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Infrastructure and Energy Alternatives Announces Second Quarter 2022 Results

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Infrastructure and Energy Alternatives Inc.
Infrastructure and Energy Alternatives Inc.

INDIANAPOLIS, Aug. 04, 2022 (GLOBE NEWSWIRE) -- Infrastructure and Energy Alternatives, Inc. (Nasdaq: IEA) (“IEA” or the “Company”), a leading infrastructure company with renewable energy and specialty civil expertise, today announced results for the second quarter 2022.

SECOND QUARTER 2022 HIGHLIGHTS               
(As compared to the Second Quarter 2021)

  • On July 25, 2022, Announced Agreement to be Acquired by MasTec, Inc. (NYSE: MTZ)

  • Total Revenues of $680.6 million, +21.5% y/y

  • Renewables Backlog of $2.4 billion, +29.2% y/y

  • Total Backlog of $3.5 billion, +27.1% y/y

  • Net Income of $17.0 million, versus $4.7 million

  • Adjusted EBITDA of $40.5 million, +13.6%

Revenue increased by 21.5% on a year-over-year basis in the second quarter 2022, supported by double-digit growth across both the Renewables and Specialty Civil segments. Renewables segment revenue increased 18.3% on a year-over-year basis in the second quarter, including second quarter solar revenue growth of 126.8% and a decline in wind revenue of 18.5%. Specialty Civil segment revenue increased 31.5% on a year-over-year basis in the second quarter, driven by continued strength in environmental revenue and heavy civil, partially offset by a decline in rail revenue.

For the three months ended June 30, 2022, the Company reported net income of $17.0 million, or $0.31 per diluted share, versus net income of $4.7 million, or $0.12 per diluted share, in the second quarter 2021. Second quarter results include a $4.6 million pre-tax benefit related to a fair value adjustment of an outstanding warrant liability.

Second quarter Adjusted EBITDA benefited from increased revenue growth in both the Renewables and Specialty Civil segments; however, inflationary pressures and supply chain issues continued to increase project costs. For a reconciliation of net income to Adjusted EBITDA, please see the appendix to this release.

As of June 30, 2022, total backlog increased to $3.5 billion, versus $2.9 billion at the end of the fourth quarter 2021. Next twelve-month backlog was $2.2 billion, an increase from $2.1 billion at the end of fourth quarter 2021, and up 24.0% from the prior-year period.

SEGMENT PERFORMANCE

Revenue and Gross Profit by segment was as follows:

 

For the quarters ended June 30,

(in thousands)

 

2022

 

 

 

2021

 

Segment

Revenue

% of Total Revenue

 

Revenue

% of Total Revenue

Renewables

$

502,703

73.9

%

 

$

424,854

75.8

%

Specialty Civil

 

177,894

26.1

%

 

 

135,294

24.2

%

Total revenue

$

680,597

100.0

%

 

$

560,148

100.0

%


 

For the quarters ended June 30,

(in thousands)

 

2022

 

 

 

2021

 

Segment

Gross Profit

Gross Profit Margin

 

Gross Profit

Gross Profit Margin

Renewables

$

44,797

8.9

%

 

$

42,883

10.1

%

Specialty Civil

 

16,767

9.4

%

 

 

10,600

7.8

%

Total gross profit

$

61,564

9.0

%

 

$

53,483

9.5

%


Renewables Segment revenue totaled $502.7 million during the second quarter 2022, an increase of 18.3% compared to the prior year. The strength in the Company’s solar business continued, with revenues more than doubling from the prior year period, while wind revenues declined during the second quarter. Renewables Segment gross profit was $44.8 million, or 8.9% of revenue, for the second quarter of 2022, compared to $42.9 million, or 10.1% of revenue, for the same period in 2021. The decrease in gross profit margin percentage for the Renewables Segment was primarily due to the inflationary impact of labor, supply chain, fuel, and certain commodities which increased estimated future costs and decreased project margins. To a lesser extent, the decrease was driven by increased man hours, resulting in higher warranty and insurance costs.

Specialty Civil Segment revenue totaled $177.9 million, an increase of 31.5% year-over-year, due to growth in environmental and heavy civil. While rail revenues remained under pressure during the second quarter, bidding activity has started to improve. Specialty Civil Segment gross profit was $16.8 million, or 9.4% of revenue, for the second quarter of 2022, as compared to $10.6 million, or 7.8% of revenue, for the same period in 2021. The increase in gross profit percentage was primarily due to improved overhead cost absorption given the strong revenue growth and a more favorable project mix.

FINANCIAL RESOURCES AND LIQUIDITY

As of June 30, 2022, the Company had $46.5 million of cash and cash equivalents and total debt of $401.4 million, consisting of the $300.0 million senior unsecured notes, $30.0 million of borrowings under the Company’s credit facility, $2.3 million of commercial equipment notes, and $69.1 million of obligations, exclusive of associated interest, recognized under various finance leases for equipment. At the end of the quarter, the Company had $95.8 million of availability under its credit facility, net of borrowings and letters of credit. Combined with cash, total liquidity was $142.3 million.

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. Backlog is not a term recognized under GAAP, although it is a common measurement used in the Company’s industry. IEA’s methodology for determining backlog may not be comparable to the methodologies used by others. See Item 1A. Risk Factors in the Company’s Annual Report for the year ended December 31, 2021 and Part II, Item 1A. Risk Factors in the Company’s most recent Quarterly Report on Form 10-Q for a discussion of the risks associated with IEA’s backlog.

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

(in millions)

 

 

 

Segments

June 30, 2022

December 31, 2021

June 30, 2021

Renewables

$

2,404.4

 

$

2,034.8

 

$

1,861.1

Specialty Civil

 

1,105.8

 

 

881.3

 

 

900.7

Total

$

3,510.2

 

$

2,916.1

 

$

2,761.8


Total backlog at June 30, 2022 was $3.5 billion, an increase of $748.8 million, or 27.1% compared to the year-ago period. Renewables Segment backlog at June 30, 2022 was $2.4 billion, an increase of 29.2% compared to the prior year, as a result of strong growth in the solar market combined with steady performance in wind.

Specialty Civil backlog at June 30, 2022 was $1.1 billion, up 22.8% compared to last year due in large part to favorable market trends in environmental.

The Company expects to realize approximately $2.2 billion of its estimated backlog during the next twelve months, an increase of $434.1 million from the year-ago period.

MASTEC TRANSACTION DETAILS

On July 24, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with MasTec, Inc. (“MasTec”), a leading infrastructure construction company, under which MasTec will acquire all of the outstanding shares of the Company in a cash-and-stock transaction (the “Merger”). The Merger Agreement provides that each share of the Company’s common stock issued and outstanding immediately prior to the effective time of the Merger will be cancelled and converted in the Merger into the right to receive (i) 0.0483 of a share of MasTec common stock and (ii) $10.50 in cash.

Completion of the Merger is subject to the satisfaction or waiver of certain closing conditions. The Company cannot predict with certainty whether and when any of the required closing conditions will be satisfied or if the Merger will close.

Given the Company’s pending acquisition by MasTec, IEA is not hosting a conference call to discuss its second quarter financial results, and the Company is no longer providing financial guidance.

ABOUT IEA

Infrastructure and Energy Alternatives, Inc. 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 260 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 the Private Securities Litigation Reform Act of 1995. The use of words such as “anticipate,” “expect,” “could,” “may,” “will,” “intend,” “plan” and “believe,” among others, generally identify forward-looking statements. Forward-looking statements in this press release include, without limitation, statements regarding IEA’s pending merger with MasTec, market conditions and market volatility, IEA’s projected financial results, IEA’s ability to fund its growth initiatives and achieve sustained, profitable growth and long-term value creation, and IEA’s strategic priorities and plans to achieve those priorities. These forward-looking statements are based on currently available operating, financial, economic and other information, and are subject to a number of risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. A variety of factors, many of which are beyond our control, could cause actual future results or events to differ materially from those projected in the forward-looking statements in this release. For a description of risks and uncertainties that could cause actual results to differ from our forward-looking statements, please refer to IEA’s periodic filings with the Securities and Exchange Commission, including the risks and uncertainties described as “Risk Factors” in IEA’s annual report on Form 10-K filed on March 7, 2022 and in any quarterly reports on Form 10-Q filed thereafter. IEA does not undertake any obligation to update forward-looking statements whether as a result of new information, future events or otherwise, except as may be required under applicable law. All forward-looking statements are expressly qualified in their entirety by this cautionary statement.

INVESTOR CONTACT

Peter J. Moerbeek

Chief Financial Officer

 

Aaron Reddington, CFA

Vice President of Investor Relations

investors@iea.net


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,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenue

$

680,597

 

 

$

560,148

 

 

$

1,040,692

 

 

$

836,560

 

Cost of revenue

 

619,033

 

 

 

506,665

 

 

 

975,298

 

 

 

766,536

 

Gross profit

 

61,564

 

 

 

53,483

 

 

 

65,394

 

 

 

70,024

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

35,758

 

 

 

30,894

 

 

 

70,640

 

 

 

55,740

 

Income (loss) from operations

 

25,806

 

 

 

22,589

 

 

 

(5,246

)

 

 

14,284

 

 

 

 

 

 

 

 

 

Other income (expense), net:

 

 

 

 

 

 

 

Interest expense, net

 

(6,863

)

 

 

(14,495

)

 

 

(12,889

)

 

 

(28,854

)

Warrant liability fair value adjustment

 

4,581

 

 

 

666

 

 

 

3,153

 

 

 

366

 

Other income (expense)

 

(10

)

 

 

104

 

 

 

1

 

 

 

242

 

Income (loss) before (provision) benefit for income taxes

 

23,514

 

 

 

8,864

 

 

 

(14,981

)

 

 

(13,962

)

 

 

 

 

 

 

 

 

(Provision) benefit for income taxes

 

(6,545

)

 

 

(4,165

)

 

 

4,879

 

 

 

(1,773

)

 

 

 

 

 

 

 

 

Net income (loss)

$

16,969

 

 

$

4,699

 

 

$

(10,102

)

 

$

(15,735

)

Less: Convertible Preferred Stock dividends

 

 

 

 

(676

)

 

 

 

 

 

(1,332

)

Less: Net income allocated to participating securities

 

(32

)

 

 

(788

)

 

 

 

 

 

 

Net income (loss) available for common shareholders

$

16,937

 

 

$

3,235

 

 

$

(10,102

)

 

$

(17,067

)

 

 

 

 

 

 

 

 

Net income (loss) per common share - basic

 

0.35

 

 

 

0.13

 

 

 

(0.21

)

 

 

(0.72

)

Net income (loss) per common share - diluted

 

0.31

 

 

 

0.12

 

 

 

(0.21

)

 

 

(0.72

)

Weighted average shares - basic

 

48,419,272

 

 

 

24,471,286

 

 

 

48,275,103

 

 

 

23,768,413

 

Weighted average shares - diluted

 

54,389,096

 

 

 

33,439,303

 

 

 

48,275,103

 

 

 

23,768,413

 


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

 

 

June 30, 2022

 

 

 

December 31, 2021

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

46,480

 

 

$

124,027

 

Accounts receivable, net

 

404,118

 

 

 

280,700

 

Contract assets

 

303,967

 

 

 

214,298

 

Prepaid expenses and other current assets

 

51,983

 

 

 

42,774

 

Total current assets

 

806,548

 

 

 

661,799

 

 

 

 

 

Property, plant and equipment, net

 

153,279

 

 

 

138,605

 

Operating lease assets

 

33,316

 

 

 

37,292

 

Intangible assets, net

 

15,736

 

 

 

18,969

 

Goodwill

 

37,373

 

 

 

37,373

 

Company-owned life insurance

 

4,273

 

 

 

4,944

 

Other assets

 

789

 

 

 

771

 

Total assets

$

1,051,314

 

 

$

899,753

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

215,156

 

 

$

164,925

 

Accrued liabilities

 

204,012

 

 

 

163,364

 

Contract liabilities

 

169,015

 

 

 

126,128

 

Current portion of finance lease obligations

 

23,150

 

 

 

24,345

 

Current portion of operating lease obligations

 

10,201

 

 

 

10,254

 

Current portion of long-term debt

 

1,101

 

 

 

1,960

 

Total current liabilities

 

622,635

 

 

 

490,976

 

 

 

 

 

Finance lease obligations, less current portion

 

45,997

 

 

 

30,096

 

Operating lease obligations, less current portion

 

24,643

 

 

 

28,540

 

Long-term debt, less current portion

 

321,080

 

 

 

290,730

 

Warrant obligations

 

2,814

 

 

 

5,967

 

Deferred compensation

 

7,326

 

 

 

7,988

 

Deferred income taxes

 

3,320

 

 

 

8,199

 

Total liabilities

$

1,027,815

 

 

$

862,496

 

 

 

 

 

Commitments and contingencies:

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

Common stock, par value, $0.0001 per share; 150,000,000 and 150,000,000 shares authorized; 48,594,834 and 48,027,359 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

 

4

 

 

 

4

 

Additional paid-in capital

 

242,794

 

 

 

246,450

 

Accumulated deficit

 

(219,299

)

 

 

(209,197

)

Total stockholders' equity

 

23,499

 

 

 

37,257

 

Total liabilities and stockholders' equity

$

1,051,314

 

 

$

899,753

 


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

 

Six Months Ended June 30,

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

Net loss

$

(10,102

)

 

$

(15,735

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

 

25,181

 

 

 

21,830

 

Warrant liability fair value adjustment

 

(3,153

)

 

 

(366

)

Amortization of debt discounts and issuance costs

 

755

 

 

 

5,814

 

Share-based compensation expense

 

3,453

 

 

 

2,653

 

Deferred income taxes

 

(4,879

)

 

 

1,773

 

Other, net

 

(1,880

)

 

 

(914

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(123,418

)

 

 

(68,531

)

Contract assets

 

(89,669

)

 

 

(31,775

)

Prepaid expenses and other assets

 

(9,227

)

 

 

(13,752

)

Accounts payable and accrued liabilities

 

90,879

 

 

 

115,294

 

Contract liabilities

 

42,887

 

 

 

(27,669

)

Net cash used in operating activities

 

(79,173

)

 

 

(11,378

)

 

 

 

 

Cash flows from investing activities:

 

 

 

Company-owned life insurance

 

671

 

 

 

(510

)

Purchases of property, plant and equipment

 

(8,456

)

 

 

(14,649

)

Proceeds from sale of property, plant and equipment

 

2,379

 

 

 

1,527

 

Net cash used in investing activities

 

(5,406

)

 

 

(13,632

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Proceeds from line of credit - long term

 

50,000

 

 

 

 

Payments on line of credit - long term

 

(20,000

)

 

 

 

Payments on long-term debt

 

(1,263

)

 

 

(1,314

)

Payments on finance lease obligations

 

(14,596

)

 

 

(15,481

)

Tax payments for shares withheld on release of restricted stock units

 

(2,921

)

 

 

(4,762

)

Proceeds from exercise of Series B Preferred Stock - Warrants

 

 

 

 

200

 

Repurchases of Merger Warrants

 

(4,188

)

 

 

 

Net cash provided by (used in) financing activities

 

7,032

 

 

 

(21,357

)

 

 

 

 

Net change in cash and cash equivalents

 

(77,547

)

 

 

(46,367

)

 

 

 

 

Cash and cash equivalents, beginning of the period

 

124,027

 

 

 

164,041

 

 

 

 

 

Cash and cash equivalents, end of the period

$

46,480

 

 

$

117,674

 


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 loss to Adjusted EBITDA for the periods indicated:

 

Three Months Ended

 

Six Months Ended

(in thousands)

June 30,

 

June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income (loss)

$

16,969

 

 

$

4,699

 

 

$

(10,102

)

 

$

(15,735

)

Interest expense, net

 

6,863

 

 

 

14,495

 

 

 

12,889

 

 

 

28,854

 

Income tax expense (benefit)

 

6,545

 

 

 

4,165

 

 

 

(4,879

)

 

 

1,773

 

Depreciation and amortization

 

12,895

 

 

 

11,031

 

 

 

25,181

 

 

 

21,830

 

EBITDA

$

43,272

 

 

$

34,390

 

 

$

23,089

 

 

$

36,722

 

 

 

 

 

 

 

 

 

Non-cash stock compensation expense

$

1,823

 

 

$

1,926

 

 

$

3,453

 

 

$

2,653

 

Warrant liability fair value adjustment (1)

 

(4,581

)

 

 

(666

)

 

 

(3,153

)

 

 

(366

)

Adjusted EBITDA

$

40,514

 

 

$

35,650

 

 

$

23,389

 

 

$

39,009

 

(1) Reflects an adjustment to the fair value of the Company’s Series B Preferred Stock - anti-dilution warrants and private merger warrant liability. The liabilities are fair value adjustments using different valuation methods.