The future’s so bright: Industry leaders see a strong ending to a remarkable 2021
Morrissey Goodale is providing the A/E industry with news and perspective on what is happening. This week, industry leaders report on an unprecedented 2021.
Pinch yourself. Do it again. Yes, this is real. Your business is performing better than you ever thought possible. And yes, your backlog is stronger than ever. Never mind that you’re still trying to figure out your “back-to-the-office strategy.” (Everyone else is, too.) It doesn’t matter that you’re still bemoaning how difficult it is to “find talent.” (As an industry we’ve been struggling with that for over 20 years, and we always seem to get by.) The fact is the A/E industry is humming—like never before.
An industry in full gear: The engines of infrastructure, environmental and site/civil firms continue to run red hot. M/E/P & structural firms are busier than ever, designing data centers, distribution facilities, and K-12 schools. The demand for laboratories, research, and sports facilities is buoying architecture and interiors firms that are concurrently seeing their recently dormant hospitality and entertainment sectors roar back to life. The remarkable residential market is like the best ever bass and drums combo—providing a non-stop, full-on backbeat, keeping everything moving. Water engineering firms are almost as valuable as water itself now. And wait, what’s that you say? The Feds are going to spend big on infrastructure? There’s a LOT of positivity going around—but not a lot of capacity. It’s no wonder that so much of our strategic planning work this year is helping leadership teams figure out how to exit low performing markets and say “no” to bad clients.
A view from the front of the pack: How strong is the industry in 2021? A great way to quickly assess the state of the market is through the eyes of the industry’s publicly traded firms. Their quarterly reports provide a timely opportunity for their investors to view their performance. They also provide a close-to-real-time proxy of industry activity and outlook. Taken together, the most recent crop of quarterly reports reflects an A/E industry that is booming with no slowdown in sight. The common message from these industry leaders is, “We’ve had a great year thus far, and we feel even better about the future!” Let’s take a look at what some of these industry leaders are reporting.
- Setting records in the Sunshine State: On August 10, Hollywood, FL-based NV5 Global Inc. (NASDAQ: NVEE) reported “record performance in the second quarter” and “the highest gross revenues, net income, adjusted EBITDA, and adjusted EPS that NV5 has delivered in a quarter since [the firm’s] inception.” How optimistic is management about the balance of 2021? By the sound of things, pretty, pretty, upbeat. “We expect to build upon our strong second quarter momentum and are raising our guidance on gross revenues…to a range of $705 million to $727 million (previously $695 million to $720 million).”
- Water + Technology + Innovation = Success: At the end of July, Tetra Tech Inc. (NASDAQ: TTEK)—ranked #1 in Water by ENR for 18 years in a row—reported “record quarterly [net] revenue” of “$638 million, up 14% year-over-year.” And there is no slow down in sight for the firm’s momentum as “backlog grew to an all-time high of $3.25 billion with increased orders for water and environmental services.”
- Good news from the Great White North: On August 10, WSP Global Inc. (TSX: WSP) reported “robust results for the second quarter of 2021 driven by strong performance from recent acquisitions and better than anticipated organic growth, resulting in improved adjusted EBITDA margins.” (Adjusted EBITDA margin for the second quarter was 16.9% compared with 15.8% for the same quarter last year.) The company’s management expects that “on the basis of our strong performance, we feel confident in revising our 2021 outlook upwards.” Importantly, “Backlog as at June 26, 2021 stood at $9.6 billion, representing 11.2 months of revenues, up 14.4% in the six-month period, mainly due to acquisition growth.”
- Global is good: On August 4, Stantec Inc. (TSX, NYSE: STN) reported that it, too, was revising its guidance for the year upwards. From the firm’s press release, “Based on the strength of its performance to date and confidence in the continued execution of its strategic plan, Stantec is raising earnings guidance for the year, with full year adjusted diluted earnings per share in comparison to 2020 now expected to achieve 4% to 7% growth compared to the previous guidance of low to mid-single digit (1% to 5%) growth.” What’s behind the optimism? Well, according to Gord Johnston, President and CEO, “We see clear evidence of building momentum in all our key markets, particularly in the US where we have achieved 6.4% organic backlog growth through the first half of this year. Beyond wins recorded in backlog, we have received award notifications for approximately $1.2 billion in gross revenue, more than half of which is in the US.”
- Momentum from NKOTB: On August 16, Atlas Technical Consultants Inc. (Nasdaq: ATCX)—a firm that only went public in February 2020—reported, “Gross revenue grew 17% to $131.6 million, compared to $112.7 million in the prior-year quarter,” and, “Adjusted EBITDA increased 17.9% to $18.2 million, compared to $15.4 million in the prior-year quarter.” Importantly, according to a company statement, “Backlog at quarter-end was $751 million, up sequentially to a record high, driven by key infrastructure and environmental related contract wins.” In many ways, L. Joe Boyer, Atlas’ Chief Executive Officer sums up not only the outlook for his firm but also for the industry when he states, “As we look ahead, the markets we serve are promising even before any increased federal infrastructure spending.”
This article originally appeared on Morrissey Goodale’s website. Morrissey Goodale is a CFE Media content partner.
Original content can be found at www.morrisseygoodale.com.