SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 9, 2022
Infrastructure & Energy Alternatives, Inc.
(Exact name of registrant as specified in its charter)
|Delaware|| ||001-37796|| ||47-4787177|
|(State or other jurisdiction|
| ||(Commission File Number)|| ||(IRS Employer|
6325 Digital Way
|(Address of principal executive offices)|| ||(Zip Code)|
Registrant’s telephone number, including area code: (800) 688-3775
Securities registered pursuant to Section 12(b) of the Act:
|Title of each class||Trading Symbols(s)||Name of exchange on which registered|
|Common Stock, $0.0001 par value||IEA||The Nasdaq Stock Market LLC|
|Warrants for Common Stock||IEAWW||The Nasdaq Stock Market LLC|
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
The information contained in Item 7.01 of this Current Report on Form 8-K is incorporated by reference in this Item 2.02.
Item 7.01. Regulation FD Disclosure
On May 9, 2022, the Company announced its financial results for the quarter ended March 31, 2022, and the Company increased its revenue guidance and reiterated adjusted EBITDA guidance for the year ending December 31, 2022. In addition, on May 9, 2022, the Company posted an updated investor presentation on its website. A copy of the Company’s earnings press release and investor presentation is furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K and incorporated by reference in this Item 7.01. The information contained in this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|Dated: May 9, 2022|
|INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.|
|By:||/s/ Peter J. Moerbeek|
|Name:||Peter J. Moerbeek|
|Title:||Chief Financial Officer|
INFRASTRUCTURE AND ENERGY ALTERNATIVES
ANNOUNCES FIRST QUARTER 2022 RESULTS
INDIANAPOLIS, May 9, 2022 – 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 first quarter 2022.
FIRST QUARTER 2022 HIGHLIGHTS
(As compared to the First Quarter 2021)
▪Record Total Revenues of $360.1 million, +30.3% y/y
▪Record Renewables Backlog of $2.1 billion, +7.0% y/y
▪Record Total Backlog of $2.9 billion, +10.1% y/y
▪Net Loss of ($27.1) million, versus a Net Loss of ($20.4) million
▪Adjusted EBITDA of ($17.1) million, versus $3.4 million
▪Increased 2022 Revenue Guidance to between $2.3 billion and $2.5 billion
Revenue increased by 30% on a year-over-year basis in the first quarter 2022, supported by growth across both the Renewables and Specialty Civil segments. Renewables segment revenue increased 35% on a year-over-year basis in the first quarter, and within Renewables, first quarter solar revenue increased by 275% and represented more than half of total Renewables revenues, while wind revenue declined by 20%. Specialty Civil segment revenue increased 21% on a year-over-year basis in the first quarter, driven by continued strength in environmental revenue, including an increase in projects under construction compared to the prior year and steady growth in heavy civil, partially offset by a decline in rail revenue.
For the three months ended March 31, 2022, the Company reported a net loss of ($27.1) million, or ($0.56) per diluted share, versus a net loss of ($20.4) million, or ($0.91) per diluted share, in the first quarter 2021.
Adjusted EBITDA declined to ($17.1) million in the first quarter 2022, versus $3.4 million in the prior-year period. First quarter Adjusted EBITDA was impacted by lower project gross margins in both the Renewables and Specialty Civil segments, due to inflationary pressures on project costs, particularly in our Renewables business, combined with increased close out costs on certain heavy civil projects. For a reconciliation of net income to Adjusted EBITDA, please see the appendix to this release.
As of March 31, 2022, total backlog increased to $2,946 million, versus $2,916 million at the end of the fourth quarter 2021. Next twelve-month backlog was $2,085 million, a decline from $2,152 million at the end of fourth quarter 2021, but still up 12.6% from the prior-year period.
“The IEA team delivered 30% year-over-year organic revenue growth, achieving record total revenue in the first quarter and record total backlog. I am happy to report that demand is strong across both our Renewables and Specialty Civil segments,” stated JP Roehm, President and CEO of IEA. “Markets for our core renewables and environmental services remain robust, while bidding activity in our heavy civil and rail businesses accelerated into the second quarter.”
“Despite strong revenue growth, our margins were adversely impacted by inflationary costs for fuel, supply chain cost increases and delays, and availability of local labor,” continued Roehm. “While we expect that many of these challenges will remain throughout the rest of 2022, we believe that we will see improvements to our project margins and overall profitability, and continue to expect record revenue and Adjusted EBITDA for the full year. It’s worth noting first quarter for our business has historically been our slowest, with projects ramping up quickly in the following three quarters, we expect that cadence to continue this year.”
“Our solar customers are effectively navigating market-wide concerns regarding both the availability and rising cost of panels,” noted Roehm. “At this juncture, many of our solar customers have successfully sourced panel inventory and anticipate limited, if any, impact from current market volatility. In some instances where panels remain on order, we are being asked to complete civil and mechanical work ahead of panel delivery, to ensure that projects remain on-schedule or experience only modest delays. Across the organization, we continue to have a strong backlog of additional projects to fill in any gaps in project cadence and support full utilization of our teams, which provides further confidence to our full-year outlook.”
“Entering 2022, we recognized the potential for some near-term margin headwinds and considered these factors in our full-year 2022 financial guidance,” continued Roehm. “These headwinds were exacerbated in the first quarter because of rapid increases in fuel costs primarily resulting from the unexpected Russian invasion of Ukraine and the recently announced Department of Commerce investigation. As a result of our first quarter results, our confidence in our current backlog and the status of panel availability for our solar projects, we are updating our full-year 2022 financial guidance by increasing our revenue guidance to a range of $2.3 to $2.5 billion, while maintaining our Adjusted EBITDA guidance range of $140 million to $150 million. This change reflects the reality of current margin headwinds impacting our business, which we anticipate will be offset with higher revenue. We will continue to monitor the factors that could impact our ability to achieve our previously forecasted results.”
“Our core investment thesis, which highlights the benefits of our diverse, renewables-weighted revenue mix, strong customer relationships, track record of successful execution and simplified capital structure, remains unchanged,” concluded Roehm. “IEA continues to grow across all sectors and is seeing particularly strong growth in our solar business. We believe that we are well-equipped to overcome the near-term margin headwinds that impacted our first quarter performance, while remaining on-track to achieve another year of strong performance, highlighted by record revenue and EBITDA.”
IEA has continued to execute on its core strategic priorities, while positioning the organization for sustained, profitable growth and long-term value creation. The Company’s strategic priorities and recent successes against these strategies are as follows:
•Develop a leading position of scale within markets where IEA is competitively advantaged. IEA intends to leverage its technical expertise, geographic reach, scale, and strong customer relationships across its key business lines to drive continued backlog growth and market share gains through a combination of organic and inorganic growth. Over the last twelve months, IEA generated total organic revenue growth of 29%, while the renewables segment revenue increased 42% on an organic basis, versus the prior twelve-month period.
•Capitalize on favorable long-term fundamentals within renewables, environmental, and infrastructure markets. In 2021, approximately 70% of IEA’s revenue was derived from solar and wind-related EPC services. Over the next five years, IEA expects more than 100 GW of new utility-scale solar capacity to be installed within the United States, an increase of more than 80% versus the prior, five-year period. Onshore wind installations are also anticipated to remain strong, with 110 GW of new, installed capacity expected to be online by 2030. Within the Company’s non-renewable, environmental services markets, demand conditions are robust, and we believe there is a multi-decade potential opportunity of $50-150 billion for coal ash remediation. With a strong track record of execution, experienced skilled work force, and broad geographic presence, IEA is well-positioned to take advantage of these trends as highlighted by our recent backlog strength.
•Maintain bidding discipline, drive economies of scale, and execute on operational efficiencies to support margin expansion. IEA intends to pursue higher-value, margin-enhancing opportunities, while leveraging its size and scale to deliver exceptional value for our customers. The Company entered the solar business in 2019 and believes that, while challenged in 2022, margins will continue to improve as the business grows and realizes the benefits of economies of scale.
•Further simplify capital structure, while maintaining a strong balance sheet and sufficient liquidity to support growth. During 2021, IEA undertook a capital structure simplification plan that resulted in lower debt costs, a more flexible capital structure, and reduced leverage. As part of this plan, in November 2021, IEA’s Board of Directors authorized a program to repurchase up to $25 million of outstanding warrants (Nasdaq: IEAWW) to further streamline the Company’s capital structure. Since announcing this program, IEA has repurchased nearly 65% of the outstanding warrants at a total cost of $14.8 million through the end of Q1 2022. The program will end no later than the expiration of the warrants on March 26, 2023. IEA intends to exercise a disciplined approach to repurchases until the program is complete or the warrants expire. As of March 31, 2022, IEA had more than $161.4 million in available cash and availability on its credit facilities to support the growth of the business.
•Pursue disciplined capital allocation strategy. IEA intends to prioritize capital allocation to optimize its return on invested capital. The Company expects to continue to invest in organic growth initiatives by expanding product and services offerings to better serve customers, further developing industry-leading technical expertise, and growing its skilled labor workforce. The Company also intends to pursue complementary, bolt-on acquisitions that further strengthen the Company’s position in high-growth and attractive end markets, increase its service capabilities in adjacent markets, expand its geographic presence and enhance its blended margin profile.
Revenue and Gross Profit by segment was as follows:
|For the quarters ended March 31, |
|Segment||Revenue||% of Total Revenue||Revenue||% of Total Revenue|
|Renewables||$||243,614 ||67.7 ||%||$||180,374 ||65.3 ||%|
|Specialty Civil||116,481 ||32.3 ||%||96,038 ||34.7 ||%|
| Total revenue||$||360,095 ||100.0 ||%||$||276,412 ||100.0 ||%|
|For the quarters ended March 31, |
|Segment||Gross Profit||Gross Profit Margin||Gross Profit||Gross Profit Margin|
|Renewables||$||1,301 ||0.5 ||%||$||12,180 ||6.8 ||%|
|Specialty Civil||2,529 ||2.2 ||%||4,361 ||4.5 ||%|
| Total gross profit||$||3,830 ||1.1 ||%||$||16,541 ||6.0 ||%|
Renewables Segment revenue totaled $243.6 million during the first quarter 2022, an increase of 35.1% compared to the prior year. The strength in the Company’s solar business continued, with revenues up nearly four-fold during the first quarter, while wind revenues declined during the first quarter. Renewables Segment gross profit was $1.3 million, or 0.5% of revenue, for the first quarter of 2022, compared to $12.2 million, or 6.8% 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; and to a lesser extent, increased training costs as the Company continues to grow our labor force to execute our backlog.
Specialty Civil Segment revenue totaled $116.5 million, an increase of 21.3% year-over-year, due to growth in environmental and heavy civil. While rail revenues remained under pressure during the first quarter, bidding activity has started to improve. Specialty Civil Segment gross profit was $2.5 million, or 2.2% of revenue, for the first quarter of 2022, as compared to $4.4 million, or 4.5% of revenue, for the same period in 2021. The decrease in gross profit percentage was primarily due to inflationary pressures discussed above. Additionally, we recorded increased close out costs related to certain projects.
FINANCIAL RESOURCES AND LIQUIDITY
As of March 31, 2022, the Company had $28.7 million of cash and cash equivalents and total debt of $366.5 million, consisting of the $300.0 million senior unsecured notes, $3.0 million of commercial equipment notes, and $63.5 million of obligations, exclusive of associated interest, recognized under various finance leases for equipment. At the end of the quarter, the Company had $132.7 million of availability under its credit facility, net of letters of credit. Combined with cash, total liquidity was $161.4 million.
IEA defines “backlog” as the amount of revenue the Company expects to realize from the uncompleted portions of existing construction contracts, including new contracts under which work has not begun and awarded contracts for which the definitive project documentation is being prepared. Backlog is not a term recognized under GAAP, although it is a common measurement used in the Company’s industry. IEA’s methodology for determining backlog may not be comparable to the methodologies used by others. See Item 1A. Risk Factors in the Company’s Annual Report for a discussion of the risks associated with IEA’s backlog.
The following table summarizes the Company’s backlog by segment for the periods below:
|Segments||March 31, 2022||December 31, 2021|
|Renewables||$||2,084.8 ||$||2,034.8 |
|Specialty Civil||861.2 ||881.3 |
| Total||$||2,946.0 ||$||2,916.1 |
Total backlog at March 31, 2022 was $2.9 billion, an increase of $270.2 million, or 10.1% compared to the year-ago period. Renewables Segment backlog at March 31, 2022 was $2.1 billion, an increase of 7.0% 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 March 31, 2021 was $861.2 million, up 18.4% compared last year due in large part to favorable market trends in environmental.
The Company expects to realize approximately $2.1 billion of its estimated backlog during the next twelve months, an increase of $233 million from the year-ago period.
IEA has provided the following updated financial guidance for the full-year 2022. Full-year guidance accounts for normal factors that may impact our business, including but not limited to weather, permitting delays and project timing, supply chain disruptions, labor constraints, and inflationary factors. All guidance is current as of May 9, 2022 and is subject to change.
•Total revenue of between $2.3 billion and $2.5 billion
•Total Adjusted EBITDA of between $140 million and $150 million
For a reconciliation of projected Adjusted EBITDA to projected net income, please see the table at the end of this release.
FIRST QUARTER 2022 CONFERENCE CALL
Management will conduct a conference call on Tuesday, May 10, 2022 at 11:00 am Eastern Time to discuss the quarterly results for the first quarter 2022.
A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of the Company’s corporate website at https://ir.iea.net. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register and download and install any necessary audio software.
To participate in the live teleconference:
To listen to a replay of the teleconference, which will be available through June 10, 2022:
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.
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. 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 full description of the risks and uncertainties which could cause actual results to differ from our forward-looking statements, please refer to IEA’s periodic filings with the Securities & Exchange Commission including those 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 securities laws.
Peter J. Moerbeek
Chief Financial Officer
|Aaron Reddington, CFA|
|Vice President of Investor Relations|
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Consolidated Statements of Operations
($ in thousands, except per share data)
|Three Months Ended|
|Revenue||$||360,095 ||$||276,412 |
|Cost of revenue||356,265 ||259,871 |
|Gross profit||3,830 ||16,541 |
|Selling, general and administrative expenses||34,882 ||24,846 |
|Loss from operations||(31,052)||(8,305)|
|Other income (expense), net:|
|Interest expense, net||(6,026)||(14,359)|
|Warrant liability fair value adjustment||(1,428)||(300)|
|Other income ||11 ||138 |
|Loss before benefit for income taxes||(38,495)||(22,826)|
|Benefit for income taxes||11,424 ||2,392 |
|Less: Convertible Preferred Stock dividends||— ||(656)|
|Net loss available for common stockholders||$||(27,071)||$||(21,090)|
|Net loss per common share - basic and diluted||(0.56)||(0.91)|
|Weighted average shares - basic and diluted||48,129,331 ||23,057,731 |
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Consolidated Balance Sheets
($ in thousands, except per share data)
|Cash and cash equivalents||$||28,732 ||$||124,027 |
|Accounts receivable, net||254,540 ||280,700 |
|Contract assets||220,119 ||214,298 |
|Prepaid expenses and other current assets||73,070 ||42,774 |
|Total current assets||576,461 ||661,799 |
|Property, plant and equipment, net||148,486 ||138,605 |
|Operating lease assets||35,904 ||37,292 |
|Intangible assets, net||17,352 ||18,969 |
|Goodwill||37,373 ||37,373 |
|Company-owned life insurance||4,786 ||4,944 |
|Deferred income taxes||3,226 ||— |
|Other assets||771 ||771 |
|Total assets||$||824,359 ||$||899,753 |
|Liabilities and Stockholders' Equity|
|Accounts payable||$||131,415 ||$||164,925 |
|Accrued liabilities||128,832 ||163,364 |
|Contract liabilities||148,452 ||126,128 |
|Current portion of finance lease obligations||24,778 ||24,345 |
|Current portion of operating lease obligations||10,401 ||10,254 |
|Current portion of long-term debt||1,573 ||1,960 |
|Total current liabilities||445,451 ||490,976 |
|Finance lease obligations, less current portion||38,714 ||30,096 |
|Operating lease obligations, less current portion||27,049 ||28,540 |
|Long-term debt, less current portion||290,891 ||290,730 |
|Warrant obligations||7,395 ||5,967 |
|Deferred compensation||7,658 ||7,988 |
|Deferred income taxes||— ||8,199 |
|Total liabilities||817,158 ||862,496 |
|Commitments and contingencies:|
Common stock, par value, $0.0001 per share; 150,000,000 and 150,000,000 shares authorized; 48,323,406 and 48,027,359 shares issued and 48,323,406 and 48,027,359 outstanding at March 31, 2022 and December 31, 2021, respectively
|4 ||4 |
|Additional paid-in capital||243,465 ||246,450 |
|Total stockholders' equity||7,201 ||37,257 |
|Total liabilities and stockholders' equity||$||824,359 ||$||899,753 |
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
|Three Months Ended March 31,|
|Cash flows from operating activities:|
|Adjustments to reconcile net loss to net cash used in operating activities:|
|Depreciation and amortization||12,286 ||10,799 |
|Warrant liability fair value adjustment||1,428 ||300 |
|Amortization of debt discounts and issuance costs||377 ||2,859 |
|Share-based compensation expense||1,630 ||727 |
|Deferred income taxes||(11,424)||(2,392)|
|Changes in operating assets and liabilities:|
|Accounts receivable||26,160 ||(7,513)|
|Prepaid expenses and other assets||(30,296)||(27,304)|
|Accounts payable and accrued liabilities||(68,042)||(31,593)|
|Contract liabilities||22,324 ||23,186 |
|Net cash used in operating activities||(79,021)||(53,780)|
|Cash flows from investing activities:|
|Company-owned life insurance||158 ||(269)|
|Purchases of property, plant and equipment||(4,788)||(3,920)|
|Proceeds from sale of property, plant and equipment||553 ||667 |
|Net cash used in investing activities||(4,077)||(3,522)|
|Cash flows from financing activities:|
|Proceeds from line of credit - long term||10,000 ||— |
|Payments on line of credit - long term||(10,000)||— |
|Payments on long-term debt||(603)||(686)|
|Payments on finance lease obligations||(6,979)||(7,971)|
|Shares for tax withholding on release of restricted stock units||(1,810)||(2,909)|
|Repurchases of public warrants||(2,805)||—|
|Net cash used in financing activities||(12,197)||(11,566)|
|Net change in cash and cash equivalents||(95,295)||(68,868)|
|Cash and cash equivalents, beginning of the period||124,027 ||164,041 |
|Cash and cash equivalents, end of the period||$||28,732 ||$||95,173 |
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|
|(in thousands)||March 31,|
|Interest expense, net||6,026 ||14,359 |
|Benefit for income taxes||(11,424)||(2,392)|
|Depreciation and amortization||12,286 ||10,799 |
|Non-cash stock compensation expense||1,630 ||727 |
Warrant liability fair value adjustment (1)
|1,428 ||300 |
|Adjusted EBITDA||$||(17,125)||$||3,359 |
(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.
The following table outlines the reconciliation from 2022 projected net income to 2022 projected Adjusted EBITDA using estimated amounts:
|For the year ended December 31, 2022|
|(in thousands)||Low Estimate||High Estimate|
|Net income||$||45,000 ||$||51,000 |
|Interest expense, net||25,000 ||26,000 |
|Depreciation and amortization||47,000 ||48,000 |
|Expense for income taxes||18,000 ||19,000 |
|EBITDA||135,000 ||144,000 |
|Non-cash stock compensation expense||5,000 ||6,000 |
|Adjusted EBITDA||$||140,000 ||$||150,000 |
© 2022. IEA. All Rights Reserved. INVESTOR PRESENTATION MAY 2022
© 2022. IEA. All Rights Reserved. 2 This presentation 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. Other than statements of historical fact included in this Annual Report, all statements regarding expectations for 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 Annual Report 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 new and emerging strains and variants), 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 mitigate its impact, and the potential negative impacts of COVID-19 on permitting and project construction cycles, the U.S. economy and financial markets; • supply chain and labor market disruptions; • 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, 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 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 the Annual Report, 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. SAFE HARBOR STATEMENT
3 © 2022. IEA. All Rights Reserved. A MARKET LEADER IN THE RENEWABLE ENERGY TRANSITION Atlas Clean Energy Index Select ESG Index Memberships Infrastructure and Energy Alternatives (“IEA”) is a leading provider of renewable energy services and transportation construction solutions in the United States. REPORTABLE SEGMENTS RENEWABLES SPECIALTY CIVIL GROWING REVENUE STRONG BACKLOG IMPROVED BALANCE SHEET RENEWABLES FOCUSED STRONG GROWTH TRENDS INDUSTRY TAIL-WINDS LONG-STANDING CUSTOMER RELATIONSHIPS Nasdaq: IEA STOCK TICKER SYMBOL Revenue CAGR(2) 2018-LTM Q1 2022 37% Renewables Revenue % of LTM Q1 2022 71% $2.2 Total Revenue LTM Q1 2022 billion Adjusted EBITDA(1) LTM Q1 2022 million$114.6 (1) See appendix for Adjusted EBITDA reconciliation to net income. (2) Revenue CAGR from full year 2018 (IPO) to LTM Q1 2022.
4 © 2022. IEA. All Rights Reserved. LEADERSHIP POSITIONS EXPANDING LEADERSHIP IN KEY RENEWABLE MARKETS IEA ranks on the 2021 Engineering News-Record Top 400 Contractors and Sourcebook List #2 WIND #8 SOLAR #4 POWER #17 RAIL #5 MINING #18 HIGHWAYS #39 TRANSPORTATION #48 TOP 400
5 © 2022. IEA. All Rights Reserved. RENEWABLE ENERGY DEVELOPMENT HOW IEA ADDS VALUE TO THE PROCESS Customers Renewable EPC Construction Services Illustrative EPC Services Engineering Procurement / Construction • Geotechnical • Preliminary & Detail • Engineering Management • Surveying & Permitting • Engineered Equipment Procurement • Public/Private Roads • WTG Foundations, Offloading, Erection & Installation • Medium Voltage U/G System • High Voltage Substation + Transmission Line • Repowering Illustrative Services • Development • Financing • Procurement and scheduling of key components (panels, blades, and turbines) • Operations IEA Risk Profile Short duration contracts Typical renewable project lasts 12-18 months after Notice to Proceed (NTP) Limited price risk IEA procures critical materials after receiving the NTP to limit price fluctuations from our bid estimate No large contract risk (1) IEA’s wind and solar projects are similar in size with no large contract risk 73% 27% Wind Solar Average Project Size: $50-60mm Illustrative customer base (1) Renewable revenue split based on LTM Q1 2022 results.
6 © 2022. IEA. All Rights Reserved. Constructed over 24.4 GW of wind and solar projects that annually offset 7.3 MILLION HOMES POWERED ANNUALLY 7.1 MILLION VEHICLE EMISSIONS CUT ANNUALLY CO2 – 32.8 million MT | NOx – 17.9 MT | SO2 – 19.5 MT | PM2.5 – 2.2 MT 1) Homes powered per year based on the GW installed compared to the average annual electricity consumption in the US per household, then further adjusted for industry average capacity factors. 2) Passenger vehicle equivalent based on CO2 emissions data using the EPA Greenhouse Gas Equivalencies Calculator. 3) Annual offsets estimated based on the emissions avoided by generating electricity with wind projects and solar PV with cumulative capacity equivalent to IEA’s cumulative installations of renewable energy projects as follows: (i) CO2, sulfur dioxide, nitrogen oxides, and particulate matter from national emission factors in EPA AVERT 2019 calculator; and (ii) annual average capacity factors as provided by EPA AVERT and DC to AC conversion factor for solar PV. 24.4 GW of renewable energy built through 2021 255+ wind and solar projects completed 11,000+ wind turbines erected 40 states renewable energy projects completed in 40 states STRONG ESG PROFILE IEA’S CONTRIBUTIONS TO DECARBONIZATION IN THE USA
7 © 2022. IEA. All Rights Reserved. REPORTING SEGMENTS IEA SEGMENT PROFILES RENEWABLES SPECIALTY CIVIL Wind Solar Power Delivery LTM Financial Performance (Q1-2022) $1.52 Total Revenue billion $130.8 Gross Margin $ million Long-Term Target Gross Margin % 10-12% 8.6% Gross Margin % Heavy Civil Rail Environmental LTM Financial Performance (Q1-2022) $637.7 Total Revenue million $62.6 Gross Margin $ million Long-Term Target Gross Margin % 8-10% 9.8% Gross Margin %Total Backlog $2.08billion $861.2 Total Backlog million
© 2022. IEA. All Rights Reserved. 8 Focused Renewable Exposure 70%+ of IEA’s business comes directly from Wind and Solar construction and services. LTM Revenue from renewables totals over $1.5 billion. Renewables Cost Less than Traditional Power Sources Renewables are the lowest cost form of new generation without incentives. The Levelized Cost of Energy from Wind and Solar is up to 40%-60% lower than the lowest conventional form of power.(1) Renewables are the Preferred Choice of Developers Approximately 90% of all new electrical generation capacity added in the U.S. in 2021 was wind, solar, and other renewable sources.(2) Legislation Provides Upside to Current Forecasts Analysis of the impact from potential legislation shows massive upside. Over the next decade utility-scale solar would see an uplift of 86% from current forecasts with an ITC extension.(2) New Wind Services Business Gaining Traction Expanding addressable market to include maintenance with new Wind Services business Environmental Work Strong Area For Growth Growing coal ash remediation business highlighted by increasing Environmental Remediation revenue (up 134% y/y in Q1-2022) KEY INVESTMENT HIGHLIGHTS EXCITING OPPORTUNITY IN ENERGY TRANSFORMATION (1) Lazard - Levelized Cost of Energy Analysis Version 15.0, Oct 2021. (2) Wood Mackenzie, “US Solar Market Insight: 2021 Year in Review” Mar 2022.
9 © 2022. IEA. All Rights Reserved. U.S. electricity generation from selected fuels AEO 2022 reference case Billion kilowatthours 0 1,000 2,000 3,000 4,000 5,000 6,000 2010 2020 2030 2040 2050 2021 history projections natural gas renewables nuclear coal 40% 21% 19% 19% 36% 42% 11% 11% Source: US Energy Information Administration, Annual Energy Outlook 2022 (AEO2022) Key Takeaways EIA – Annual Energy Outlook 2021 ▪ Wind and Solar are projected to contribute 44% of total US electricity generation by 2050, up from 21% in 2021 ▪ Renewable technologies account for over 57% of the approximately 1,000 GW of cumulative capacity additions projected from 2021 to 2050 ▪ EIA’s 2021 reference case assumes 1) PTC phases out after 2024, 2) ITC, solar receives a 30% tax credit through 2024, 26% for 2024 and 2025 and phasing down to a non‐expiring credit of 10% starting in 2026. ▪ Implies further upside with possible extension of PTC and ITC Renewable technologies account for over 57% of the approximately 1,000 GW of cumulative capacity additions projected from 2021 to 2050 RENEWABLES OUTLOOK DECADES-LONG GROWTH OPPORTUNITY
10 © 2022. IEA. All Rights Reserved. CIVIL OUTLOOK “ONCE-IN-A-GENERATION” INVESTMENT IN INFRASTRUCTURE (1) ARTBA “Market Forecast 2021” 2021 (2) United States Environmental Protection Agency Fiscal Year 2020 Justification of Appropriation - Estimates for the Committee on Appropriations (3) Whitehouse.gov Bipartisan Infrastructure Deal (Infrastructure Investment and Jobs Act) Impact on Key IEA Civil Markets ARTBA Major Construction Markets(1) ARTBA 2020 Annual Spend Estimate(1) Infrastructure Deal Targeted Investments(3) Total Amount Funded(3) Public & Private Highway and Bridge Construction $155 billion Roads, bridges and major infrastructure projects $110 billion Subway and Light Rail Construction $11 billion Modernize public transit $39 billion Class I Railroads $13 billion Passenger and freight rail $66 billion Superfund approved budget (2) $1 billion Clean up Superfund and brownfield sites, reclaim abandoned mine land and cap orphaned gas wells $21 billion
11 © 2022. IEA. All Rights Reserved. CIVIL OUTLOOK LARGEST INCREASE IN FUNDING SINCE THE FEDERAL- AID HIGHWAY ACT OF 1956 (1) Source: ARTBA “$1 Trillion Infrastructure Bill Passes House, Heads to President for Enactment” Nov 5 2021 Bipartisan Infrastructure Deal (Infrastructure Investment and Jobs Act) Impact on Highway Funding
12 © 2022. IEA. All Rights Reserved. COAL ASH REMEDIATION OUTLOOK LARGE OPPORTUNITY WITH LONG-TERM CONTRACTS There are more than 1,000 coal ash impoundments and surface landfills (1) that require EPA-Mandated closure or remediation Coal ash remediation opportunity could be as much as $50 billion to $150 billion(2) The easy to remediate sites are typically closed first, leaving behind higher dollar projects. 10% 90% Closed or remediated Still require closure or remediation Source: (1) United States Environmental Protection Agency, FirmoGraphs LLC CCR Market Overview, and management estimates. (2) Estimated based on assumed average cost to remediate of $25 to $75 per metric ton, the upper end of the range is based on Duke Energy’s publicly announced remediation costs of $8 – $9 billion to close the utility’s 31 ash basins in North Carolina, which contain 120 million tons of CCRs, and 2.3 billion cubic yards of coal ash currently stockpiled in the U.S. according to FirmoGraphs LLC CCR Market Overview. In the Early StagesLarge Multi-Decade Opportunity coal ash impoundments and surface landfills1,000 2M estimated tons per siteX $25 to $75 estimated price per ton for remediationX = $50 to $150B TOTAL OPPORTUNITY
© 2022. IEA. All Rights Reserved. 13 Q1 2022 FINANCIAL PERFORMANCE
© 2022. IEA. All Rights Reserved. 14 Record Revenue A record for first quarter with quarterly total revenue of $360 million, up 30% year-over-year, with record LTM total revenue of $2.2 billion Continued Strength in 2022 2022 forecasted to be another record year, Revenue expected to grow 15% and Adjusted EBITDA expected to increase 7% (at the midpoint of guidance) Record Solar Performance Record first quarter solar revenue of $126 million, up 275% year-over-year, with record LTM solar revenue of $406 million Strong Backlog Growth Backlog of $2.9 billion represents 10% year-over-year growth, NTM Backlog of $2.1 billion, up 13% year-over-year, providing strong visibility into 2022 BUSINESS HIGHLIGHTS–Q1 2022 SETTING UP FOR RECORD 2022 PERFORMANCE Solid Wind Performance Quarterly wind revenue of $118 million, in line with management expectations, with strong LTM wind revenue of over $1.1 billion (1) See appendix for Adjusted EBITDA reconciliation to net income. Record Environmental Performance Record first quarter environmental revenue of $48 million, up 134% year- over-year, with record LTM environmental revenue of $179 million
© 2022. IEA. All Rights Reserved. 15 STRONG BACKLOG –Q1 2022 EXCELLENT VISIBILITY FOR THE REMAINDER OF 2022 Next Twelve-Month Backlog ($mm) Total Backlog ($mm) ▪ Strong backlog in Q1-2022 of $2.9 billion • YoY increase of $0.3 billion (or +10%) ▪ Renewables Segment backlog of $2,085 million • YoY increase of $136 million (or +7%) ▪ Specialty Civil Segment backlog of $861 million • YoY increase of $134 million (or +18%) ▪ Next Twelve-Month Backlog of $2.1 billion • YoY increase of $233 million (or +13%) $2,116 $2,171 $2,070 $2,916 $2,676 $2,946 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 YE-2018 YE-2019 YE-2020 YE-2021 1Q-2021 1Q-2022 $1,173 $1,412 $1,629 $2,152 $1,852 $2,085 $0 $500 $1,000 $1,500 $2,000 $2,500 YE-2018 YE-2019 YE-2020 YE-2021 1Q-2021 1Q-2022
© 2022. IEA. All Rights Reserved. 16 SG&A Expense ($mm) Revenues ($mm) Adjusted EBITDA ($mm)(1) $3 -$17 1Q21 1Q22 $25 $35 1Q21 1Q22 Key Themes ▪ Record first quarter revenue of $360 million • Strong start to 2022 with increased full year revenue guidance ▪ Solid next-twelve-month backlog of $2.1 billion provides visibility for continued growth in 2022 ▪ Gross Margins lower than prior year ▪ Renewables down as a result of inflationary pressures on project costs ▪ Specialty Civil down as a result of inflationary pressures and increased close out costs related to a few heavy civil projects ▪ SG&A increased YoY, but more in line with our Q4-2021 run rate ▪ SG&A reflects our continued investment in people and IT infrastructure to support record 2022 guidance% Revenue 1.2% -4.8% (1) See appendix for Adjusted EBITDA reconciliation to net income. Gross Margin (%) 6.0% 1.1% 1Q21 1Q22 $276 $360 1Q21 1Q22 % Revenue 9.0% 9.7% RECORD PERFORMANCE –Q1 2022 STRONG REVENUE WITH LOWER GROSS MARGINS
© 2022. IEA. All Rights Reserved. 17 Key Takeaways ▪ Wind revenues in line with management expectations (down $29 million YoY, or 20%) ▪ Solar revenues up significantly YoY ($126 million vs $34 million the same period last year) • Fastest growing renewable business going forward ▪ Gross Margin % down as a result of inflationary pressures on project costs Key Takeaways ▪ Heavy Civil up 11% YoY due to increased activity ▪ Environmental up strongly YoY • Large, multi-year benefit from contract entered during Q3-2021 • Strong long-term outlook ▪ Rail down YoY • Continued COVID related slow- down and delays • Strong bidding environment provides improvement for balance of 2022 Gross Margin %: 4.5% 2.2% Revenue Gross Margins Re ne w ab le s Sp ec ia lty C iv il $4 $3 1Q21 1Q22 ($mm) Gross Margin %: 6.8% 0.5% $180 $244 1Q21 1Q22 $12 $1 1Q21 1Q22 $96 $117 1Q21 1Q22 SEGMENT RESULTS –Q1 2022 STRENGTH ACROSS BOTH RENEWABLES AND SPECIALTY CIVIL
© 2022. IEA. All Rights Reserved. 18 CAPITAL STRUCTURE KEY FIGURES POST REFINANCING • IEA successfully restructured our capital structure in Q3 2021 • Key activities included: • Equity Offering • Series A Preferred Conversion • Series B Preferred Payoff • High Yield Offering • Expanded Revolver • Total Liquidity of $161.4 million as of 1Q-22 • Current potential shares ~59.1 million (assuming conversion of all SPAC warrants, see appendix for details) • Potential shares ~55.2 million • SPAC warrants ~3.0 million • Anti dilution warrants ~0.9 million ($ in millions) Final Maturity Cost Balance as of 1Q-22 Cash and Equivalents 28.7$ Debt Revolving Credit Facility 8/17/2026 LIBOR + [2% to 3.5%] -$ Term Loan 8/15/2029 6.625% 300.0$ Finance Lease Obligations 5.17% 63.5$ Other Debt 3.0$ Total Debt 366.5$ Net Debt 337.8$ Revolver Availability, net of Letters of Credit 132.7$ Total Liquidity (as of 1Q-22) 161.4$
© 2022. IEA. All Rights Reserved. 19 2022 GUIDANCE AS OF MAY 9, 2022 ($ in Millions) Low High Revenue $2,300 $2,500 Net Income 45.0 51.0 Interest Expense, Net 25.0 26.0 Depreciation & Amortization 47.0 48.0 Expense for Income Taxes 18.0 19.0 EBITDA $135.0 $144.0 Non-Cash Stock Compensation Expense 5.0 6.0 Adjusted EBITDA $140.0 $150.0 • Increasing full year 2022 Revenue guidance • Maintaining full year 2022 Adjusted EBITDA guidance
© 2022. IEA. All Rights Reserved. 20 APPENDIX
© 2022. IEA. All Rights Reserved. 21 Dollars in thousands Last- Twelve- Month (LTM) 3-31-2022 Quarter Ended 3-31-2022 Quarter Ended 12-31-2021 Quarter Ended 9-30-2021 Quarter Ended 6-30-2021 Quarter Ended 3-31-2021 Net income (loss) $(90,366) $ (27,071) $ 31,655 $(99,649) $ 4,699 $(20,434) Interest expense 36,365 6,026 6,441 9,403 14,495 14,359 Provision (benefit) for income taxes 2,166 (11,424) 7,176 2,249 4,165 (2,392) Depreciation and amortization expense 48,566 12,286 12,672 12,577 11,031 10,799 EBITDA (3,269) (20,183) 57,944 (75,420) 34,390 2,332 Non-Cash stock compensation expense 6,264 1,630 1,182 1,526 1,926 727 Warrant liability fair value adjustment(1) 5,463 1,428 (12,881) 17,582 (666) 300 Transaction fees(2) 5,130 - 1 5,129 - - Loss on extinguishment of debt(3) 101,006 - - 101,006 - - Adjusted EBITDA $ 114,594 $ (17,125) $ 46,246 $ 49,823 $ 35,650 $ 3,359 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. 2) Reflects the transaction fees associated with the debt transaction and new equity offering. 3) Reflects the loss incurred as a result of the extinguishment of the term loan and Series B Preferred Stock. ADJUSTED EBITDA
© 2022. IEA. All Rights Reserved. 22 Common shares in thousands Quarter Ended 3-31-2022 Shares outstanding 48,323 Prefunded warrants 4,327 Employee performance awards and others 2,597 Potential shares 55,247 SPAC warrants 2,981 Anti dilution warrants 907 After SPAC warrants exercise 59,135 SHARE RECONCILIATION Warrant repurchase update (1) Potential shares in thousands (2 : 1 warrant to common ratio) Quarter End 9-30-2021 Repurchased 4Q-2021 Year End 12-31-2021 Repurchased 1Q-2022 Quarter End 3-31-2022 SPAC warrants 8,463 (4,636) 3,827 (846) 2,981 Anti dilution warrants (2) 2,576 (1,411) 1,165 (258) 907 (1) On November 4, 2021, the Company’s Board of Directors authorized a repurchase program for the Company’s publicly traded warrants to purchase common stock, which trade on the Nasdaq under the symbol IEAWW. This repurchase program allows the Company to purchase up to $25.0 million of warrants, at prevailing prices, in open market or negotiated transactions, subjectto market conditions and other considerations, beginning November 11, 2021, and will end no later than the expiration of the warrants on March 26, 2023. As of March 31, 2022, the Company has repurchased 10,963,160 warrants. (2) With the purchase of SPAC warrants, anti dilution warrants are retired on a pro-rata basis.
© 2022. IEA. All Rights Reserved. 23 THANK YOU I R C O N T A C T Aaron Reddington CFA VP of Investor Relations email@example.com 765.828.2653