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

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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

Segment

Revenue

% of Total
Revenue

Revenue

% of Total
Revenue

Wind

$

317,066

56.6

%

$

317,151

66.0

%

Solar

107,788

19.2

%

7,111

1.5

%

Renewables Segment

$

424,854

75.8

%

$

324,262

67.5

%

Specialty Civil Segment

135,294

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

Segment

Gross Profit

Gross Profit
Margin

Gross Profit

Gross Profit
Margin

Renewables

$

42,883

10.1

%

$

36,983

11.4

%

Specialty Civil

10,600

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)

Segments

June 30, 2021

December 31, 2020

June 30, 2020

Wind

$

1,061.0

$

1,093.1

$

852.1

Solar

800.1

420.3

325.5

Renewables

$

1,861.1

$

1,513.4

$

1,177.6

Specialty Civil

900.7

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. Moerbeek

Kimberly Esterkin

Chief Financial Officer

ADDO 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 revenue

506,665

426,363

766,536

751,485

Gross profit

53,483

54,241

70,024

87,282

Selling, general and administrative expenses

30,894

28,074

55,740

57,558

Income from operations

22,589

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 taxes

8,864

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 - basic

0.13

0.11

(0.72

)

(0.51

)

Net income (loss) per common share - diluted

0.12

0.09

(0.72

)

(0.51

)

Weighted average shares - basic

24,471,286

20,751,673

23,768,413

20,636,944

Weighted average shares - diluted

33,439,303

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, net

232,323

163,793

Contract assets

176,958

145,183

Prepaid expenses and other current assets

33,007

19,352

Total current assets

559,962

492,369

Property, plant and equipment, net

135,514

130,746

Operating lease assets

37,701

36,461

Intangible assets, net

22,202

25,434

Goodwill

37,373

37,373

Company-owned life insurance

4,760

4,250

Deferred income taxes

295

2,069

Other assets

533

438

Total assets

$

798,340

$

729,140

Liabilities and Stockholder's Equity (Deficit)

Current liabilities:

Accounts payable

$

149,352

$

104,960

Accrued liabilities

201,828

129,594

Contract liabilities

90,566

118,235

Current portion of finance lease obligations

24,842

25,423

Current portion of operating lease obligations

9,817

8,835

Current portion of long-term debt

2,277

2,506

Total current liabilities

478,682

389,553

Finance lease obligations, less current portion

27,370

32,146

Operating lease obligations, less current portion

29,355

29,154

Long-term debt, less current portion

161,266

159,225

Debt - Series B Preferred Stock

176,556

173,868

Warrant obligations

8,834

9,200

Deferred compensation

7,930

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, respectively

17,483

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, respectively

3

2

Additional paid in capital

32,064

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 amortization

21,830

24,001

Warrant liability fair value adjustment

(366

)

2,828

Amortization of debt discounts and issuance costs

5,814

5,379

Share-based compensation expense

2,653

1,957

Loss on sale of equipment

574

Deferred compensation

(742

)

(830

)

Accrued dividends on Series B Preferred Stock

7,959

Deferred income taxes

1,773

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 liabilities

115,294

(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 equipment

1,527

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 warrants

200

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 period

164,041

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, net

14,495

16,200

28,854

32,265

Provision for income taxes

4,165

4,739

1,773

3,872

Depreciation and amortization

11,031

12,113

21,830

24,001

EBITDA

34,390

36,649

36,722

50,992

Non-cash stock compensation expense

1,926

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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