Dickerson Wright on Building NV5 into a Leading Provider of Professional and Technical Engineering and Consulting Solutions
Dickerson Wright, PE, is the founder, Chairman, and CEO of NV5 Global, Inc. (Nasdaq: NVEE), an infrastructure engineering and environmental services firm with over 2,000 employees and 102 offices internationally. He has 35 years of uninterrupted experience in the engineering sector and previously founded US Laboratories, took it public, and sold the company to Bureau Veritas in 2002. Mr. Wright then served as CEO of Bureau Veritas US where he grew operations to $280 million in revenue. In 2009 he started NV5 (then called Vertical V) through the acquisition of Bureau Veritas’s construction quality assurance practice in the US and shortly after, the acquisition of Nolte Associates (the “N” in NV5). NV5 went public in March 2013 at $6.00 a share with a market capitalization of $25 million and today trades at $37.00 a share with a market capitalization of over $400 million.
Could you tell us a bit more about NV5 – how did it develop into the company that it is today?
The roots of NV5 are really in our management team, which has been together over 20 years through the founding and sale of US Laboratories, through Bureau Veritas, and the founding of NV5. We’ve done over 50 acquisitions together in this time, and we believe in running a very flat, vertically structured organization (the “V” in NV5 is for vertical) where entrepreneurial leaders are given an opportunity to grow the specific business in which they are experts. We also believe in having partners, not key employees, so we drive stock very deep into our organization. NV5 has five service verticals: construction quality assurance, infrastructure, energy, environmental, and program management. We achieve organic growth by cross-selling our services among these verticals, so we are able to continually decrease sub-consultant fees by doing work in-house. We also grow through strategic acquisitions, which expand and deepen our service offerings within these five verticals.
What goals are you currently working towards with NV5?
We are aiming to reach $600 million in revenues by the end of 2020 and 12-15% EBITDA margins. We exited 2016 with 8% organic growth, which is well above the industry standard of 5% and we plan to keep growing organically through synergy, cross-selling, the scalability of our back office, and the integration of strategic acquisitions. The struggle, as our company gets larger, is to maintain a flat organization with many points of entry and resist the tendency of large companies to become organized geographically or in a matrix fashion. We don’t want our expert practitioners to become highly paid administrators. If someone is an expert in energy services, she or he should be working on expanding our energy services business, not running a region of the country that provides many services.
You have over 35 years of uninterrupted experience in managing and developing engineering companies – what have been your major achievements to date?
I think over the years our team has developed a really strong business strategy that we’ve learned through trial and error, and so now our experience has taken us to a place where we are not perfect but we make very few errors. This is especially important if a company is as acquisitive as we are. We’ve become known in the space for doing deals in the range of $5 to $50 million, and we won’t do a deal if we don’t perceive a cultural fit – our culture is one of growth and value for our shareholders. We also insist on our shared services platform. The acquisition has to be on our financial and IT platforms, so we can measure and track everything the same. They have to use our in-house legal counsel, so we don’t take risks on big contracts or projects and risk is managed in every single contract. They have to use our HR services, because we want everyone to have the same benefits structure, to have an annual performance review, and to have the same opportunities to advance within our organization. And they have to participate in our M&A program. We often get some of the best leads from our operators. If any of these changes seems onerous or undesirable to the acquisition, we won’t do the deal. There are over 140,000 engineering companies in the US and we have as many deals as 10 in the pipeline at all times. There are plenty of opportunities and it is a very fragmented industry.