Infrastructure and Energy Alternatives, Inc. Announces Second Quarter 2021 Financial Results

Wednesday, 28. July 2021 22:01

INDIANAPOLIS, July 28, 2021 (GLOBE NEWSWIRE) -- Infrastructure and Energy Alternatives, Inc. (NASDAQ: IEA) (“IEA” or the “Company”), a leading infrastructure construction company with renewable energy and specialty civil expertise, today announced its financial results for the quarter ended June 30, 2021.

Second Quarter Highlights

  • Backlog increased by $86.0 million during the quarter to a record amount of $2.8 billion; the Company expects to recognize $1.8 billion of backlog over the next 12 months.
  • Record quarterly revenue totaling $560.1 million, as compared to $480.6 million for last year’s second quarter.
  • Net income of $4.7 million, or $0.12 per diluted share, as compared to $3.6 million, or $0.09 per diluted share, for last year’s second quarter.
  • Adjusted EBITDA of $35.7 million, as compared to $39.3 million for last year’s second quarter.
  • Reaffirming full year 2021 guidance, including revenue to range from $1.80 billion to $1.95 billion and Adjusted EBITDA to range from $130 million to $140 million.
  • Company to host earnings conference call at 11 AM ET on Tuesday, August 10, 2021.

Management Commentary

“IEA generated record revenue in the second quarter and ended the quarter with more business in backlog than at any time in our Company’s history. Backlog increased by $86.0 million during the quarter to a record $2.8 billion. The growth in our revenue and backlog during the second quarter reflects continued strong demand in our Renewables Segment, particularly in our solar business where revenues totaled $108 million, up nearly 1,500% year-over-year. 2021 is unfolding as expected, and so we are reaffirming the revenue and Adjusted EBITDA guidance we provided in May. We expect our earnings to accelerate, however, throughout the remainder of the year as COVID-19-related project delays abate and we return to normal permitting and construction timelines,” said J.P. Roehm, IEA’s President and Chief Executive Officer.

Mr. Roehm continued, “I am very excited about what the future holds for IEA. The United States is still in the early innings of what will be a multi-decade transformation of the power industry from predominantly fossil-fueled generation to renewables. As one of the largest builders of wind and solar projects in the country, IEA will be a direct beneficiary of that transformation. We are also seeing growth ahead for our Specialty Civil Segment, with the prospect for increased federal spending on rail and highway projects. Our environmental business will also be a major growth engine for our Company in the future as we win additional coal ash remediation contracts like our recently announced agreement with Dominion Energy.”

Second Quarter Results

Revenue by segment was as follows:

 Three Months Ended June 30,
(in thousands)2021 2020
SegmentRevenue% of Total
Revenue
 Revenue% of Total
Revenue
Wind$317,066 56.6% $317,151 66.0%
Solar107,788 19.2% 7,111 1.5%
Renewables Segment$424,854 75.8% $324,262 67.5%
Specialty Civil Segment135,294 24.2% 156,342 32.5%
Total revenue$560,148 100.0% $480,604 100.0%
            

Renewables Segment revenue totaled $424.9 million, an increase of 31.0%, or $100.6 million compared to the prior year, as a result of a $100.7 million increase in solar revenue from last year’s second quarter.

Specialty Civil Segment revenue totaled $135.3 million, a decrease of 13.5%, or $21.0 million year-over-year, primarily due to lower revenue in the heavy civil market as a result of unseasonably rainy conditions in parts of the country and in comparison to a large project in the last year quarter which was not repeated this year, partially offset by higher revenue from the environmental remediation market.

Segment Gross Profit

Gross profit by segment was as follows:

 Three Months Ended June 30,
(in thousands)2021 2020
SegmentGross ProfitGross Profit
Margin
 Gross ProfitGross Profit
Margin
Renewables$42,883 10.1% $36,983 11.4%
Specialty Civil10,600 7.8% 17,258 11.0%
Total gross profit$53,483 9.5% $54,241 11.3%
            

Renewables Segment gross profit was $42.9 million, or 10.1% of revenue, for the second quarter of 2021, compared to $37.0 million, or 11.4% of revenue, for the same period in 2020. The decrease in gross profit margin for the Renewables Segment was primarily related to adding more craft labor and rented and leased equipment in anticipation of higher work volumes and greater operating intensity in the second half of the year.

Specialty Civil Segment gross profit was $10.6 million, or 7.8% of revenue, for the second quarter of 2021, as compared to $17.3 million, or 11.0% of revenue, for the same period in 2020. This decrease resulted from fewer projects under construction in the second quarter of 2021, which resulted in lower utilization of labor and equipment.

Selling, general and administrative expenses of $30.9 million increased 10.0%, or $2.8 million, in the second quarter of 2021 compared to the same period in 2020. The increase in selling, general and administrative expenses was primarily driven by higher overall compensation and benefit expenses in the second quarter compared to last year’s quarter. As a percent of revenues, selling, general and administrative expenses were 5.5% in the second quarter of 2021, compared to 5.8% in the same period in 2020.

Interest expense decreased by $1.7 million compared to the same period in 2020. This decrease was primarily driven by lower effective interest rates on the Company’s term loan, partially offset by an increase in the dividend rate on the Company's Series B Preferred Stock.

Other income increased by $2.4 million to $0.8 million in the second quarter of 2021, compared to other expense of $1.6 million for the same period in 2020. This increase was primarily from the fair value adjustment of the Company’s Series B Preferred Stock and private warrant liabilities.

Provision for income taxes decreased $0.6 million to an expense of $4.2 million in the second quarter of 2021, compared to an expense of $4.7 million for the same period in 2020. The effective tax rates for the period ended June 30, 2021 and 2020 were 47.0% and 56.8%, respectively. The higher effective tax rate in the second quarter of 2021 was primarily attributable to an expected increase in non-deductible compensation.

Net income was $4.7 million in the second quarter of 2021, an increase of 30.6%, or $1.1 million, compared to the second quarter of 2020. Earnings per diluted share were $0.12 per diluted share for the quarter, compared to $0.09 per diluted share in the second quarter of 2020.

Adjusted EBITDA was $35.7 million for the second quarter, compared to $39.3 million in the second quarter of 2020. For a reconciliation of net income to Adjusted EBITDA, please see the appendix to this release.

Balance Sheet

As of June 30, 2021, the Company had $117.7 million of cash and cash equivalents and total debt of $364.3 million, which consisted of $173.3 million outstanding under its credit facility, $4.3 million of commercial equipment loans, and $186.7 million of Series B Preferred Stock. Series B Preferred Stock is mandatorily redeemable in 2025 and therefore is categorized as long-term debt. At the end of the quarter, the Company had $53.3 million of availability under its credit facility.

Backlog

IEA defines “backlog” as the amount of revenue the Company expects to realize from the uncompleted portions of existing construction contracts, including new contracts under which work has not begun and awarded contracts for which the definitive project documentation is being prepared.

The following table summarizes the Company’s backlog by segment for the periods below:

(in millions)   
SegmentsJune 30, 2021December 31, 2020June 30, 2020
Wind$1,061.0 $1,093.1 $852.1 
Solar800.1 420.3 325.5 
Renewables$1,861.1 $1,513.4 $1,177.6 
Specialty Civil900.7 556.1 579.8 
Total$2,761.8 $2,069.5 $1,757.4 
          

The Company expects to realize approximately $1,811.0 million of its estimated backlog in the next twelve months.

Outlook

For the full year 2021, IEA is reaffirming its revenue and Adjusted EBITDA guidance ranges. The Company continues to expect full year 2021 revenue in the range of $1.80 billion to $1.95 billion and Adjusted EBITDA for the year in the range of $130 million to $140 million. For a reconciliation of Adjusted EBITDA, please see the table at the end of this release.

Conference Call

IEA will hold a conference call to discuss its second quarter 2021 results on Tuesday, August 10, 2021 at 11:00 a.m. Eastern Time. To join the conference call, please dial (877) 407-0784 (domestic) or (201) 689-8560 (international) and ask for Infrastructure & Energy Alternatives’ Second Quarter 2021 Conference Call. To listen via the Internet, please visit the investor section of the Company’s website at https://ir.iea.net at least 15 minutes prior to the start of the call to download and install any necessary audio software. The conference call webcast will be archived on the Company’s website as well as available for replay by dialing (844) 512-2921 or (412) 317-6671 (international) and providing the PIN code: 13721228.

About IEA

Infrastructure and Energy Alternatives, Inc. (IEA) is a leading infrastructure construction company with renewable energy and specialty civil expertise. Headquartered in Indianapolis, Indiana, with operations throughout the country, IEA’s service offering spans the entire construction process. The Company offers a full spectrum of delivery models including full engineering, procurement, and construction, turnkey, design-build, balance of plant, and subcontracting services. IEA is one of the larger providers in the renewable energy industry and has completed more than 240 utility scale wind and solar projects across North America. In the heavy civil space, IEA offers a number of specialty services including environmental remediation, industrial maintenance, specialty transportation infrastructure and other site development for public and private projects. For more information, please visit IEA’s website at www.iea.net or follow IEA on Facebook, LinkedIn and Twitter for the latest company news and events.

Forward Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements can be identified by the use of forward-looking terminology including “may,” “should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “forecast,” “seek,” “target,” “continue,” “plan,” “intend,” “project,” or other similar words. All statements, other than statements of historical fact, included in this press release regarding expectations for the impact of COVID-19, future financial performance, business strategies, expectations for our business, future operations, liquidity positions, availability of capital resources, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements. These forward-looking statements are based on information available as of the date of this release and our management’s current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct. Forward-looking statements should not be relied upon as representing our views as of any subsequent date. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

  • potential risks and uncertainties relating to COVID-19, including the geographic spread, the severity of the disease, the scope and duration of the COVID-19 pandemic, actions that may be taken by governmental authorities to contain the COVID-19 pandemic or to treat its impact, and the potential negative impacts of COVID-19 on permitting and project construction cycles, the U.S. economy and financial markets;
  • availability of commercially reasonable and accessible sources of liquidity and bonding;
  • our ability to generate cash flow and liquidity to fund operations;
  • the timing and extent of fluctuations in geographic, weather and operational factors affecting our customers, projects and the industries in which we operate;
  • our ability to identify acquisition candidates and integrate acquired businesses;
  • our ability to grow and manage growth profitably;
  • the possibility that we may be adversely affected by economic, business, and/or competitive factors;
  • market conditions, technological developments, regulatory changes or other governmental policy uncertainty that affects us or our customers;
  • our ability to manage projects effectively and in accordance with management estimates, as well as the ability to accurately estimate the costs associated with our fixed price and other contracts, including any material changes in estimates for completion of projects;
  • the effect on demand for our services and changes in the amount of capital expenditures by customers due to, among other things, economic conditions, commodity price fluctuations, the availability and cost of financing, and customer consolidation;
  • the ability of customers to terminate or reduce the amount of work, or in some cases, the prices paid for services, on short or no notice;
  • customer disputes related to the performance of services;
  • disputes with, or failures of, subcontractors to deliver agreed-upon supplies or services in a timely fashion;
  • our ability to replace non-recurring projects with new projects;
  • the impact of U.S. federal, local, state, foreign or tax legislation and other regulations affecting the renewable energy industry and related projects and expenditures;
  • the effect of state and federal regulatory initiatives, including costs of compliance with existing and future safety and environmental requirements;
  • fluctuations in equipment, fuel, materials, labor and other costs;
  • our beliefs regarding the state of the renewable energy market generally; and
  • the “Risk Factors” described in our Annual Report on Form 10-K filed with the SEC on March 8, 2021, and in our quarterly reports, other public filings and press releases.

We do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Contacts:

Peter J. MoerbeekKimberly Esterkin
Chief Financial OfficerADDO Investor Relations
Pete.Moerbeek@iea.net
iea@addo.com
800-688-3775
310-829-5400


INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.

Consolidated Statements of Operations
($ in thousands, except per share data)
(Unaudited)

 Three Months Ended Six Months Ended
 June 30, June 30,
 2021 2020 2021 2020
Revenue$560,148   $480,604   $836,560   $838,767  
Cost of revenue506,665   426,363   766,536   751,485  
Gross profit53,483   54,241   70,024   87,282  
        
Selling, general and administrative expenses30,894   28,074   55,740   57,558  
Income from operations22,589   26,167   14,284   29,724  
        
Other income (expense), net:       
Interest expense, net(14,495)  (16,200)  (28,854)  (32,265) 
Other income (expense)770   (1,631)  608   (2,733) 
Income (loss) before benefit for income taxes8,864   8,336   (13,962)  (5,274) 
        
Provision for income taxes(4,165)  (4,739)  (1,773)  (3,872) 
        
Net income (loss)$4,699   $3,597   $(15,735)  $(9,146) 
Less: Convertible Preferred Stock dividends(676)  (606)  (1,332)  (1,372) 
Less: Net income allocated to participating securities(788)  (802)       
Net income (loss) available for common stockholders$3,235   $2,189   $(17,067)  $(10,518) 
        
        
Net income (loss) per common share - basic0.13   0.11   (0.72)  (0.51) 
Net income (loss) per common share - diluted0.12   0.09   (0.72)  (0.51) 
Weighted average shares - basic24,471,286   20,751,673   23,768,413   20,636,944  
Weighted average shares - diluted33,439,303   39,978,382   23,768,413   20,636,944  
                

INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Consolidated Balance Sheets
($ in thousands, except per share data)
(Unaudited)

 June 30, 2021 December 31, 2020
Assets   
Current assets:   
Cash and cash equivalents$117,674   $164,041  
Accounts receivable, net232,323   163,793  
Contract assets176,958   145,183  
Prepaid expenses and other current assets33,007   19,352  
Total current assets559,962   492,369  
    
Property, plant and equipment, net135,514   130,746  
Operating lease assets37,701   36,461  
Intangible assets, net22,202   25,434  
Goodwill37,373   37,373  
Company-owned life insurance4,760   4,250  
Deferred income taxes295   2,069  
Other assets533   438  
Total assets$798,340   $729,140  
    
Liabilities and Stockholder's Equity (Deficit)   
Current liabilities:   
Accounts payable$149,352   $104,960  
Accrued liabilities201,828   129,594  
Contract liabilities90,566   118,235  
Current portion of finance lease obligations24,842   25,423  
Current portion of operating lease obligations9,817   8,835  
Current portion of long-term debt2,277   2,506  
Total current liabilities478,682   389,553  
    
Finance lease obligations, less current portion27,370   32,146  
Operating lease obligations, less current portion29,355   29,154  
Long-term debt, less current portion161,266   159,225  
Debt - Series B Preferred Stock176,556   173,868  
Warrant obligations8,834   9,200  
Deferred compensation7,930   8,672  
Total liabilities$889,993   $801,818  
    
Commitments and contingencies:   
    
Series A Preferred Stock, par value, $0.0001 per share; 1,000,000 shares authorized; 17,483 shares and 17,483 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively17,483   17,483  
    
Stockholders' equity (deficit):   
Common stock, par value, $0.0001 per share; 150,000,000 and 150,000,000 shares authorized; 25,150,306 and 21,008,745 shares issued and 25,150,306 and 21,008,745 outstanding at June 30, 2021 and December 31, 2020, respectively3   2  
Additional paid in capital32,064   35,305  
Accumulated deficit(141,203)  (125,468) 
Total stockholders' deficit(109,136)  (90,161) 
Total liabilities and stockholders' deficit$798,340   $729,140  
          

INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)

 Six Months Ended June 30,
 2021 2020
Cash flows from operating activities:   
Net loss$(15,735)  $(9,146) 
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization21,830   24,001  
Warrant liability fair value adjustment(366)  2,828  
Amortization of debt discounts and issuance costs5,814   5,379  
Share-based compensation expense2,653   1,957  
Loss on sale of equipment   574  
Deferred compensation(742)  (830) 
Accrued dividends on Series B Preferred Stock   7,959  
Deferred income taxes1,773   3,659  
Other, net(172)  227  
Change in operating assets and liabilities:   
Accounts receivable(68,531)  (8,349) 
Contract assets(31,775)  (41,565) 
Prepaid expenses and other assets(13,752)  (16,685) 
Accounts payable and accrued liabilities115,294   (42,097) 
Contract liabilities(27,669)  7,458  
Net cash used in operating activities(11,378)  (64,630) 
    
Cash flow from investing activities:   
Company-owned life insurance(510)  812  
Purchases of property, plant and equipment(14,649)  (5,171) 
Proceeds from sale of property, plant and equipment1,527   2,837  
Net cash used in investing activities(13,632)  (1,522) 
    
Cash flows from financing activities:   
Proceeds from long-term debt   72,000  
Payments on long-term debt(1,314)  (82,357) 
Payments on finance lease obligations(15,481)  (12,468) 
Proceeds from issuance of Series B Preferred Stock   350  
Proceeds of issuance of employee stock awards   760  
Shares repurchased for tax withholding on release of restricted stock units(4,762)    
Proceeds from exercise of warrants200     
Net cash used in financing activities(21,357)  (21,715) 
    
Net change in cash and cash equivalents(46,367)  (87,867) 
    
Cash and cash equivalents, beginning of the period164,041   147,259  
    
Cash and cash equivalents, end of the period$117,674   $59,392  
    

Non-U.S. GAAP Financial Measures

We define EBITDA as net income (loss), determined in accordance with GAAP, for the period presented, before depreciation and amortization, interest expense and provision (benefit) for income taxes. We define Adjusted EBITDA as EBITDA plus restructuring expenses, acquisition or disposition related expenses, non-cash stock compensation expense, and certain other non-cash charges, unusual, non-operating or non-recurring items and other items that we believe are not representative of our core business or future operating performance.

Adjusted EBITDA is a supplemental non-GAAP financial measure and, when considered along with other performance measures, is a useful measure as it reflects certain drivers of the business, such as revenue growth and operating costs. We believe Adjusted EBITDA can be useful in providing an understanding of the underlying operating results and trends and an enhanced overall understanding of our financial performance and prospects for the future. While Adjusted EBITDA is not a recognized measure under GAAP, management uses this financial measure to evaluate and forecast business performance. Adjusted EBITDA is not intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income as it does not consider certain requirements, such as capital expenditures and depreciation, principal and interest payments, and tax payments. Adjusted EBITDA is not a presentation made in accordance with GAAP, and our use of the term Adjusted EBITDA may vary from the use of similarly-titled measures by others in our industry due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation.

The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

The following table outlines the reconciliation from net income (loss) to Adjusted EBITDA for the periods indicated:

 Three Months Ended Six Months Ended
(in thousands)June 30,  June 30,
 2021 2020 2021 2020
Net income (loss)$4,699   $3,597  $(15,735)  $(9,146) 
Interest expense, net14,495   16,200  28,854   32,265  
Provision for income taxes4,165   4,739  1,773   3,872  
Depreciation and amortization11,031   12,113  21,830   24,001  
EBITDA34,390   36,649  36,722   50,992  
        
Non-cash stock compensation expense1,926   844  2,653   1,957  
Warrant liability fair value adjustment (1)(666)  1,771  (366)  2,828  
Adjusted EBITDA$35,650   $39,264  $39,009   $55,777  
                   

(1) Reflects an adjustment to the fair value of the Company’s Series B Preferred Stock and Private warrant liabilities. The warrant liability fair value adjustment is a mark-to-market adjustment based on fluctuation in the Company's stock price or warrant stock price.

The following table outlines the reconciliation from 2021 projected net income to 2021 projected Adjusted EBITDA using estimated amounts:

  Guidance
  For the year ended December 31, 2021
(in thousands) Low Estimate High Estimate
     
Net income (loss) $4,000  $11,500 
     
Interest expense, net 61,000  61,000 
Depreciation and amortization 50,000  50,000 
Expense for income taxes 10,000  11,000 
EBITDA 125,000  133,500 
     
Non-cash stock compensation expense 4,000  4,500 
Warrant liability fair value adjustment 1,000  2,000 
Adjusted EBITDA $130,000  $140,000 
     

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