INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC. ANNOUNCES FOURTH QUARTER AND FULL YEAR 2019 FINANCIAL RESULTS
Fourth Quarter Highlights
- Revenue totaled
$520.0 million, an increase of 89% year-over-year.
- Net income totaled
$11.0 million, consistent with the prior-year period.
- Adjusted EBITDA totaled
$47.1 million, or 9.1% of revenues, as compared to a loss of $18.8 million, or (6.8)% of revenues, in the prior-year period.
- Gross margins were 12.9%, as compared to (3.3)% in the prior-year period.
- Completed an
$80.0 millioncapital raise of Series B Preferred Stock and warrants to purchase common stock, using the proceeds to reduce borrowings under the Company’s term loan facility and significantly improve liquidity.
Full Year Highlights
- Revenue totaled approximately
$1.5 billion, up 87% year over year.
- Net income of
$6.2 million, up 46.8% year over year.
- Adjusted EBITDA of
$100.7 million, or 6.9% of revenues.
- Backlog of
$2.2 billionprovides excellent visibility into 2020.
- Raised a total of
$180.0 millionin Series B Preferred Stock to address the Company’s liquidity needs and reduce outstanding debt.
- Strong year-end liquidity, including
$147.3 millionin cash and cash equivalents.
$79.8 millionof operating cash flow.
“2019 was a year of progress for IEA,” said JP Roehm, IEA’s President and Chief Executive Officer. “We achieved revenues of approximately
Fourth Quarter Results
Revenue for the fourth quarter of 2019 totaled
Cost of revenue totaled
Gross profit totaled
Selling, general and administrative expenses were
Interest expense totaled
Other loss was
The effective tax rates for the period ended
Net income for the fourth quarter of 2019 was
Adjusted EBITDA was
Cash provided by operations during the year totaled
Backlog as of
IEA is now a significantly larger and more diversified engineering and construction business. The Company remains confident in its long-term growth outlook, driven primarily by a strong existing backlog, growing pipeline of opportunities and continued tailwinds across all of its end markets.
The Company is reiterating full year 2020 guidance issued in Form 8-K filed on
The settlement of the Company’s previously announced Rights Offering was completed on
The Company also announced today that
IEA will hold a conference call to discuss its fourth quarter 2019 results tomorrow,
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 use of offering proceeds, future financial performance, business strategies, expectations for our business, future operations, 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:
- 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, including impacts of the coronavirus strain, or COVID-19;
- our ability to identify acquisition candidates, integrate acquired businesses and realize upon the expected benefits of the acquisition of CCS and William Charles;
- consumer demand;
- 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 maintenance, materials, labor and other costs; and
- the “Risk Factors” described in our Annual Report on Form 10-K for the year ended
December 31, 2019, 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.
|Chief Financial Officer||ADDO Investor Relations|
Condensed Consolidated Statement of Operations
($ in thousands, except per share data)
|Three Months Ended||For the Years Ended|
|Cost of revenue||453,018||285,052||1,302,746||747,817|
|Selling, general and administrative expenses||35,241||29,140||120,186||72,262|
|Income (loss) from operations||31,740||(38,336||)||36,831||(40,736||)|
|Other income (expense), net:|
|Interest expense, net||(15,438||)||(8,120||)||(51,260||)||(12,080||)|
|Contingent consideration fair value adjustment||—||46,291||23,082||46,291|
|Other income (expense)||(3,518||)||(325||)||(4,043||)||(2,173||)|
|Income (loss) before benefit for income taxes||12,784||(490||)||4,610||(8,698||)|
|Benefit (provision) for income taxes||(1,731||)||11,475||1,621||12,942|
|Net income (loss)||$||11,053||$||10,985||$||6,231||$||4,244|
|Net income (loss) per common share - basic||0.51||(1.63||)||(0.97||)||(2.01||)|
|Net income (loss) per common share - diluted||0.31||(1.63||)||(0.97||)||(2.01||)|
|Weighted average shares - basic||20,446,811||21,928,029||20,431,096||21,665,965|
|Weighted average shares - diluted||35,711,512||21,928,029||20,431,096||21,665,965|
(1) See reconciliation of basic and diluted earnings per share below.
The calculations of basic and diluted EPS, are as follows:
|Three Months Ended||For the Years Ended|
|($ in thousands, except per share data)||2019||2018||2019||2018|
|Less: Convertible Series A Preferred Stock dividends||(673||)||(525||)||(2,875||)||(1,597||)|
|Less: Contingent consideration fair value adjustment||—||(46,291||)||(23,082||)||(46,291||)|
|Net income (loss) available to common stockholders||$||10,380||$||(35,831||)||$||(19,726||)||$||(43,644||)|
|Weighted average common shares outstanding - basic||20,446,811||21,928,029||20,431,096||21,665,965|
|Series B Preferred - Warrants||5,581,539||—||—||—|
|Convertible Series A Preferred Stock||8,357,909||—||—||—|
|Restricted stock units||1,325,253||—||—||—|
|Weighted average shares for diluted computation||35,711,512||—||—||—|
|Weighted average anti-dilutive shares (excluded):|
|Series B Preferred - Warrants||—||—||2,389,719||—|
|Convertible Series A Preferred Stock||—||3,902,045||8,816,119||3,100,085|
|Restricted stock units||—||237,782||904,608||59,445|
|Net income (loss) per common share - basic||$||0.51||$||(1.63||)||$||(0.97||)||$||(2.01||)|
|Net income (loss) per common share - diluted||$||0.31||$||(1.63||)||$||(0.97||)||$||(2.01||)|
Condensed Consolidated Balance Sheets
($ in thousands, except per share data)
|Cash and cash equivalents||$||147,259||$||71,311|
|Accounts receivable, net||203,645||161,366|
|Prepaid expenses and other current assets||16,855||12,864|
|Total current assets||547,062||356,662|
|Property, plant and equipment, net||140,488||176,178|
|Operating lease asset||43,431||—|
|Intangible assets, net||37,272||50,874|
|Company-owned life insurance||4,752||3,854|
|Deferred income taxes||12,992||11,215|
|Liabilities, Preferred Stock and Stockholders' Deficit|
|Current portion of finance lease obligations||23,183||17,615|
|Current portion of operating lease obligations||9,628||—|
|Current portion of long-term debt||1,946||32,580|
|Total current liabilities||486,277||364,563|
|Finance lease obligations, less current portion||41,055||45,912|
|Operating lease obligations, less current portion||34,572||—|
|Long-term debt, less current portion||162,901||295,727|
|Debt - Series B Preferred Stock||166,141||—|
|Series B Preferred Stock - warrant obligations||17,591||—|
|Commitments and contingencies:|
|Stockholders' equity (deficit):|
|Additional paid-in capital||17,167||4,751|
|Total stockholders' deficit||(109,103||)||(131,178||)|
|Total liabilities, preferred stock and stockholders' deficit||$||824,921||$||639,228|
Condensed Consolidated Statements of Cash Flows
($ in thousands)
|Cash flows from operating activities:|
|Adjustments to reconcile net income to net cash provided by (used in) operating activities:|
|Depreciation and amortization||48,220||16,699||5,044|
|Contingent consideration fair value adjustment||(23,082||)||(46,291||)||—|
|Warrant liability fair value adjustment||2,262||—||—|
|Amortization of debt discounts and issuance costs||5,435||1,321||—|
|Loss on extinguishment of debt||—||1,836||—|
|Share-based compensation expense||4,016||1,072||53|
|Allowance for doubtful accounts||33||(174||)||81|
|Accrued dividends on Series B Preferred Stock||10,389||—||—|
|Deferred income taxes||(1,563||)||(12,017||)||11,451|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other assets||(4,222||)||(2,123||)||587|
|Accounts payable and accrued liabilities||84,689||95,398||(27,212||)|
|Net cash provided by (used in) operating activities||79,812||47,018||(9,109||)|
|Cash flows from investing activities:|
|Company-owned life insurance||(898||)||396||(2,036||)|
|Purchases of property, plant and equipment||(6,764||)||(4,230||)||(2,248||)|
|Proceeds from sale of property, plant and equipment||8,272||690||776|
|Acquisition of businesses, net of cash acquired||—||(166,690||)||—|
|Net cash provided by (used in) investing activities||610||(169,834||)||(3,508||)|
|Cash flows from financing activities:|
|Proceeds from long-term debt and line of credit - short-term||50,400||497,272||33,674|
|Payments on long-term debt||(217,034||)||(155,359||)||—|
|Payments on line of credit - short-term||—||(38,447||)||—|
|Extinguishment of debt||—||(53,549||)||—|
|Debt financing fees||(22,246||)||(26,641||)||—|
|Payments on capital lease obligations||(22,850||)||(7,138||)||(3,049||)|
|Proceeds from issuance of stock - Series B Preferred Stock||180,000||—||—|
|Proceeds from stock-based awards, net||159||—||—|
|Merger recapitalization transaction||2,754||(25,816||)||—|
|Net cash (used in) provided by financing activities||(4,474||)||189,250||(4,113||)|
|Net change in cash and cash equivalents||75,948||66,434||(16,730||)|
|Cash and cash equivalents, beginning of the period||71,311||4,877||21,607|
|Cash and cash equivalents, end of the period||$||147,259||$||71,311||$||4,877|
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 net income (loss) plus depreciation and amortization, interest expense, provision (benefit) for income taxes, 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||For the Years Ended|
|Net income (loss)||$||11,053||$||10,985||$||6,231||$||4,244|
|Interest expense, net||15,438||8,120||51,260||12,080|
|Provision (benefit) for income taxes||1,731||(11,475||)||(1,621||)||(12,942||)|
|Depreciation and amortization||11,846||10,108||48,220||16,699|
|Diversification SG&A (1)||—||972||—||3,868|
|Credit support fees (2)||—||—||—||231|
|Consulting fees & expenses (3)||—||5||—||438|
|Non-cash stock compensation expense||1,203||572||4,016||1,072|
|Transaction costs (4)||—||—||—||8,521|
|Merger and acquisition costs (5)||—||8,190||—||15,792|
|Acquisition integration costs (6)||1,354||—||10,082||—|
|Loss on extinguishment of debt (7)||—||—||—||1,835|
|Settlement of customer project dispute (8)||—||—||—||8,500|
|Contingent consideration fair value adjustment (9)||—||(46,291||)||(23,082||)||(46,291||)|
|Series B Preferred warrant liability fair value adjustment (10)||2,262||—||2,262||—|
|Project settlement legal fees (11)||(1,186||)||—||—||—|
|Adjusted EBITDA margin||9.1||%||(6.8||)%||6.9||%||1.8||%|
- Diversification selling, general and administrative reflects the costs, including recruiting, compensation and benefits for additional personnel, associated with IEA beginning to expand into electrical transmission work and corresponding services, which were historically subcontracted to third parties. These costs currently did not have corresponding revenue in fiscal year 2018.
- Credit support fees reflect payments to Oaktree for its guarantee of certain borrowings.
- Consulting fees and expenses represents consulting and professional fees and expenses in connection with the merger with
M III Acquisition Corp.
- Transaction costs include legal, consulting, filing and other costs associated with the acquisition of IEA Energy Services by
M III Acquisition Corp.and the subsequent public listing of IEA securities on the NASDAQ stock exchange.
- Merger and acquisition costs include legal, consulting, travel, personnel and other costs associated with our original Merger to become a public company in the first quarter of 2018 and related to our two acquisitions completed in the third and fourth quarter of 2018.
- Acquisition integration costs related to CCS and William Charles include legal, consulting, personnel and other costs associated with the acquisitions of CCS and William Charles.
- Expense of previously deferred financing fees in connection with refinancing the Company's credit facility in
- Settlement of dispute with a customer regarding the costs to be incurred to complete a project and the loss of revenue related to unbilled change orders. The add back reflects the associated negative impact to gross margin. While IEA believed it had a strong legal position to support the charges, management determined that it was in the best interests of the Company to settle the dispute, retain the important customer relationship and secure the award of an additional Wind energy project with the customer.
- Reflects an adjustment to the fair value of its contingent consideration incurred in connection with the Company's merger and initial public offering transactions in
March 2018. The contingent consideration fair value adjustment is a mark-to-market adjustment based on the Company not anticipating reaching EBITDA requirements outlined in the original agreement.
- Reflects an adjustment to the fair value of its Series B Preferred Stock warrant liabilities. The warrant liability fair value adjustment is a mark-to-market adjustment based on fluctuation in the Company's stock price.
- Project settlement legal fees reflect fees related to extreme weather-related events that occurred on projects at the end of 2018. These project legal costs were significantly higher due to the complexity of the settlement process when compared to non-weather related projects. In the fourth quarter the settlement of some of these claims are recorded in gross profit and the related legal expenses were also included in gross profit.
- Other reflects unanticipated charges related to tax and warranty on solar projects that were previously disclosed as part of our Discontinued Operations in
Canadain 2016 and gain/losses on asset sales.
The following table outlines the reconciliation from 2020 projected net income to 2020 projected Adjusted EBITDA for the periods indicated using relevant estimated figures:
|For the year ended
||For the year ended
|(in thousands)||Actual||Low Estimate||High Estimate|
|Net income (loss)||$||6,231||$||(6,000||)||$||(4,000||)|
|Interest expense, net||51,260||55,500||66,500|
|Depreciation and amortization||48,220||50,400||55,000|
|Provision for income taxes||(1,621||)||(400||)||(1,000||)|
|Non-cash stock compensation expense||4,016||4,500||5,500|
|Acquisition integration costs||10,082||—||—|
|Contingent consideration fair value adjustment||(23,082||)||—||—|
|Series B Preferred warrant liability fair value adjustment||2,262||1,000||3,000|
Source: Infrastructure and Energy Alternatives, Inc.