Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 10, 2020

Infrastructure and Energy Alternatives, Inc.
(Exact Name of Registrant as Specified in Charter)
 
Delaware
 
001-37796
 
47-4787177
(State or Other Jurisdiction
of Incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)
 
6325 Digital Way
Suite 460
Indianapolis, Indiana
 
46278
(Address of Principal Executive Offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code: (765) 828-2580
 
None.
(Former Name or Former Address, if Changed Since Last Report)

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 (see General Instruction A.2. below):
 
¨ 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 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On March 10, 2020, the Board of Directors (the “Board”) of Infrastructure and Energy Alternatives, Inc., a Delaware corporation (the “Company”) elected Matthew Underwood to serve as a Class III member of the Board. Mr. Underwood will serve until the 2021 annual meeting of shareholders, or until his successor is elected and qualified or his earlier death, resignation, removal or retirement. Mr. Underwood will serve on the Compensation Committee, the Audit Committee and the Nominating and Governance Committee.

Mr. Underwood is the designated director of Ares Management LLC, on behalf of its affiliated funds, investment vehicles and/or managed accounts (“Ares”), pursuant to the Second Amended and Restated Certificate of Designations of Series B-1 Preferred Stock of the Company, dated November 14, 2019 and the Amended and Restated Certificate of Designations of Series B-2 Preferred Stock of the Company, dated as November 14, 2019, as further conditioned in the Waiver Agreement, dated January 23, 2020, between the Company and Ares.

The Company has determined that neither Mr. Underwood, nor any of his immediate family members, has or had a direct or indirect material interest in any transaction in which the Company or any of the Company’s subsidiaries was or is a participant, that would be required to be disclosed under Item 404(a) of SEC Regulation S-K.

The Company has entered into a standard director indemnity agreement with Mr. Underwood, a form of which was filed as Exhibit 10.8 to the Company’s Amendment No. 1 to Form S-1 filed with the SEC on May 2, 2016.

Item 7.01. Regulation FD Disclosure

On March 10, 2020, the Company, announced its financial results for the quarter and full year ended December 31, 2019, and the Company reiterated guidance for the year ending December 31, 2020. In addition, on March 10, 2020, 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

(d) Exhibits

Exhibit Number
Description
99.1
99.2






SIGNATURE
 
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: March 10, 2020
 
 
 
 
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
 
 
 
By:
/s/ Peter J. Moerbeek
 
Name: Peter J. Moerbeek
 
Title:   Chief Financial Officer



Exhibit


https://cdn.kscope.io/34e2fb1defc20c2e202a99a2a5f60197-iea-logoa08.jpg

INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC. ANNOUNCES FOURTH QUARTER AND FULL YEAR 2019 FINANCIAL RESULTS

Indianapolis, IN - March 10, 2020 - Infrastructure and Energy Alternatives, Inc. (NASDAQ: IEA) (“IEA” or the “Company”), a leading infrastructure construction company with specialized energy and heavy civil expertise, today announced its financial results for the fourth quarter and full year ended December 31, 2019.

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 million capital 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 billion provides excellent visibility into 2020.
Raised a total of $180.0 million in Series B Preferred Stock to address the Company’s liquidity needs and reduce outstanding debt.
Strong year-end liquidity, including $147.3 million in cash and cash equivalents.
Generated $79.8 million of operating cash flow.

Management Commentary

“2019 was a year of progress for IEA,” said JP Roehm, IEA’s President and Chief Executive Officer. “We achieved revenues of approximately $1.5 billion, a record for our Company. We also saw improvements in both our operating income and cash flow, generating nearly $80 million of cash flow from operations for the year. Our Adjusted EBITDA of $100.7 million, was a significant improvement from last year.”

Mr. Roehm continued, “Throughout the past year, IEA completed a number of financing transactions that increased our financial flexibility and resulted in a step down in the interest and distribution rates on our term loan and Series B Preferred Stock. With these initiatives, we saw an improvement in our credit rating and increased bonding capacity to support our growing business pipeline. We are grateful for the backing and commitment of our financing partners, Ares and Oaktree. As we look toward to 2020 and further, we see significant ongoing opportunities both in our legacy renewable wind business and our newer rail and civil markets. We will leverage each of these opportunities to grow our business profitably and generate increased value for our shareholders.”

Fourth Quarter Results

Revenue for the fourth quarter of 2019 totaled $520.0 million, up $244.1 million, or 89%, from the fourth quarter of 2018. This increase was primarily due to an improvement in weather conditions in the fourth quarter of 2019, which allowed the Company to complete more projects at the end of the year and to start work on several projects that were initially slated to begin in 2020. Revenue increases were also the result of growth in IEA’s acquired businesses by





$52.2 million compared to the prior year. For 2019, revenue from the Renewables and Specialty Civil Segments represented 57.1% and 42.9% of total revenue, respectively.

Cost of revenue totaled $453.0 million, an increase of $167.9 million, compared to the same period in 2018. The increase was primarily due to larger project volume as a result of improved weather conditions in the fourth quarter of 2019 and, to a lesser extent, $40.7 million of costs related to 2018 acquisitions.

Gross profit totaled $67.0 million for the quarter, compared to a negative gross profit of $9.2 million in the fourth quarter of 2018. As a percentage of revenue, gross profit increased to 12.9%, as compared to (3.3)% in the prior-year period. Gross profit margin increased primarily due to higher margins in the Company’s Renewable Segment as compared to 2018 when gross margin was hampered by delays in six wind projects due to bad weather.

Selling, general and administrative expenses were $35.2 million for the fourth quarter, an increase of 20.9% year-over-year. SG&A expenses as a percentage of revenue were 6.8% in the fourth quarter, compared to 10.6% in the fourth quarter of 2018. The dollar increase in SG&A expenses was primarily driven by IEA’s larger operating platform due in part to the 2018 acquisitions, partially offset by a decrease in merger and acquisition costs.

Interest expense totaled $15.4 million in the fourth quarter of 2019, up from $8.1 million for the same period in 2018, primarily as a result of increased interest accrued on the Company's Series B Preferred Stock.

Other loss was $3.5 million in the fourth quarter of 2019, which primarily consisted of a fair value adjustment related to the warrant liability associated with the Company's Series B Preferred Stock. This was compared to $46.0 million of other income in the fourth quarter of 2018, which included a $46.3 million adjustment to the fair value of contingent consideration. For a further discussion of the prior year adjustment, please see the tables following the results of operations.

The effective tax rates for the period ended December 31, 2019 and 2018 were 13.5% and (2,341.8)%, respectively. The higher effective tax rate in the fourth quarter of 2019 was primarily attributable to the contingent consideration fair value adjustment in 2018 and 2019, offset by interest accrued for the Series B Preferred Stock in 2019, which is not deductible for federal and state income taxes.

Net income for the fourth quarter of 2019 was $11.0 million, consistent with the prior-year period.

Adjusted EBITDA was $47.1 million for the quarter, as compared to an Adjusted EBITDA loss of $18.8 million in the fourth quarter of 2018. As a percentage of revenue, Adjusted EBITDA increased to 9.1%, as compared to (6.8)% in the prior-year period. This increase was primarily the result of the higher gross margins and weather improvements as explained above. For a reconciliation of net income to Adjusted EBITDA, please see the tables following the results of operations.

Cash provided by operations during the year totaled $79.8 million, compared to $47.0 million at the end of 2018. The significant increase in cash from operations was primarily driven by the higher net income and the impact of the timing of receipts from customers and payments to vendors.

Balance Sheet

As of December 31, 2019, the Company had $147.3 million of cash and cash equivalents and total debt of $367.1 million, which consisted of $182.7 million outstanding under its credit facility, $180.0 million of Series B Preferred Stock and $4.4 million of commercial equipment loans. At the end of the fourth quarter, the Company had $29.0 million of availability under its credit facility.

Backlog

Backlog as of December 31, 2019 totaled $2.2 billion, which was approximately the same at the end of the previous year. 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, as well as the impact of change orders and renewal options.

Outlook

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 February 20, 2020. IEA continues to anticipate revenue in the range of $1.50 billion to $1.65 billion and Adjusted EBITDA to be in the range of $105.0 million to $125.0 million. For a reconciliation of Adjusted EBITDA and discussion of further adjustments for cost savings and synergies, please see the appendix to this release.

Subsequent Events

The settlement of the Company’s previously announced Rights Offering was completed on March 4, 2020. Pursuant to the Rights Offering, the Company received subscriptions for an aggregate of 350 units, each unit consisting of one share of Series B-3 Preferred Stock and 34.375 warrants (subject to rounding at settlement) to purchase common stock at an exercise price of $0.0001, which results in proceeds to the Company of approximately $350,000, prior to deducting expenses and excluding any proceeds to be received upon exercise of any warrants.

The Company also announced today that Matthew Underwood, Principal at the Private Equity Group of Ares Management Corporation (“Ares”), has been appointed to IEA’s Board of Directors, effective immediately. As a Principal at Ares, Mr. Underwood focuses on special opportunities investing. Prior to joining Ares in 2018, Mr. Underwood was a Senior Analyst in the Corporate Credit Group at HBK Capital as well as an Analyst in the Financial Restructuring Group at Houlihan Lokey. Mr. Underwood holds a B.S. from the University of Southern California in Business Administration and Accounting, where he graduated summa cum laude.

Conference Call

IEA will hold a conference call to discuss its fourth quarter 2019 results tomorrow, March 11, 2020 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’ Fourth Quarter 2019 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 also be archived on the Company’s website or by dialing 844-512-2921 and providing the PIN code: 13698964 for 30 days after the live call.
 
About IEA

Infrastructure and Energy Alternatives, Inc. (IEA) is a leading infrastructure construction company with specialized energy and heavy 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 three Tier 1 wind energy contractors in the United States and has completed more than 200 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 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.








Contact

Peter J. Moerbeek
Kimberly Esterkin
Chief Financial Officer
ADDO Investor Relations
Pete.Moerbeek@iea.net

iea@addoir.com
765-828-2568

310-829-5400





INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statement of Operations
($ in thousands, except per share data)
(Unaudited)



 
Three Months Ended
 
For the Years Ended
 
December 31,
 
December 31,
 
2019
 
2018
 
2019
 
2018
Revenue
$
519,999

 
$
275,856

 
$
1,459,763

 
$
779,343

Cost of revenue
453,018

 
285,052

 
1,302,746

 
747,817

Gross profit
66,981

 
(9,196
)
 
157,017

 
31,526

 
 
 
 
 
 
 
 
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
 
 December 31,
 
December 31,
($ in thousands, except per share data)
2019
 
2018
 
2019
 
2018
Numerator:
 
 
 
 
 
 
 
Net income
$
11,053

 
$
10,985

 
$
6,231

 
$
4,244

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
)
 
 
 
 
 
 
 
 
Denominator:
 
 
 
 
 
 
 
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
)








INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Balance Sheets
($ in thousands, except per share data)
(Unaudited)
 
December 31,
 
2019
 
2018
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
147,259

 
$
71,311

Accounts receivable, net
203,645

 
161,366

Contract assets
179,303

 
111,121

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

Goodwill
37,373

 
40,257

Company-owned life insurance
4,752

 
3,854

Deferred income taxes
12,992

 
11,215

Other assets
1,551

 
188

Total assets
$
824,921

 
$
639,228

 
 
 
 
Liabilities, Preferred Stock and Stockholders' Deficit
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
177,783

 
$
158,075

Accrued liabilities
158,103

 
94,059

Contract liabilities
115,634

 
62,234

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

 

Deferred compensation
8,004

 
6,157

Contingent consideration

 
23,082

Total liabilities
916,541

 
735,441

 
 
 
 
Commitments and contingencies:

 

 
 
 
 
Preferred stock, $0.0001 par value per share; 1,000,000 shares authorized; 17,483 and 34,965 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively
17,483

 
34,965

 
 
 
 
Stockholders' equity (deficit):
 
 
 
Common stock, $0.0001 par value per share; 100,000,000 shares authorized; 20,460,533 and 22,155,271 shares issued and 20,446,811 and 22,155,271 outstanding at December 31, 2019 and December 31, 2018, respectively
2

 
2

Treasury stock, 13,722 shares at cost
(76
)
 

Additional paid-in capital
17,167

 
4,751

Accumulated deficit
(126,196
)
 
(135,931
)
Total stockholders' deficit
(109,103
)
 
(131,178
)
Total liabilities, preferred stock and stockholders' deficit
$
824,921

 
$
639,228







INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
 
Year Ended December 31,
 
2019
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
 
Net income
$
6,231

 
$
4,244

 
$
16,525

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

Deferred compensation
1,847

 
(482
)
 
944

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

Other, net
1,623

 
1,034

 
(244
)
Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
(42,312
)
 
(36,430
)
 
8,915

Contract assets
(67,222
)
 
(2,901
)
 
(4,470
)
Prepaid expenses and other assets
(4,222
)
 
(2,123
)
 
587

Accounts payable and accrued liabilities
84,689

 
95,398

 
(27,212
)
Contract liabilities
53,468

 
25,832

 
(20,783
)
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
)
Sale-leaseback transaction
24,343

 
 
 
 
Distributions

 

 
(34,738
)
Preferred dividends

 
(1,072
)
 

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







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 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
(in thousands)
December 31,
 
December 31,
 
2019
 
2018
 
2019
 
2018
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

EBITDA
40,068

 
17,738

 
104,090

 
20,081

 
 
 
 
 
 
 
 
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
)
 

 

 

Other (12)
3,370

 

 
3,370

 

Adjusted EBITDA
$
47,071

 
$
(18,814
)
 
$
100,738

 
$
14,047

 
 
 
 
 
 
 
 
Adjusted EBITDA margin
9.1
%
 
(6.8
)%
 
6.9
%
 
1.8
%
 
(1)
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.

(2)
Credit support fees reflect payments to Oaktree for its guarantee of certain borrowings.

(3)
Consulting fees and expenses represents consulting and professional fees and expenses in connection with the merger with M III Acquisition Corp.

(4)
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.

(5)
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.

(6)
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.






(7)
Expense of previously deferred financing fees in connection with refinancing the Company's credit facility in September 2018.

(8)
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.

(9)
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.

(10)
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.

(11)
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.

(12)
Other reflects unanticipated charges related to tax and warranty on solar projects that were previously disclosed as part of our Discontinued Operations in Canada in 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:

 
 
 
 
Guidance
 
 
For the year ended December 31, 2019
 
For the year ended December 31, 2020
(in thousands)
 
Actual
 
Low Estimate
 
High Estimate
Revenue
 
$
1,459,763

 
$
1,500,000

 
$
1,650,000

 
 
 
 
 
 
 
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
)
EBITDA
 
104,090

 
99,500

 
116,500

 
 
 
 
 
 
 
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

Other
 
3,370

 

 

Adjusted EBITDA
 
$
100,738

 
$
105,000

 
$
125,000

 
 
 
 
 
 
 






ieaq4earningspresentatio
Fourth Quarter Earnings Presentation March 10, 2020


 
Safe Harbor Statement 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. All statements, other than statements of historical fact included in this Annual Report, 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 presentation 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.


 
IEA OVERVIEW & ACHIEVEMENTS Fourth Quarter 2019 Earnings Presentation


 
Company Overview IEA (Nasdaq “IEA”) is a leading infrastructure construction company with specialized energy and heavy civil expertise. CUSTOMER MARKETS SELECT SERVICES & CAPABILITIES Renewable Energy • Consulting Services • Solar Technology Installation • Excavation & Site Preparation • Road, Bridge, & Other Heavy Civil Construction Civil & Infrastructure • Electrical Transmission & Distribution • Rail Infrastructure Construction Power & Industrial • Turbine Assembly & Erection • Environmental Management


 
2019 Achievements Solid Financial Performance Liquidity Improvements Diversified Platform Expansion in our Current and Future End Markets Improved Operational Excellence


 
Solid Financial Performance Revenue Organic vs Acquisition Growth $2,000 $2,000 $1,460 $1,500 $1,500 $1,000 $673 $1,000 $779 Millions $603 $500 $455 $250 $787 $500 $205 $0 $205 $205 2015 2017 2019 $0 Base Business(1 Organic 2015 2016 2017 2018 2019 ) Revenue Growth $582 2015-2019 $673 Acquisition Organic 1) Base business represents existing business in 2015 plus the first twelve months results for all acquired entities since that time.


 
Strong Backlog Visibility Key Takeaways   Good visibility on 2020 revenues – backlog + Additional projects awarded in all segments Q4 revenue supports 2020 revenue guidance  Seeing early returns on cross-selling strategy range(1) Historical Backlog (1) $2,500 $2,116 $2,171 $2,000 $1,500 $1,100 $1,000 $415 $500 $0 2016 2017 2018 2019 *Numbers are in millions (1) Estimated backlog represents the amount of revenue we expect 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, as well as revenue from change orders and renewal options.


 
Financial Results Fourth Quarter Highlights  Revenue totaled $520.0 million, an increase of 89% year-over-year  Net income of $11.0 million, consistent year-over- year  Adjusted EBITDA(1) of $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 Full Year Highlights  Revenue totaled approximately $1.5 billion, an increase of 87% year-over-year  Net income of $6.2 million, up 46.8% year-over-year  Adjusted EBITDA(1) of $100.7 million, or 6.9% of revenues as compared to $14.0 million or 1.8% of revenues, in the prior-year  Gross margins were 10.8%, as compared to 4.0% in the prior-year (1) See slide 21 for a definition of Adj. EBITDA and a reconciliation to net income.


 
Liquidity Improvements Series B-3 Series B-1 Series B-2 Series A 50% “Second” Initial Closing Rights Offering Exchange Commitment Up to 180 day from Closing Date May 20, 2019 August 30, 2019 November 14, 2019 Series B-3 initial March 4, 2020 closing 60% Ares / 50% Oaktree / Public Investor(s) Ares Ares Oaktree 40% Oaktree 50% Ares stockholders Gross Proceeds $50 million $50 million $80 million ── Up to $15 million $350,000 Net working Net working Use of Proceeds capital and line of Term loan capital ── ── ── credit Preferred Stock Shares 50,000 50,000 80,000 19,124 15,000 350 Issued Penny Warrants Issued 2,545,934 900,000 3,568,750 657,383 515,625 12,029 Cash Dividend Rate 13.5% Cash Dividend Rate – leverage less than or 12.0% equal to 1.5x PIK Dividend Rate 15.0%


 
Improved Equity Capitalization December 31, 2019 2018 Debt Revolver - 46.5 1st Lien Term Loan 182.7 300.0 Finance Leases and Other Debt 68.7 68.9 Total Debt 251.4 415.4 Less: Cash (147.3) (71.3) Net Debt (1) 104.1 344.1 Equity Preferred Stock (Series A and B) 197.9 35.0 Public Equity (2) 65.9 181.4 Total Equity 263.8 216.4 Total Enterprise Value 367.9 560.5 Net Debt / Equity (1) 39.5% 159.0% Equity / Capitalization 71.7% 38.6% (1) Net debt excludes cash which is consistent with the Company’s leverage calculations under the third amended and restated credit agreement (2) Equals common shares outstanding multiplied by the Company’s stock price as of 12/31 for the respective years.


 
Diversified Platform Overlap in labor, skills and equipment across the platform with the ability to pivot and deploy resources efficiently based on demand Wind and Solar (1) Heavy Civil and Environmental (1) Rail (1) 12% 31% 57% $ 834 million $ 451 million $ 174 million Market Leading National Provider of Specialty Paving Market Leading Rail Construction Services Provider Tier 1 U.S. Wind Energy Construction and High Altitude / Complex Bridge Construction Serving Blue-Chip Customers for Over 50 years  210+ utility-scale wind and solar projects  Provides industrial maintenance,  National experience performing general completed environmental services as well as heavy contractor, construction management and and light infrastructure services for public design – build construction for rail  8,850+ wind turbines erected representing customers >16.8 gigawatts of generation capacity ─ Intermodal facilities  Serves customers in the power generation, ─ Maintenance facilities  Growing presence in utility-scale solar transportation, utility, mineral and ─ Auto marshaling yards ─ >750 megawatts of solar power aggregate mining, industrial recreational ─ Fueling facilities installed and pulp & paper markets ─ Capacity improvements (1) Represents 2019 revenue.


 
Significant Operational Leverage Across Segments Examples of Cross-Segment Collaboration: William Charles / IEA • William Charles personnel have been tasked with overseeing the risk management for overall IEA • William Charles legal personnel oversee requirements for the civil group, including contracts, PO’s, subcontracts, dispute resolution, etc. IEA Equipment Management • Equipment is shared across IEA companies as needs arise (e.g. 2-Cat 336’s sent from White to Saiia, Saiia sent semi tractor to IEAEM, IEAEM sent post driver to ACCSW) William Charles-Ragnar Benson / White Construction • WCC has performed civil work on Iowa wind farms including substation grading and road construction • White Construction is currently building a bridge structure for WCC on an Edgar County, Illinois project • White Construction is supporting Ragnar Benson in a rail siding proposal in Indiana


 
Significant Operational Leverage Across Segments Saiia / Ragnar Benson / White Construction • Delivered a joint presentation to NIPSCO regarding coal ash remediation projects Saiia / White Construction • Jointly responded to a Duke RFP for coal ash remediation projects in Indiana Saiia / IEAC • Jointly responded to a Southern Company solar project • Saiia prepared an estimate for a large grading package on a ridge top wind project for Apex ACCMW / IEAC • ACC assisted IEAC in preparing estimates and bids for civil work on wind farms in Colorado William Charles / ACCSW • William Charles has taken oversight/management of the ACCSW operations • ACCSW will build Texas Rail Siding projects for WCC-Ragnar Benson starting in 2019


 
Expansion in our Current and Future End Markets U.S. Construction Put-in-Place 2019E: $1,300 Billion Transport & Water, Sewage and Road 12% Waste 3% Power 7% Recreation 2% Residential Nonresidential 40% 36% Transport & Road $150.7B Power $97.6B Water, Sewage & Waste $43.3B Recreation $28.1B ($Billions) $110 $102 $104 $106 $53 $178 $183 $98 $45 $47 $50 $151 $160 $169 $43 $28 $27 $26 $26 $27 19E 20E 21E 22E 23E 19E 20E 21E 22E 23E 19E 20E 21E 22E 23E 19E 20E 21E 22E 23E  Includes highway & street,  Consists of power generation  Consists of waste-water  Includes sport fields, airports & runways, (Renewable, Nuclear, Thermal) treatment facilities, sewage gymnasiums, arenas, stadiums, transportation terminals, as well as distribution networks and drainage systems, pump theme parks, fitness centers, railroads, docks and ports  Renewable power generation is stations, wells and tanks / social centers, theaters, etc. the largest new power water towers generation investment category Source: American Society of Civil Engineers, U.S. DOT and FMI.


 
U.S. Construction Market Outlook Aging Infrastructure and Deferred Maintenance Spend is No Longer Discretionary and is a Significant Driver of Near and Long-term Construction Demand Bridges 2016 Pipes Act 9% Pipeline and of the nation’s ~615K Hazardous bridges materials safety are structurally spending by 2020 deficient Bridge rehabilitation needs $608B $123B Roads / Highways 2015 Fast Act 21% Transportation of the nation’s spending by highways had poor 2020 pavement condition in 2015 $305B Highway capital needs $713B Source: American Society of Civil Engineers, U.S. DOT and FMI.


 
Improved Operational Excellence In April 2019, Michael Stoecker was hired as the Chief Operating Officer, to implement systems and control mechanisms to efficiently manage our projects and ensure more predictable, reliable results and execution. Key examples of operational progress are listed below: 1. Consolidated 5,000-piece equipment fleet into one common tracking and maintenance system, this maximizes are ability for: • Optimum utilization of entire fleet • Efficiency of mobilization for projects • Improved maintenance to ensure safety and effectiveness 2. Project Improvements: • Managed workforce to reduce down time by redirecting teams to different parts of the Company as needed • Implemented real-time project control software to help teams better forecast labor production, manage changing project conditions(such as weather or other delays) and forecast project profitability • Heightened focus on change order management to enhance project cash flow 3. Risk Management: • Centralized insurance, claims and safety functions for cost efficiency and enhanced performance • Renewed safety focus which resulted in improvements in Total Recordable Incident Rate (“TRIR”) and our Lost Time Incident Rate(“LTIR”)


 
2020 Financial Guidance and Strategy Fourth Quarter 2019 Earnings Presentation


 
2020 Guidance ($ IN MILLIONS) LOW HIGH Key Takeaways Revenue $1,500.0 $1,650.0 Net Loss (6.0) (4.0) Management 2020 Guidance on Revenue: Interest Expense, Net 55.5 66.5  $1,500M - $1,650M of revenue Depreciation & Amortization 50.4 55.0  Benefit for Income Taxes (0.4) (1.0) $105M - $125M in Adjusted EBITDA EBITDA 99.5 116.5 Non-Cash Stock Compensation Expense 4.5 5.5 Series B Preferred warrant liability fair value 1.0 3.0 adjustment Adjusted EBITDA $105.0 $125.0


 
2020 Strategy Retention of strong relationships with our customers for further diversification • Continue to build our strong, long-term relationships with each of our customers to meet their needs. • Leverage our established relationships to provide expanded products and services that will continue to diversify our revenue streams and assist our customers with their business strategies. Maintain Operational Excellence • Quality - We believe in satisfying our clients, mitigating risk, and driving improvement by performing work right the first time. • Technical Expertise - We have an established reputation for safe, high quality performance, reliable customer service and technical expertise in constructing technically demanding projects. • Safety - We believe the safety of our employees, the public and the environment is a moral obligation as well as good business. By identifying and concentrating resources to address jobsite hazards, we continually strive to reduce our incident rates and the costs associated with accidents. • Productivity - We strive to use our resources efficiently to deliver work on time and on budget. Ownership of Equipment • Utilize our long-standing relations with equipment vendors to achieve the lowest cost of equipment available. • Evaluate ownership vs leasing structure to ensure maximization of returns on investment of our equipment. • Maximize fleet utilization across segments to ensure efficient construction across all end markets.


 
APPENDIX Fourth Quarter 2019 Earnings Presentation


 
Adjusted EBITDA ($ in millions) 3 Months Ended 3 Months Ended Year Ended Year Ended 12.31.2019 12.31.2018 12.31.2019 12.31.2018 Net Income (loss) 11,053 10,985 6,231 4,244 Interest Expense 15,438 8,120 51,260 12,080 Tax Provision (benefit) 1,731 (11,475) (1,621) (12,942) Depreciation Expense 11,846 10,108 48,220 16,699 EBITDA 40,068 17,738 104,090 20,081 Diversification SG&A(1) - 972 - 3,868 Credit Support Fees(2) - - - 231 Consulting Fees & Expenses(3) - 5 - 438 Non-Cash Stock Comp Expenses 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 Debt Extinguishment(7) - - - 1,835 Settlement of Customer Project Dispute(8) - - - 8,500 Contingent fair value adjustment(9) - (46,291) (23,082) (46,291) Series B Preferred warrant liability fair 2,262 - 2,262 - value adjustment(10) Project Settlement legal fees(11) (1,186) - - - Other(12) 3,370 - 3,370 - Adjusted EBITDA 47,071 (18,814) 100,738 14,047 See Slide 22 for footnotes to Adjusted EBITDA.


 
Footnotes to Adjusted EBITDA 1) 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. 2) Credit support fees reflect payments to Oaktree for its guarantee of certain borrowings. 3) Consulting fees and expenses represents consulting and professional fees and expenses in connection with the merger with M III Acquisition Corp. 4) 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. 5) 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 or acquisition activity related to our two acquisitions completed in the third and fourth quarter of 2018. 6) 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. 7) Expense of previously deferred financing fees in connection with refinancing the Company's credit facility in September 2018. 8) Settlement of customer project dispute-related to a dispute 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, which will be built in 2018. 9) 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. 10) 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 the Company's fluctuation in the stock price. 11) Project settlement legal fees reflected 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. 12) Other reflects unanticipated charges related to tax and warranty on solar projects that were previously disclosed as part of our Discontinued Operations in Canada in 2016 and gain/losses on asset sales.


 
THANK YOU IR CONTACT Addo Investor Releations Kimberly Esterkin, Managing Director iea@addoir.com 310.829.5400