Company priced an underwritten public offering of 1,612,903 shares of its common stock (the "Firm Shares") at a price of $93.00 per share. The shares were sold pursuant to an effective registration statement on Form S-3 (Registration No. 333-237167). In addition, the Company also granted the underwriters a 30-day option to purchase 241,935 additional shares (the "Option Shares") of its common stock at the public offering price. On March 15, 2021, the Company closed on the Firm Shares, for which it received net proceeds of approximately $140,642 after deducting the underwriting discount and estimated offering expenses payable by the Company. On April 13, 2021, the underwriters exercised the Option Shares and the Company received net proceeds of $21,150 after deducting the underwriting discount and estimated offering expenses payable by the Company.
Note 5 – Business Acquisitions
2021 Acquisitions
The Company has completed five acquisitions during 2021 which are not material individually or in the aggregate. The aggregate purchase price of all five acquisitions is $43,777, including $24,476 of cash, $10,680 of promissory notes, $5,145 of the Company's common stock, and potential earn-outs of up to $23,900 payable in cash and stock, which was recorded at an estimated fair value of $3,476. An option-based model was used to determine the fair value of the earn-outs, which is a generally accepted valuation technique that embodies all significant assumption types. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed, the Company engaged an independent third-party valuation specialist to assist in the determination of fair values. The final determination of the fair value of assets and liabilities will be completed within the one-year measurement period as required by ASC 805. The 2021 acquisitions will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, accounts receivable, and certain fixed assets.
2020 Acquisitions
The Company completed one acquisition during 2020 which was not material. The aggregate purchase price was $1,949, including $882 of cash, $500 in a promissory note, $312 of the Company's common stock, and $255 in additional contingent payments. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed the Company performed a fair value assessment.
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date for the acquisitions closed during the nine months ended October 2, 2021 and the fiscal year ended January 2, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
Fiscal Year Ended
|
|
October 2, 2021
|
|
January 2, 2021
|
Cash
|
$
|
907
|
|
|
$
|
—
|
|
Billed and unbilled receivables, net
|
6,799
|
|
|
1,439
|
|
Right-of-use assets
|
2,633
|
|
|
—
|
|
Property and equipment
|
3,534
|
|
|
28
|
|
Prepaid expenses
|
497
|
|
|
33
|
|
Other assets
|
5
|
|
|
28
|
|
Intangible assets:
|
|
|
|
Customer relationships
|
12,921
|
|
|
237
|
|
Trade name
|
823
|
|
|
30
|
|
Customer backlog
|
1,903
|
|
|
56
|
|
|
|
|
|
Non-compete
|
2,926
|
|
|
5
|
|
Total Assets
|
$
|
32,948
|
|
|
$
|
1,856
|
|
Liabilities
|
(5,888)
|
|
|
(345)
|
|
Deferred tax liabilities
|
(5,601)
|
|
|
(86)
|
|
Net assets acquired
|
$
|
21,459
|
|
|
$
|
1,425
|
|
|
|
|
|
Consideration paid (Cash, Notes and/or stock)
|
$
|
40,301
|
|
|
$
|
1,694
|
|
Contingent earn-out liability (Cash and stock)
|
3,476
|
|
|
255
|
|
Total Consideration
|
$
|
43,777
|
|
|
$
|
1,949
|
|
Excess consideration over the amounts assigned to the net assets acquired (Goodwill)
|
$
|
22,318
|
|
|
$
|
524
|
|
Goodwill was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is attributable to the reputation of the business acquired, the workforce in place and the synergies to be achieved from these acquisitions. See Note 8, Goodwill and Intangible Assets, for further information on fair value adjustments to goodwill and identified intangibles.
The consolidated financial statements of the Company include the results of operations from any business acquired from their respective dates of acquisition. The following table presents the results of operations of businesses acquired from their respective dates of acquisition for the three and nine months ended October 2, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
October 2, 2021
|
|
October 2, 2021
|
Gross revenues
|
$
|
9,026
|
|
|
$
|
19,007
|
|
Income before income taxes
|
$
|
871
|
|
|
$
|
4,158
|
|
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
The following table presents the unaudited, pro forma consolidated results of operations (in thousands, except per share amounts) for the three and nine months ended October 2, 2021 and October 3, 2020 as if the acquisitions had occurred at the beginning of fiscal year 2020. The pro forma information provided below is compiled from the pre-acquisition financial information and includes pro forma adjustments for amortization expense, adjustments to certain expenses, and the income tax impact of these adjustments. The pro forma results are not necessarily indicative of (i) the results of operations that would have occurred had the operations of these acquisitions actually been acquired at the beginning of fiscal year 2020 or (ii) future results of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
October 2, 2021
|
|
October 3, 2020
|
|
October 2, 2021
|
|
October 3, 2020
|
Gross revenues
|
$
|
186,166
|
|
|
$
|
177,689
|
|
|
$
|
527,824
|
|
|
$
|
520,412
|
|
Net income
|
$
|
12,696
|
|
|
$
|
7,955
|
|
|
$
|
32,059
|
|
|
$
|
16,869
|
|
Basic earnings per share
|
$
|
0.87
|
|
|
$
|
0.64
|
|
|
$
|
2.30
|
|
|
$
|
1.36
|
|
Diluted earnings per share
|
$
|
0.84
|
|
|
$
|
0.62
|
|
|
$
|
2.21
|
|
|
$
|
1.33
|
|
Note 6 – Billed and Unbilled Receivables
Billed and Unbilled Receivables consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
October 2, 2021
|
|
January 2, 2021
|
Billed receivables
|
$
|
135,590
|
|
|
$
|
149,233
|
|
Less: allowance for doubtful accounts
|
(5,809)
|
|
|
(6,528)
|
|
Billed receivables, net
|
$
|
129,781
|
|
|
$
|
142,705
|
|
|
|
|
|
Unbilled receivables
|
$
|
88,685
|
|
|
$
|
76,609
|
|
Less: allowance for doubtful accounts
|
(2,286)
|
|
|
(2,151)
|
|
Unbilled receivables, net
|
$
|
86,399
|
|
|
$
|
74,458
|
|
Note 7 – Property and Equipment, net
Property and equipment, net, consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
October 2, 2021
|
|
January 2, 2021
|
Office furniture and equipment
|
$
|
3,933
|
|
|
$
|
3,782
|
|
Computer equipment
|
17,357
|
|
|
15,597
|
|
Survey and field equipment
|
31,237
|
|
|
22,866
|
|
Leasehold improvements
|
6,354
|
|
|
6,322
|
|
Total
|
58,881
|
|
|
48,567
|
|
Less: accumulated depreciation
|
(29,558)
|
|
|
(21,556)
|
|
Property and equipment, net
|
$
|
29,323
|
|
|
$
|
27,011
|
|
Depreciation expense was $2,974 and $8,413 for the three and nine months ended October 2, 2021, respectively, of which $1,353 and $3,633 was included in other direct costs for the three and nine months ended October 2, 2021. Depreciation expense was $2,786 and $8,212 for the three and nine months ended October 3, 2020, respectively, of which $1,215 and $3,394 was included in other direct costs for the three and nine months ended October 3, 2020, respectively.
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
Note 8 – Goodwill and Intangible Assets
Goodwill
The changes in the carrying value by reportable segment for the nine months ended October 2, 2021 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
January 2, 2021
|
|
2021 Acquisitions
|
|
Adjustments
|
|
October 2, 2021
|
INF
|
$
|
87,333
|
|
|
$
|
3,392
|
|
|
$
|
—
|
|
|
$
|
90,725
|
|
BTS
|
78,848
|
|
|
8,341
|
|
|
86
|
|
|
87,275
|
|
GEO
|
177,615
|
|
|
10,585
|
|
|
—
|
|
|
188,200
|
|
Total
|
$
|
343,796
|
|
|
$
|
22,318
|
|
|
$
|
86
|
|
|
$
|
366,200
|
|
During the nine months ended October 2, 2021, the Company recorded goodwill related to acquisitions of $22,318 and a purchase price allocation adjustment of $86 that increased goodwill for the acquisition related to fiscal 2020.
Intangible Assets
Intangible assets, net, as of October 2, 2021 and January 2, 2021 consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 2, 2021
|
|
January 2, 2021
|
|
Gross
Carrying
Amount
|
|
Accumulated Amortization
|
|
Net
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated Amortization
|
|
Net
Amount
|
Finite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
Customer relationships(1)
|
$
|
195,969
|
|
|
$
|
(60,241)
|
|
|
$
|
135,728
|
|
|
$
|
183,048
|
|
|
$
|
(46,506)
|
|
|
$
|
136,542
|
|
Trade name(2)
|
15,340
|
|
|
(14,168)
|
|
|
1,172
|
|
|
14,517
|
|
|
(12,099)
|
|
|
2,418
|
|
Customer backlog(3)
|
27,014
|
|
|
(23,795)
|
|
|
3,219
|
|
|
25,111
|
|
|
(19,709)
|
|
|
5,402
|
|
Non-compete(4)
|
12,299
|
|
|
(8,476)
|
|
|
3,823
|
|
|
9,373
|
|
|
(6,909)
|
|
|
2,464
|
|
Developed technology(5)
|
32,944
|
|
|
(8,389)
|
|
|
24,555
|
|
|
32,944
|
|
|
(4,839)
|
|
|
28,105
|
|
Total finite-lived intangible assets
|
$
|
283,566
|
|
|
$
|
(115,069)
|
|
|
$
|
168,497
|
|
|
$
|
264,993
|
|
|
$
|
(90,062)
|
|
|
$
|
174,931
|
|
(1) Amortized on a straight-line basis over estimated lives (5 to 12 years)
(2) Amortized on a straight-line basis over their estimated lives (1 to 3 years)
(3) Amortized on a straight-line basis over their estimated lives (1 to 5 years)
(4) Amortized on a straight-line basis over their contractual lives (2 to 5 years)
(5) Amortized on a straight-line basis over their estimated lives (5 to 7 years)
Amortization expense was $8,487 and $24,984 during the three and nine months ended October 2, 2021, respectively, and $8,615 and $26,468 during the three and nine months ended October 3, 2020, respectively.
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
Note 9 – Accrued Liabilities
Accrued liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
October 2, 2021
|
|
January 2, 2021
|
Current portion of lease liability
|
$
|
12,981
|
|
|
$
|
13,161
|
|
Accrued vacation
|
14,012
|
|
|
11,998
|
|
Payroll and related taxes
|
16,954
|
|
|
10,744
|
|
Benefits
|
4,716
|
|
|
4,764
|
|
Accrued operating expenses
|
4,425
|
|
|
2,792
|
|
Professional liability reserve
|
1,063
|
|
|
949
|
|
Accrued interest expense
|
688
|
|
|
506
|
|
Income tax payable and other liabilities
|
412
|
|
|
411
|
|
Total
|
$
|
55,251
|
|
|
$
|
45,325
|
|
Note 10 – Notes Payable and Other Obligations
Notes payable and other obligations consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
October 2, 2021
|
|
January 2, 2021
|
Senior credit facility
|
$
|
138,750
|
|
|
$
|
283,832
|
|
Uncollateralized promissory notes
|
27,732
|
|
|
23,175
|
|
Finance leases
|
2,432
|
|
|
2,994
|
|
Other obligations
|
1,971
|
|
|
1,151
|
|
Debt issuance costs, net of amortization
|
(3,497)
|
|
|
(3,630)
|
|
Total notes payable and other obligations
|
167,388
|
|
|
307,522
|
|
Current portion of notes payable and other obligations
|
17,526
|
|
|
24,196
|
|
Notes payable and other obligations, less current portion
|
$
|
149,862
|
|
|
$
|
283,326
|
|
As of October 2, 2021 and January 2, 2021, the carrying amount of debt obligations approximates their fair values based on Level 2 inputs as the terms are comparable to terms currently offered by local lending institutions for arrangements with similar terms to industry peers with comparable credit characteristics.
Future contractual maturities of long-term debt as of October 2, 2021 are as follows:
|
|
|
|
|
|
|
|
|
Fiscal year
|
|
Amount
|
Remainder of 2021
|
|
$
|
9,025
|
|
2022
|
|
12,466
|
|
2023
|
|
6,081
|
|
2024
|
|
3,196
|
|
2025
|
|
710
|
|
2026 and thereafter
|
|
139,407
|
|
Total
|
|
$
|
170,885
|
|
Senior Credit Facility
On August 13, 2021 (the "Closing Date"), the Company amended and restated its Credit Agreement (The "Second A&R Credit Agreement"), originally dated December 7, 2016 and as amended to the Closing Date, with Bank of America, N.A. ("Bank of America"), as administrative agent, swingline lender and letter of credit issuer, the other lenders party thereto, and certain of
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
the Company's subsidiaries as guarantors. Pursuant to the Second A&R Credit Agreement, the previously drawn term commitments of $150,000 and revolving commitments totaling $215,000 in the aggregate were converted into revolving commitments totaling $400,000 in the aggregate. These revolving commitments are available through August 13, 2026 (the "Maturity Date") and an aggregate amount of approximately $138,750 was drawn under the Second A&R Credit Amendment on the Closing Date to repay previously existing borrowings under the term and revolving facilities prior to such amendment and restatement. The Second A&R Credit Agreement also includes an accordion feature permitting the Company to request an increase in the revolving facility under the Second A&R Credit Agreement by an additional amount of up to $200,000 in the aggregate.
Borrowings under the Second A&R Credit Agreement bear interest at variable rates which are, at the Company's option, tied to a Eurocurrency rate equal to LIBOR (London Interbank Offered Rate) plus an applicable margin or a base rate denominated in U.S. dollars. Interest rates remain subject to change based on the Company's consolidated leverage ratio. As of October 2, 2021 the Company's interest rate was 1.1%.
The Second A&R Credit Agreement contains financial covenants that require NV5 Global to maintain a consolidated net leverage ratio (the ratio of the Company's pro forma consolidated net funded indebtedness to the Company's pro forma consolidated EBITDA for the most recently completed measurement period) of no greater than 4.00 to 1.00.
These financial covenants also require the Company to maintain a consolidated fixed charge coverage ratio of no less than 1.10 to 1.00 as of the end of any measurement period. As of October 2, 2021, the Company was in compliance with the financial covenants.
The Second A&R Credit Agreement contains covenants that may have the effect of limiting the Company's ability to, among other things, merge with or acquire other entities, enter into a transaction resulting in a Change in Control, create certain new liens, incur certain additional indebtedness, engage in certain transactions with affiliates, or engage in new lines of business or sell a substantial part of their assets. The Second A&R Credit Agreement also contains customary events of default, including (but not limited to) a default in the payment of principal or, following an applicable grace period, interest, breaches of the Company's covenants or warranties under the Second A&R Credit Agreement, payment default or acceleration of certain indebtedness, certain events of bankruptcy, insolvency or liquidation, certain judgments or uninsured losses, changes in control and certain liabilities related to ERISA based plans.
The Second A&R Credit Agreement limits the payment of cash dividends (together with certain other payments that would constitute a "Restricted Payment" within the meaning of the Second A&R Credit Agreement and generally including dividends, stock repurchases and certain other payments in respect to warrants, options, and other rights to acquire equity securities), unless the Consolidated Leverage Ratio would be less than 3.25 to 1.00 and available liquidity (defined as unrestricted, domestically held cash plus revolver availability) would be at least $30,000, in each case after giving effect to such payment.
Total debt issuance costs incurred and capitalized in connection with the issuance of the Second A&R Credit Agreement were $3,617. Total amortization of debt issuance costs was $571 and $1,024 during the three and nine months ended October 2, 2021, respectively, and $227 and $669 during the three and nine months ended October 3, 2020, respectively.
Other Obligations
The Company has aggregate obligations related to acquisitions of $29,703 and $24,326 as of October 2, 2021 and January 2, 2021, respectively.
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
Note 11 – Contingent Consideration
The following table summarizes the changes in the carrying value of estimated contingent consideration:
|
|
|
|
|
|
|
|
|
|
|
|
|
October 2, 2021
|
|
January 2, 2021
|
Contingent consideration, beginning of the year
|
$
|
2,400
|
|
|
$
|
4,002
|
|
Additions for acquisitions
|
3,476
|
|
|
255
|
|
Reduction of liability for payments made
|
(872)
|
|
|
(1,857)
|
|
Increase of liability related to re-measurement of fair value
|
(67)
|
|
|
—
|
|
Total contingent consideration, end of the period
|
4,937
|
|
|
2,400
|
|
Current portion of contingent consideration
|
3,406
|
|
|
1,334
|
|
Contingent consideration, less current portion
|
$
|
1,531
|
|
|
$
|
1,066
|
|
Note 12 – Commitments and Contingencies
Litigation, Claims and Assessments
The Company is subject to certain claims and lawsuits typically filed against the engineering, consulting and construction profession, alleging primarily professional errors or omissions. The Company carries professional liability insurance, subject to certain deductibles and policy limits, against such claims. However, in some actions, parties are seeking damages that exceed our insurance coverage or for which we are not insured. While management does not believe that the resolution of these claims will have a material adverse effect, individually or in aggregate, on its financial position, results of operations or cash flows, management acknowledges the uncertainty surrounding the ultimate resolution of these matters.
Note 13 – Stock-Based Compensation
In October 2011, our stockholders approved the 2011 Equity Incentive Plan, which was subsequently amended and restated in March 2013 (as amended, the “2011 Equity Plan”). The 2011 Equity Plan provides directors, executive officers, and other employees of the Company with additional incentives by allowing them to acquire ownership interest in the business and, as a result, encouraging them to contribute to the Company’s success. We may provide these incentives through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other cash-based or stock-based awards. As of October 2, 2021, 641,307 shares of common stock are authorized and reserved for issuance under the 2011 Equity Plan. This reserve automatically increases on each January 1 from 2014 through 2023, by an amount equal to the smaller of (i) 3.5% of the number of shares issued and outstanding on the immediately preceding December 31, or (ii) an amount determined by our Board of Directors. The restricted shares of common stock granted generally provide for service-based vesting after two to four years following the grant date.
The following summarizes the activity of restricted stock awards during the nine months ended October 2, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Unvested Restricted Shares of Common Stock and Restricted Stock Units
|
|
Weighted Average
Grant Date Fair
Value
|
January 2, 2021
|
770,183
|
|
$
|
57.20
|
|
Granted
|
262,509
|
|
$
|
91.31
|
|
Vested
|
(220,588)
|
|
$
|
65.16
|
|
Forfeited
|
(33,902)
|
|
$
|
58.25
|
|
October 2, 2021
|
778,202
|
|
$
|
66.33
|
|
Stock-based compensation expense relating to restricted stock awards during the three and nine months ended October 2, 2021 was $4,297 and $12,087, respectively, and $4,020 and $10,900 during the three and nine months ended October 3, 2020, respectively. Approximately $32,395 of deferred compensation, which is expected to be recognized over the remaining weighted
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
average vesting period of 1.8 years, is unrecognized at October 2, 2021. The total fair value of restricted shares vested during the nine months ended October 2, 2021 and October 3, 2020 was $20,376 and $8,837, respectively.
Note 14 – Income Taxes
As of October 2, 2021 and January 2, 2021, the Company had net deferred income tax liabilities of $29,154 and $27,791, respectively. Deferred income tax liabilities primarily relate to intangible assets and accounting basis adjustments where we have a future obligation for tax purposes.
The Company's effective income tax rate was 28.1% and 24.0% during the three and nine months ended October 2, 2021, respectively, and 26.2% and 27.4% during the three and nine months ended October 3, 2020, respectively. The difference between the effective income tax rate and the combined statutory federal and state income tax rate in 2021 was primarily due to the recognition of tax expense resulting from the reduction of federal tax credits recorded in the third quarter and the recognition of excess tax benefits from stock-based payments in the second quarter. The difference between the effective income tax rate and the combined statutory federal and state income tax rate in 2020 was primarily due to the recognition of tax expense from stock-based payments in the second quarter.
The Company evaluates tax positions for recognition using a more-likely-than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information. The California Franchise Tax Board (“CFTB”) challenged research and development tax credits generated for the years 2012 to 2014. Fiscal years 2012 through 2020 are considered open tax years in the State of California and 2018 through 2020 in the U.S. federal jurisdiction and other state and foreign jurisdictions. It is not expected that there will be a significant change in the unrecognized tax benefits within the next 12 months.
Note 15 – Reportable Segments
The Company reports segment information in accordance with ASC Topic No. 280 “Segment Reporting” (“Topic No. 280”). The Company's Chief Executive Officer, who is the chief operating decision maker ("CODM"), organized the Company into three operating and reportable segments: Infrastructure ("INF"), which includes the Company's engineering, civil program management, utility services, and construction quality assurance, testing and inspection practices; Building, Technology & Sciences ("BTS"), which includes the Company's environmental, buildings and program management, and MEP & technology practices; and Geospatial Solutions ("GEO"), which includes the Company's geospatial solution practices. The prior period results of the Company's INF and GEO reportable segments were adjusted to include the results of Skyscene, LLC ("Skyscene") in the Company's GEO reportable segment. The adjustment to the INF and GEO segments was not material to prior period segment financial results.
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
The Company evaluates the performance of these reportable segments based on their respective operating income before the effect of amortization expense related to acquisitions and other unallocated corporate expenses. The following tables set forth summarized financial information concerning our reportable segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
October 2, 2021
|
|
October 3, 2020
|
|
October 2, 2021
|
|
October 3, 2020
|
Gross revenues
|
|
|
|
|
|
|
|
INF
|
$
|
99,365
|
|
|
$
|
94,693
|
|
|
$
|
284,653
|
|
|
$
|
265,515
|
|
BTS
|
51,381
|
|
|
39,861
|
|
|
133,804
|
|
|
119,610
|
|
GEO
|
34,807
|
|
|
35,395
|
|
|
99,694
|
|
|
112,993
|
|
Total gross revenues
|
$
|
185,553
|
|
|
$
|
169,949
|
|
|
$
|
518,151
|
|
|
$
|
498,118
|
|
|
|
|
|
|
|
|
|
Segment income before taxes
|
|
|
|
|
|
|
|
INF
|
$
|
17,628
|
|
|
$
|
19,482
|
|
|
$
|
53,589
|
|
|
$
|
48,078
|
|
BTS
|
10,299
|
|
|
5,944
|
|
|
24,065
|
|
|
16,772
|
|
GEO
|
9,476
|
|
|
7,998
|
|
|
23,502
|
|
|
22,297
|
|
Total Segment income before taxes
|
37,403
|
|
|
33,424
|
|
|
101,156
|
|
|
87,147
|
|
Corporate(1)
|
(19,928)
|
|
|
(22,917)
|
|
|
(59,460)
|
|
|
(64,487)
|
|
Total income before taxes
|
$
|
17,475
|
|
|
$
|
10,507
|
|
|
$
|
41,696
|
|
|
$
|
22,660
|
|
(1) Includes amortization of intangibles of $8,487 and $24,984 for the three and nine months ended October 2, 2021, respectively, and $8,615 and $26,468 for the three and nine months ended October 3, 2020, respectively.
Upon adoption of Topic 606, the Company disaggregates its gross revenues from contracts with customers by geographic location, customer-type and contract-type for each of our reportable segments. Disaggregated revenues include the elimination of inter-segment revenues which has been allocated to each segment. The Company believes this best depicts how the nature, amount, timing and uncertainty of its revenues and cash flows are affected by economic factors. Gross revenue, classified by the major geographic areas in which the Company's customers were located, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 2, 2021
|
|
Nine Months Ended October 2, 2021
|
|
INF
|
|
BTS
|
|
GEO
|
|
Total
|
|
INF
|
|
BTS
|
|
GEO
|
|
Total
|
United States
|
$
|
99,365
|
|
|
$
|
45,797
|
|
|
$
|
33,862
|
|
|
$
|
179,024
|
|
|
$
|
284,653
|
|
|
$
|
120,813
|
|
|
$
|
97,726
|
|
|
$
|
503,192
|
|
Foreign
|
—
|
|
|
5,584
|
|
|
945
|
|
|
6,529
|
|
|
—
|
|
|
12,991
|
|
|
1,968
|
|
|
14,959
|
|
Total gross revenues
|
$
|
99,365
|
|
|
$
|
51,381
|
|
|
$
|
34,807
|
|
|
$
|
185,553
|
|
|
$
|
284,653
|
|
|
$
|
133,804
|
|
|
$
|
99,694
|
|
|
$
|
518,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 3, 2020
|
|
Nine Months Ended October 3, 2020
|
|
INF
|
|
BTS
|
|
GEO
|
|
Total
|
|
INF
|
|
BTS
|
|
GEO
|
|
Total
|
United States
|
$
|
94,693
|
|
|
$
|
37,278
|
|
|
$
|
35,104
|
|
|
$
|
167,075
|
|
|
$
|
265,515
|
|
|
$
|
112,460
|
|
|
$
|
112,067
|
|
|
$
|
490,042
|
|
Foreign
|
—
|
|
|
2,583
|
|
|
291
|
|
|
2,874
|
|
|
—
|
|
|
7,150
|
|
|
926
|
|
|
8,076
|
|
Total gross revenues
|
$
|
94,693
|
|
|
$
|
39,861
|
|
|
$
|
35,395
|
|
|
$
|
169,949
|
|
|
$
|
265,515
|
|
|
$
|
119,610
|
|
|
$
|
112,993
|
|
|
$
|
498,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
Gross revenue by customer were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 2, 2021
|
|
Nine Months Ended October 2, 2021
|
|
INF
|
|
BTS
|
|
GEO
|
|
Total
|
|
INF
|
|
BTS
|
|
GEO
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public and quasi-public sector
|
$
|
77,635
|
|
|
$
|
16,065
|
|
|
$
|
21,940
|
|
|
$
|
115,640
|
|
|
$
|
223,096
|
|
|
$
|
52,950
|
|
|
$
|
64,760
|
|
|
$
|
340,806
|
|
Private sector
|
21,730
|
|
|
35,316
|
|
|
12,867
|
|
|
69,913
|
|
|
61,557
|
|
|
80,854
|
|
|
34,934
|
|
|
177,345
|
|
Total gross revenues
|
$
|
99,365
|
|
|
$
|
51,381
|
|
|
$
|
34,807
|
|
|
$
|
185,553
|
|
|
$
|
284,653
|
|
|
$
|
133,804
|
|
|
$
|
99,694
|
|
|
$
|
518,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 3, 2020
|
|
Nine Months Ended October 3, 2020
|
|
INF
|
|
BTS
|
|
GEO
|
|
Total
|
|
INF
|
|
BTS
|
|
GEO
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public and quasi-public sector
|
$
|
72,772
|
|
|
$
|
17,522
|
|
|
$
|
25,377
|
|
|
$
|
115,671
|
|
|
$
|
204,863
|
|
|
$
|
53,011
|
|
|
$
|
79,431
|
|
|
$
|
337,305
|
|
Private sector
|
21,921
|
|
|
22,339
|
|
|
10,018
|
|
|
54,278
|
|
|
60,652
|
|
|
66,599
|
|
|
33,562
|
|
|
160,813
|
|
Total gross revenues
|
$
|
94,693
|
|
|
$
|
39,861
|
|
|
$
|
35,395
|
|
|
$
|
169,949
|
|
|
$
|
265,515
|
|
|
$
|
119,610
|
|
|
$
|
112,993
|
|
|
$
|
498,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross revenues by contract type were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 2, 2021
|
|
Nine Months Ended October 2, 2021
|
|
INF
|
|
BTS
|
|
GEO
|
|
Total
|
|
INF
|
|
BTS
|
|
GEO
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost-reimbursable contracts
|
$
|
95,154
|
|
|
$
|
35,873
|
|
|
$
|
34,787
|
|
|
$
|
165,814
|
|
|
$
|
271,935
|
|
|
$
|
96,035
|
|
|
$
|
99,497
|
|
|
$
|
467,467
|
|
Fixed-unit price contracts
|
4,211
|
|
|
15,508
|
|
|
20
|
|
|
19,739
|
|
|
12,718
|
|
|
37,769
|
|
|
197
|
|
|
50,684
|
|
Total gross revenues
|
$
|
99,365
|
|
|
$
|
51,381
|
|
|
$
|
34,807
|
|
|
$
|
185,553
|
|
|
$
|
284,653
|
|
|
$
|
133,804
|
|
|
$
|
99,694
|
|
|
$
|
518,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 3, 2020
|
|
Nine Months Ended October 3, 2020
|
|
INF
|
|
BTS
|
|
GEO
|
|
Total
|
|
INF
|
|
BTS
|
|
GEO
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost-reimbursable contracts
|
$
|
92,054
|
|
|
$
|
32,402
|
|
|
$
|
35,333
|
|
|
$
|
159,789
|
|
|
$
|
253,717
|
|
|
$
|
96,776
|
|
|
$
|
112,771
|
|
|
$
|
463,264
|
|
Fixed-unit price contracts
|
2,639
|
|
|
7,459
|
|
|
62
|
|
|
10,160
|
|
|
11,798
|
|
|
22,834
|
|
|
222
|
|
|
34,854
|
|
Total gross revenues
|
$
|
94,693
|
|
|
$
|
39,861
|
|
|
$
|
35,395
|
|
|
$
|
169,949
|
|
|
$
|
265,515
|
|
|
$
|
119,610
|
|
|
$
|
112,993
|
|
|
$
|
498,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 16 – Leases
The Company primarily leases property under operating leases and has six equipment operating leases for aircrafts used by the operations of QSI. The Company's property operating leases consist of various office facilities. The Company uses a portfolio approach to account for such leases due to the similarities in characteristics and apply an incremental borrowing rate based on estimates of rates the Company would pay for senior collateralized loans over a similar term. The Company's office leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for lease components (e.g. fixed payments including rent, real estate taxes and common area maintenance costs) as a single lease component. Some of the Company's leases include one or more options to renew the lease term at its sole discretion; however, these are not included in the calculation of its lease liability or ROU lease asset because they are not reasonably certain of exercise.
The Company also leases vehicles through a fleet leasing program. The payments for the vehicles are based on the terms selected. The Company has determined that it is reasonably certain that the leased vehicles will be held beyond the period in which the entire capitalized value of the vehicle has been paid to the lessor. As such, the capitalized value is the delivered price of the vehicle. The Company's vehicle leases are classified as financing leases.
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
Supplemental balance sheet information related to the Company's operating and finance leases is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leases
|
|
Classification
|
|
October 2, 2021
|
|
January 2, 2021
|
Assets
|
|
|
|
|
|
|
Operating lease assets
|
|
Right-of-use lease asset, net (1)
|
|
$
|
44,866
|
|
|
$
|
43,607
|
|
Finance lease assets
|
|
Property and equipment, net (1)
|
|
2,413
|
|
|
2,946
|
|
Total leased assets
|
|
|
|
$
|
47,279
|
|
|
$
|
46,553
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Operating
|
|
Accrued liabilities
|
|
$
|
(12,981)
|
|
|
$
|
(13,161)
|
|
Finance
|
|
Current portion of notes payable and other obligations
|
|
(1,302)
|
|
|
(1,321)
|
|
Noncurrent
|
|
|
|
|
|
|
Operating
|
|
Other long-term liabilities
|
|
(33,710)
|
|
|
(32,290)
|
|
Finance
|
|
Notes payable and other obligations, less current portion
|
|
(1,130)
|
|
|
(1,673)
|
|
Total lease liabilities
|
|
|
|
$
|
(49,123)
|
|
|
$
|
(48,445)
|
|
(1) At October 2, 2021, operating right of-use lease assets and finance lease assets are recorded net of accumulated amortization of $27,014 and $3,326, respectively. At January 2, 2021, operating right-of-use lease assets and finance lease assets are recorded net of accumulated amortization of $19,096 and $2,499, respectively.
Supplemental balance sheet information related to the Company's operating and finance leases is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted - Average Remaining Lease Term (Years)
|
|
October 2, 2021
|
|
January 2, 2021
|
Operating leases
|
|
4.6
|
|
4.9
|
Finance leases
|
|
1.8
|
|
2.1
|
|
|
|
|
|
Weighted - Average Discount Rate
|
|
|
|
|
Operating leases
|
|
4%
|
|
4%
|
Finance leases
|
|
7%
|
|
7%
|
Supplemental cash flow information related to the Company's operating and finance lease liabilities is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
October 2, 2021
|
|
October 3, 2020
|
|
October 2, 2021
|
|
October 3, 2020
|
Operating cash flows from operating leases
|
|
$
|
3,467
|
|
|
$
|
3,467
|
|
|
$
|
10,514
|
|
|
$
|
10,406
|
|
Financing cash flows from finance leases
|
|
$
|
327
|
|
|
$
|
266
|
|
|
$
|
921
|
|
|
$
|
801
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
|
|
|
|
|
|
|
Operating leases
|
|
$
|
4,398
|
|
|
$
|
4,267
|
|
|
$
|
6,780
|
|
|
$
|
12,252
|
|
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(in thousands, except share data)
The following tables summarize the components of lease cost recognized in the consolidated statements of net income and comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
Lease Cost
|
|
Classification
|
|
October 2, 2021
|
|
October 2, 2021
|
Operating lease cost
|
|
Facilities and facilities related
|
|
$
|
3,872
|
|
|
$
|
11,525
|
|
Variable operating lease cost
|
|
Facilities and facilities related
|
|
510
|
|
|
1,441
|
|
Finance lease cost
|
|
|
|
|
|
|
Amortization of financing lease assets
|
|
Depreciation and amortization
|
|
339
|
|
|
931
|
|
Interest on lease liabilities
|
|
Interest expense
|
|
39
|
|
|
117
|
|
Total lease cost
|
|
|
|
$
|
4,760
|
|
|
$
|
14,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
Lease Cost
|
|
Classification
|
|
October 3, 2020
|
|
October 3, 2020
|
Operating lease cost
|
|
Facilities and facilities related
|
|
$
|
3,805
|
|
|
$
|
11,247
|
|
Variable operating lease cost
|
|
Facilities and facilities related
|
|
705
|
|
|
2,411
|
|
Finance lease cost
|
|
|
|
|
|
|
Amortization of financing lease assets
|
|
Depreciation and amortization
|
|
261
|
|
|
770
|
|
Interest on lease liabilities
|
|
Interest expense
|
|
29
|
|
|
90
|
|
Total lease cost
|
|
|
|
$
|
4,800
|
|
|
$
|
14,518
|
|
As of October 2, 2021, maturities of the Company's lease liabilities under its long-term operating leases and finance leases for the next five fiscal years and thereafter are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
Operating Leases
|
|
Finance Leases
|
Remainder of 2021
|
|
$
|
3,870
|
|
|
$
|
477
|
|
2022
|
|
13,784
|
|
|
1,131
|
|
2023
|
|
11,308
|
|
|
715
|
|
2024
|
|
8,595
|
|
|
295
|
|
2025
|
|
6,212
|
|
|
80
|
|
Thereafter
|
|
7,287
|
|
|
19
|
|
Total lease payments
|
|
51,056
|
|
|
2,717
|
|
Less: Interest
|
|
(4,365)
|
|
|
(285)
|
|
Present value of lease liabilities
|
|
$
|
46,691
|
|
|
$
|
2,432
|
|