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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Infrastructure and Energy Alternatives Inc | NASDAQ:IEA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 13.72 | 13.72 | 13.72 | 0 | 01:00:00 |
Second Quarter Highlights
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 TotalRevenue | Revenue | % of TotalRevenue | |||||||
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 ProfitMargin | Gross Profit | Gross ProfitMargin | |||||||
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:
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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