UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
þ☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED March 31, 20202021
OR
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 001-37796
Infrastructure and& Energy Alternatives, Inc.
(Exact Name of Registrant as Specified in Charter)
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Delaware | | | | 47-4787177 |
(State or Other Jurisdiction of Incorporation)
| | | | (IRS Employer Identification No.)
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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
Securities registered pursuant to Section 12(b) of the Act:
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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 |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past ninety days.þ ☑Yes ¨ ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ ☑Yes¨ ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filer¨ ☐Accelerated filer ¨ ☐Non-accelerated filer þ ☑ Smaller reporting company þ ☑ 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. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ ☐Yes þ ☑ No
Number of shares of Common Stock outstanding as of the close of business on May 7, 2020: 22,506,233.
10, 2021: 24,847,908.
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| Infrastructure and Energy Alternatives, Inc. |
| Table of Contents |
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| PART I. FINANCIAL INFORMATION | |
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| Infrastructure and Energy Alternatives, Inc. |
| Table of Contents |
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| PART I. FINANCIAL INFORMATION | |
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| Part II. OTHER INFORMATION | |
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Balance Sheets
($ in thousands, except per share data)
(Unaudited)
| | | | | | | | | | | |
| March 31, 2021 | | December 31, 2020 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 95,173 | | | $ | 164,041 | |
Accounts receivable, net | 171,306 | | | 163,793 | |
Contract assets | 146,696 | | | 145,183 | |
Prepaid expenses and other current assets | 46,656 | | | 19,352 | |
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Total current assets | 459,831 | | | 492,369 | |
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Property, plant and equipment, net | 127,264 | | | 130,746 | |
Operating lease assets | 34,994 | | | 36,461 | |
Intangible assets, net | 23,818 | | | 25,434 | |
Goodwill | 37,373 | | | 37,373 | |
Company-owned life insurance | 4,519 | | | 4,250 | |
Deferred income taxes | 4,461 | | | 2,069 | |
Other assets | 436 | | | 438 | |
Total assets | $ | 692,696 | | | $ | 729,140 | |
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Liabilities and Stockholder's Equity (Deficit) | | | |
Current liabilities: | | | |
Accounts payable | $ | 86,826 | | | $ | 104,960 | |
Accrued liabilities | 116,793 | | | 129,594 | |
Contract liabilities | 141,420 | | | 118,235 | |
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Current portion of finance lease obligations | 24,728 | | | 25,423 | |
Current portion of operating lease obligations | 8,779 | | | 8,835 | |
Current portion of long-term debt | 2,379 | | | 2,506 | |
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Total current liabilities | 380,925 | | | 389,553 | |
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Finance lease obligations, less current portion | 27,053 | | | 32,146 | |
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Operating lease obligations, less current portion | 27,736 | | | 29,154 | |
Long-term debt, less current portion | 160,229 | | | 159,225 | |
Debt - Series B Preferred Stock | 175,164 | | | 173,868 | |
Warrant obligations | 9,500 | | | 9,200 | |
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Deferred compensation | 8,039 | | | 8,672 | |
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Total liabilities | $ | 788,646 | | | $ | 801,818 | |
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Commitments and contingencies: | 0 | | 0 |
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Series A Preferred Stock, par value, $0.0001 per share; 1,000,000 shares authorized; 17,483 shares and 17,483 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively | 17,483 | | | 17,483 | |
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Stockholders' equity (deficit): | | | |
Common stock, par value, $0.0001 per share; 150,000,000 and 150,000,000 shares authorized; 23,348,353 and 21,008,745 shares issued and 23,348,353 and 21,008,745 outstanding at March 31, 2021 and December 31, 2020, respectively | 2 | | | 2 | |
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Additional paid in capital | 32,467 | | | 35,305 | |
Accumulated deficit | (145,902) | | | (125,468) | |
Total stockholders' deficit | (113,433) | | | (90,161) | |
Total liabilities and stockholders' deficit | $ | 692,696 | | | $ | 729,140 | |
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| March 31, 2020 | | December 31, 2019 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | 58,081 |
| | 147,259 |
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Accounts receivable, net | 154,699 |
| | 203,645 |
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Contract assets | 193,851 |
| | 179,303 |
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Prepaid expenses and other current assets | 22,178 |
| | 16,855 |
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Total current assets | 428,809 |
| | 547,062 |
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Property, plant and equipment, net | 134,753 |
| | 140,488 |
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Operating lease asset | 43,444 |
| | 43,431 |
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Intangible assets, net | 33,902 |
| | 37,272 |
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Goodwill | 37,373 |
| | 37,373 |
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Company-owned life insurance | 4,153 |
| | 4,752 |
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Deferred income taxes | 14,072 |
| | 12,992 |
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Other assets | 492 |
| | 1,551 |
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Total assets | $ | 696,998 |
| | $ | 824,921 |
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Liabilities and Stockholder's Equity (Deficit) | | | |
Current liabilities: | | | |
Accounts payable | 110,485 |
| | 177,783 |
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Accrued liabilities | 121,445 |
| | 158,103 |
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Contract liabilities | 107,253 |
| | 115,634 |
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Current portion of finance lease obligations | 23,437 |
| | 23,183 |
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Current portion of operating lease obligations | 10,191 |
| | 9,628 |
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Current portion of long-term debt | 1,693 |
| | 1,946 |
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Total current liabilities | 374,504 |
| | 486,277 |
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Finance lease obligations, less current portion | 37,826 |
| | 41,055 |
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Operating lease obligations, less current portion | 34,131 |
| | 34,572 |
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Long-term debt, less current portion | 154,788 |
| | 162,901 |
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Debt - Series B Preferred Stock | 175,145 |
| | 166,141 |
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Series B Preferred Stock - warrant obligations | 2,200 |
| | 17,591 |
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Deferred compensation | 6,593 |
| | 8,004 |
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Total liabilities | $ | 785,187 |
| | $ | 916,541 |
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Commitments and contingencies: |
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Series A Preferred Stock, par value, $0.0001 per share; 1,000,000 shares authorized; 17,483 shares and 17,483 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively | 17,483 |
| | 17,483 |
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Stockholders' equity (deficit): | | | |
Common stock, par value, $0.0001 per share; 100,000,000 shares authorized; 20,700,555 and 20,460,533 shares issued and 20,648,793 and 20,446,811 outstanding at March 31, 2020 and December 31, 2019, respectively | 2 |
| | 2 |
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Treasury stock, 51,762 and 13,722 shares at cost at March 31, 2020 and December 31, 2019, respectively. | (160 | ) | | (76 | ) |
Additional paid in capital | 33,425 |
| | 17,167 |
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Retained earnings (deficit) | (138,939 | ) | | (126,196 | ) |
Total stockholders' equity (deficit) | (105,672 | ) | | (109,103 | ) |
Total liabilities and stockholders' equity (deficit) | $ | 696,998 |
| | $ | 824,921 |
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See accompanying notes to condensed consolidated financial statements.
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Operations
($ in thousands, except per share data)
(Unaudited)
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| Three Months Ended | | |
| March 31, | | |
| 2021 | | 2020 | | | | |
Revenue | $ | 276,412 | | | $ | 358,163 | | | | | |
Cost of revenue | 259,871 | | | 325,122 | | | | | |
Gross profit | 16,541 | | | 33,041 | | | | | |
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Selling, general and administrative expenses | 24,846 | | | 29,484 | | | | | |
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Loss income from operations | (8,305) | | | 3,557 | | | | | |
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Other income (expense), net: | | | | | | | |
Interest expense, net | (14,359) | | | (16,065) | | | | | |
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Other expense | (162) | | | (1,102) | | | | | |
Loss before benefit for income taxes | (22,826) | | | (13,610) | | | | | |
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Benefit for income taxes | 2,392 | | | 867 | | | | | |
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Net loss | $ | (20,434) | | | $ | (12,743) | | | | | |
Less: Convertible Preferred Stock dividends | (656) | | | (766) | | | | | |
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Net loss available for common stockholders | $ | (21,090) | | | $ | (13,509) | | | | | |
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Net loss per common share - basic | (0.91) | | | (0.66) | | | | | |
Net loss per common share - diluted | (0.91) | | | (0.66) | | | | | |
Weighted average shares - basic | 23,057,731 | | | 20,522,216 | | | | | |
Weighted average shares - diluted | 23,057,731 | | | 20,522,216 | | | | | |
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| Three Months Ended |
| March 31, |
| 2020 | | 2019 |
Revenue | $ | 358,163 |
| | $ | 189,781 |
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Cost of revenue | 325,122 |
| | 184,037 |
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Gross profit | 33,041 |
| | 5,744 |
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Selling, general and administrative expenses | 29,484 |
| | 27,754 |
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Income (loss) from operations | 3,557 |
| | (22,010 | ) |
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Other income (expense), net: | | | |
Interest expense, net | (16,065 | ) | | (10,367 | ) |
Other expense | (1,102 | ) | | (170 | ) |
Loss before benefit for income taxes | (13,610 | ) | | (32,547 | ) |
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Benefit for income taxes | 867 |
| | 8,908 |
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Net loss | $ | (12,743 | ) | | $ | (23,639 | ) |
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Net loss per common share - basic | (0.66 | ) | | (1.09 | ) |
Net loss per common share - diluted | (0.66 | ) | | (1.09 | ) |
Weighted average shares - basic | 20,522,216 |
| | 22,188,757 |
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Weighted average shares - diluted | 20,522,216 |
| | 22,188,757 |
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See accompanying notes to condensed consolidated financial statements.
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Stockholders' Equity (Deficit)
($ in thousands)
(Unaudited)
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| | Common Stock | | Additional Paid-in Capital | | Treasury Stock | | Accumulated Deficit | | Total Equity (Deficit) |
| | Shares | Par Value | | | Shares | Cost | | |
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Balance at December 31, 2019 | | 20,461 | | $ | 2 | | | $ | 17,167 | | | (14) | | $ | (76) | | | $ | (126,196) | | | $ | (109,103) | |
Net loss | | — | | — | | | — | | | — | | — | | | (12,743) | | | (12,743) | |
Share-based compensation | | — | | — | | | 1,113 | | | — | | — | | | — | | | 1,113 | |
Equity plan compensation | | 240 | | 0 | | | 280 | | | (38) | | (84) | | | — | | | 196 | |
Series B Preferred Stock - Warrants at close | | — | | — | | | 15,631 | | | — | | — | | | — | | | 15,631 | |
Series A Preferred dividends | | — | | — | | | (766) | | | — | | — | | | — | | | (766) | |
Balance at March 31, 2020 | | 20,701 | | $ | 2 | | | $ | 33,425 | | | (52) | | $ | (160) | | | $ | (138,939) | | | $ | (105,672) | |
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Balance at December 31, 2020 | | 21,009 | | $ | 2 | | | $ | 35,305 | | | 0 | | $ | 0 | | | $ | (125,468) | | | $ | (90,161) | |
Net loss | | — | | — | | | — | | | — | | — | | | (20,434) | | | (20,434) | |
Earnout Shares | | 1,803 | | — | | | — | | | — | | — | | | — | | | — | |
Share-based compensation | | — | | — | | | 727 | | | — | | — | | | — | | | 727 | |
Equity plan compensation | | 521 | | — | | | (2,909) | | | — | | — | | | — | | | (2,909) | |
Exercise of warrants | | 15 | | — | | | — | | | — | | — | | | — | | | — | |
Series A Preferred dividends | | — | | — | | | (656) | | | — | | — | | | — | | | (656) | |
Balance at March 31, 2021 | | 23,348 | | $ | 2 | | | $ | 32,467 | | | 0 | | $ | 0 | | | $ | (145,902) | | | $ | (113,433) | |
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| | Common Stock | | Additional Paid-in Capital | | Treasury Stock | | Accumulated Deficit | | Total Equity (Deficit) |
| | Shares | Par Value | | | Shares | Cost | | |
Balance at December 31, 2018 | | 22,155 |
| 2 |
| | 4,751 |
| | — |
| — |
| | (135,931 | ) | | (131,178 | ) |
Net loss | | — |
| — |
| | — |
| | — |
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| | (23,639 | ) | | (23,639 | ) |
Share-based compensation | | — |
| — |
| | 1,040 |
| | — |
| — |
| | — |
| | 1,040 |
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Share-based payment transaction | | 111 |
| — |
| | 235 |
| | (14 | ) | (76 | ) | | — |
| | 159 |
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Merger recapitalization transaction | | — |
| — |
| | — |
| | — |
| — |
| | 2,754 |
| | 2,754 |
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Cumulative effect from adoption of new accounting standard, net of tax | | — |
| — |
| | — |
| | — |
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| | 750 |
| | 750 |
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Preferred dividends | | — |
| — |
| | (525 | ) | | — |
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| | — |
| | (525 | ) |
Balance at March 31, 2019 | | 22,266 |
| $ | 2 |
| | $ | 5,501 |
| | (14 | ) | $ | (76 | ) | | $ | (156,066 | ) | | $ | (150,639 | ) |
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Balance at December 31, 2019 | | 20,461 |
| $ | 2 |
| | $ | 17,167 |
| | (14 | ) | $ | (76 | ) | | $ | (126,196 | ) | | $ | (109,103 | ) |
Net loss | | — |
| — |
| | — |
| | — |
| — |
| | (12,743 | ) | | (12,743 | ) |
Share-based compensation | | — |
| — |
| | 1,113 |
| | — |
| — |
| | — |
| | 1,113 |
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Share-based payment transactions | | 240 |
| — |
| | 280 |
| | (38 | ) | (84 | ) | | — |
| | 196 |
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Series B Preferred Stock - Warrants at close | | — |
| — |
| | 15,631 |
| | — |
| — |
| | — |
| | 15,631 |
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Preferred dividends | | — |
| — |
| | (766 | ) | | — |
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| | — |
| | (766 | ) |
Balance at March 31, 2020 | | 20,701 |
| $ | 2 |
| | $ | 33,425 |
| | (52 | ) | $ | (160 | ) | | $ | (138,939 | ) | | $ | (105,672 | ) |
See accompanying notes to condensed consolidated financial statements.
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
| | | Three Months Ended March 31, | | Three Months Ended March 31, |
| 2020 | | 2019 | | 2021 | | 2020 |
Cash flows from operating activities: | | | | Cash flows from operating activities: | | | |
Net loss | $ | (12,743 | ) | | $ | (23,639 | ) | Net loss | $ | (20,434) | | | $ | (12,743) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
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Adjustments to reconcile net loss to net cash used in operating activities: | | Adjustments to reconcile net loss to net cash used in operating activities: | |
Depreciation and amortization | 11,888 |
| | 12,017 |
| Depreciation and amortization | 10,799 | | | 11,888 | |
| Warrant liability fair value adjustment | 1,057 |
| | — |
| Warrant liability fair value adjustment | 300 | | | 1,057 | |
| Amortization of debt discounts and issuance costs | 2,237 |
| | 1,239 |
| Amortization of debt discounts and issuance costs | 2,859 | | | 2,237 | |
Share-based compensation expense | 1,113 |
| | 1,040 |
| Share-based compensation expense | 727 | | | 1,113 | |
| Deferred compensation | (1,371 | ) | | 735 |
| Deferred compensation | 0 | | | (1,371) | |
| Accrued dividends on Series B Preferred Stock | 7,959 |
| | — |
| Accrued dividends on Series B Preferred Stock | 0 | | | 7,959 | |
Deferred income taxes | (1,080 | ) | | (8,908 | ) | Deferred income taxes | (2,392) | | | (1,080) | |
Other, net | 733 |
| | 168 |
| Other, net | (902) | | | 733 | |
Change in operating assets and liabilities: | | | | Change in operating assets and liabilities: | |
Accounts receivable | 48,931 |
| | 82,383 |
| Accounts receivable | (7,513) | | | 48,931 | |
Contract assets | (14,548 | ) | | (12,405 | ) | Contract assets | (1,513) | | | (14,548) | |
Prepaid expenses and other assets | (5,212 | ) | | (3,149 | ) | Prepaid expenses and other assets | (27,304) | | | (5,212) | |
Accounts payable and accrued liabilities | (104,760 | ) | | (110,060 | ) | Accounts payable and accrued liabilities | (31,593) | | | (104,760) | |
Contract liabilities | (8,381 | ) | | 23,032 |
| Contract liabilities | 23,186 | | | (8,381) | |
Net cash used in operating activities | (74,177 | ) | | (37,547 | ) | Net cash used in operating activities | (53,780) | | | (74,177) | |
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Cash flow from investing activities: | | | | Cash flow from investing activities: | |
Company-owned life insurance | 599 |
| | (202 | ) | Company-owned life insurance | (269) | | | 599 | |
Purchases of property, plant and equipment | (2,231 | ) | | (1,908 | ) | Purchases of property, plant and equipment | (3,920) | | | (2,231) | |
Proceeds from sale of property, plant and equipment | 1,719 |
| | 47 |
| Proceeds from sale of property, plant and equipment | 667 | | | 1,719 | |
Net cash provided by (used in) investing activities | 87 |
| | (2,063 | ) | |
| Net cash (used in) provided by investing activities | | Net cash (used in) provided by investing activities | (3,522) | | | 87 | |
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Cash flows from financing activities: | | | | Cash flows from financing activities: | |
Proceeds from long-term debt | 46,000 |
| | 9,400 |
| Proceeds from long-term debt | 0 | | | 46,000 | |
Payments on long-term debt | (55,853 | ) | | (16,151 | ) | Payments on long-term debt | (686) | | | (55,853) | |
| Payments on finance lease obligations | (5,781 | ) | | (4,289 | ) | Payments on finance lease obligations | (7,971) | | | (5,781) | |
Sale-leaseback transaction | — |
| | 24,343 |
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Proceeds from issuance of stock - Series B Preferred Stock | 350 |
| | — |
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Proceeds from stock-based awards, net
| 196 |
| | 159 |
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Merger recapitalization transaction | — |
| | 2,754 |
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Net cash provided by (used in) financing activities | (15,088 | ) | | 16,216 |
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| Proceeds from issuance of Series B Preferred Stock | | Proceeds from issuance of Series B Preferred Stock | 0 | | | 350 | |
Proceeds of issuance of employee stock awards | | Proceeds of issuance of employee stock awards | 0 | | | 196 | |
Shares repurchased for tax withholding on release of restricted stock units | | Shares repurchased for tax withholding on release of restricted stock units | (2,909) | | | 0 | |
| Net cash used in financing activities | | Net cash used in financing activities | (11,566) | | | (15,088) | |
| | | | | | | |
Net change in cash and cash equivalents | (89,178 | ) | | (23,394 | ) | Net change in cash and cash equivalents | (68,868) | | | (89,178) | |
| | | | |
Cash and cash equivalents, beginning of the period | 147,259 |
| | 71,311 |
| Cash and cash equivalents, beginning of the period | 164,041 | | | 147,259 | |
| | | | |
Cash and cash equivalents, end of the period | $ | 58,081 |
| | $ | 47,917 |
| Cash and cash equivalents, end of the period | $ | 95,173 | | | $ | 58,081 | |
| | | | | | | |
See accompanying notes to condensed consolidated financial statements.
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
(Continued)
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2021 | | 2020 |
Supplemental disclosures: | | | |
Cash paid for interest | 10,691 | | | 6,053 | |
Cash (received) for income taxes | (290) | | | (229) | |
Schedule of non-cash activities: | | | |
Acquisition of assets/liabilities through finance lease | 2,183 | | | 2,806 | |
Acquisition of assets/liabilities through operating lease | 1,101 | | | 2,732 | |
| | | |
| | | |
| | | |
Series A Preferred dividends declared | 656 | | | 766 | |
|
| | | | | |
| Three Months Ended March 31, |
| 2020 | | 2019 |
Supplemental disclosures: | | | |
Cash paid for interest | 6,053 |
| | 9,168 |
|
Cash paid (received) for income taxes | (229 | ) | | 190 |
|
Schedule of non-cash activities: | | | |
Acquisition of assets/liabilities through finance lease | 2,806 |
| | — |
|
Acquisition of assets/liabilities through operating lease | 2,732 |
| | 971 |
|
Preferred dividends declared | 766 |
| | 525 |
|
See accompanying notes to condensed consolidated financial statements.
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Note 1. Business, Basis of Presentation and Significant Accounting Policies
Organization and Reportable Segments
Infrastructure and Energy Alternatives, Inc., a Delaware corporation, is a holding company organized on August 4, 2015 (together with its wholly-owned subsidiaries, “IEA” or the “Company”). On March 26, 2018, we became a public company by consummating a merger (the “Merger”) pursuant to an Agreement and Plan of Merger, dated November 3, 2017, with M III Acquisition Corporation (“M III”).
As of December 31, 2019, the Company's total annual gross revenues exceeded $1.07 billion and we are no longer an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”).
We segregate our business into two2 reportable segments: the Renewables segment and the Specialty Civil segment. See Note 10. Segments for a description of the reportable segments and their operations.
COVID-19 Pandemic
During March 2020, the World Health Organization declared a global pandemic related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). The COVID-19 pandemic has significantly affected economic conditions in the United States and internationally as national, state and local governments reacted to the public health crisis by requiring mitigation measures that have disrupted business activities for an uncertain period of time. The effects of the COVID-19 pandemic could affect the Company’s future business activities and financial results, including; reduced crew productivity, contract amendments/cancellations, higher operating costs and/or delayed project start dates or project shutdowns that may be requested or mandated by governmental authorities or others.
The effects of the COVID-19 pandemic on the Company’s financial results for the three months ended March 31, 2020 has had no negative material impact. Most of the Company’s construction services are currently deemed essential under governmental mitigation orders and substantially all of its business segments continue to operate. Management’s top priority has been to take appropriate actions to protect the health and safety of its employees, customers and business partners, including adjusting its standard operating procedures to respond to evolving health guidelines. Management believes that it is taking appropriate steps to mitigate any potential impact to the Company; however, given the uncertainty regarding the potential effects of the COVID-19 pandemic, any future impacts cannot be quantified or predicted with specificity.
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions for Quarterly Reports on Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in the annual audited consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Adjustments necessary to arrive at net income (loss) available for common stockholders, previously disclosed in Note 8. Earnings Per Share, have been added to the prior period presentation of the consolidated statements of operations to be comparable with the current period presentation.
The unaudited condensed consolidated financial statements include the accounts of IEA and its wholly-owned direct and indirect domestic and foreign subsidiaries andsubsidiaries. The Company occasionally forms joint ventures with unrelated third parties for the execution of single contracts or projects. The Company assesses its joint ventures to determine if they meet the qualifications of a variable interest entity (“VIE”) in accordance with Accounting Standard Codification (“ASC”) Topic 810, Consolidation. For construction joint ventures that are not VIEs or fully consolidated but for which the Company has significant influence, the Company accounts for its interest in the joint ventures using the proportionate consolidation method, see Note 11. Joint Ventures.
In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) that are necessary to present fairly the results of operations for the interim periods presented. The results of operations for the three months ended March 31, 20202021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.2021. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 20192020 and notes thereto included in the Company’s 20192020 Annual Report on Form 10-K.
Basis of Accounting and Use of Estimates
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of the condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the
accompanying notes. Key estimates include: the recognition of revenue and project profit or loss; fair value estimates, including those related to Series B Preferred Stock;estimates; valuations of goodwill and intangible assets; asset lives used in computing depreciation and amortization; accrued self-insured claims; other reserves and accruals; accounting for income taxes; and the estimated impact of contingencies and ongoing litigation. While management believes that its estimates are reasonable when considered in conjunction with the Company’s consolidated financial position and results of operations, actual results could differ materially from those estimates.
Revenue Recognition
The Company adopted the requirements of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which is also referred to as Accounting Standards Codification (“ASC”) Topic 606, under the modified retrospective transition approach effective January 1, 2019, with application to all existing contracts that were not substantially completed as of January 1, 2019. The Company adopted this standard for interim periods beginning after December 31, 2019, and recorded adjustments to the previously issued quarterly financial statements for the three months ended March 31, 2019. The impacts of adoption on the Company’s retained earnings on January 1, 2019 was primarily related to variable consideration on unapproved change orders. The cumulative impact of adopting Topic 606 required net adjustments of $750,000 to the statement of operations between revenue, cost of revenue and income taxes, thereby reducing income in the March 31, 2019 quarterly financial statements and reducing the December 31, 2019 accumulated deficit. The Company also adjusted the cashflow statement as of March 31, 2019, to reflect adoption.
Under Topic 606, revenue is recognized when control of promised goods and services is transferred to customers, and the amount of revenue recognized reflects the consideration to which an entity expects to be entitled in exchange for the goods and services transferred. Revenue is recognized by the Company primarily over time utilizing the cost-to-cost measure of progress for fixed price contracts and are based on cost for time and materials and other service contracts, consistent with the Company’s previous revenue recognition practices.
Contracts
The Company derives revenue primarily from construction projects performed under contracts for specific projects requiring the construction and installation of an entire infrastructure system or specified units within an infrastructure system. The contractsContracts contain multiple pricing options, includingsuch as fixed price, time and materials, or unit price. RenewableGenerally, renewable energy projects are performed for private customers while our Specialty Civil projects are performed for a mix of various governmental entities.
Revenue derived from projects billed on a fixed-price basis totaled 96.0%96.2% and 90.2%96.0% of consolidated revenue from operations for the three months ended March 31, 20202021 and 2019,2020, respectively. Revenue and related costs for construction contracts billed on a time and materials basis are recognized as the services are rendered. Revenue derived from projects billed on a time and materials basis totaled 4.0%3.8% and 9.8%4.0% of consolidated revenue from operations for the three months ended March 31, 20202021 and 2019,2020, respectively.
Revenue from construction contractsConstruction contract revenue is recognized over time using the cost-to-cost measure of progress for fixed price construction contracts. For these contracts, theThe cost-to-cost measure of progress best depicts the continuous transfer of control of goods or services to the customer. The contractual terms provide that the customer compensates the Company for services rendered.
Contract costs include all direct materials, labor and subcontracted costs, as well as indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and the operational costs of capital equipment. The cost estimation and review process for recognizing revenue over time under the cost-to-cost method is based on the professional knowledge and experience of the Company’s project managers, engineers and financial professionals. Management reviews estimates of total contract transaction price and total project costs on an ongoing basis. Changes in job performance, job conditions and management’s assessment of expected variable consideration are factors that influence estimates of the total contract transaction price, total costs to complete those contracts and profit recognition. Changes in these factors could result in revisions to revenue and costs of revenue in the period in which the revisions are determined on a prospective basis, which could materially affect the Company’s condensed consolidated results of operations for that period. Provisions for losses on uncompleted contracts are recorded in the period in which such losses are determined.
Performance Obligations
A performance obligation is a contractual promise in a contract to transfer a distinct good or service to the customer and is the unit of account under ASC Topic 606. The transaction price of a contract is allocated to a distinct performance obligationobligations and recognized
as revenue when or as the performance obligation isobligations are satisfied. The Company’s contracts often require significant integrated services and, even when delivering multiple distinct services, are generally accounted for as a single performance obligation. Contract amendments and change orders are generally not distinct from the existing contract due to the significant integrated service provided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation. With the exception of certain Specialty Civil service contracts, the majority of the Company’s performance obligations are generally completed within one year.
When more than one contract is entered into with a customer on or close to the same date, the Company evaluates whether those contracts should be combined and accounted for as a single contract as well as whether those contracts should be accounted for as more than one performance obligation. This evaluation requires significant judgment and is based on the facts and circumstances of the various contracts, which could change the amount of revenue and profit recognition in a given period depending upon the outcome of the evaluation.
Remaining performance obligations represent the amount of unearned transaction prices for contracts, including approved and unapproved change orders. As of March 31, 2020,2021, the amount of the Company’s remaining performance obligations was $1,238.5$1,627.5 million. The Company expects to recognize approximately 81.6%67.7% of its remaining performance obligations as revenue during 2020.the next twelve months. Revenue recognized from performance obligations satisfied in previous periods was ($2.0)$0.4 million and $2.8$(2.0) million for the three months ended March 31, 2021 and 2020, and 2019, respectively.
Variable Consideration
Transaction pricing for the Company’s contracts may include variable consideration, such as unapproved change orders, claims, incentives and liquidated damages. Management estimates variable consideration for a performance obligation utilizing estimation methods that best predict the amount of consideration to which the Company will be entitled. Variable consideration is included in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Management’s estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based on legal opinions, past practices with the customer, specific discussions, correspondence or preliminary negotiations with the customer and all other relevant information that is reasonably available. The effect of a change in variable consideration on the transaction price of a performance obligation is typically recognized as an adjustment to revenue on a cumulative catch-up basis. To the extent unapproved change orders, claims and liquidated damages reflected in transaction price are not resolved in the Company’s favor, or to the extent incentives reflected in transaction price are not earned, there could be reductions in, or reversals of, previously recognized revenue.
As of March 31, 20202021 and year ended December 31, 2019,2020, the Company included approximately $60.2$42.8 million and $73.3$52.6 million, respectively, of unapproved change orders and/or claims in the transaction price for certain contracts that were in the process of
being resolved in the normal course of business, including through negotiation, arbitration and other proceedings. These transaction price adjustments are included within Contract Assets or Contract Liabilities as appropriate. The Company actively engages with its customers to complete the final change order approval process, and generally expects these processes to be completed within one year. Amounts ultimately realized upon final acceptance by customers could be higher or lower than such estimated amounts.
Disaggregation of Revenue
The following tables disaggregate revenue by customers and services performed, which the Company believes best depicts how the nature, amount, timing and uncertainty of its revenue:
| | (in thousands) | | Three months ended | (in thousands) | | Three Months Ended | | |
| | March 31, 2020 | | March 31, 2019 | | March 31, 2021 | | March 31, 2020 | | |
Renewables | | | | | |
Renewables Segment | | Renewables Segment | | | | |
Wind | | $ | 248,537 |
| | $ | 72,034 |
| Wind | | $ | 146,858 | | | $ | 248,537 | | | |
Solar | | 209 |
| | 1,997 |
| Solar | | 33,516 | | | 209 | | | |
| | $ | 248,746 |
| | $ | 74,031 |
| | $ | 180,374 | | | $ | 248,746 | | | |
| | | | | | | | |
Specialty Civil | | | | | |
Specialty Civil Segment | | Specialty Civil Segment | | |
Heavy civil | | $ | 41,222 |
| | $ | 50,115 |
| Heavy civil | | $ | 48,871 | | | $ | 41,222 | | | |
Rail | | 47,057 |
| | 42,609 |
| Rail | | 26,868 | | | 47,057 | | | |
Environmental | | 21,138 |
| | 23,026 |
| Environmental | | 20,299 | | | 21,138 | | | |
| | $ | 109,417 |
| | $ | 115,750 |
| | $ | 96,038 | | | $ | 109,417 | | | |
Concentrations
The Company had the following approximate revenue and accounts receivable concentrations, net of allowances, for the periods ended:
|
| | | | | | | | | |
| Revenue % | | |
| Three months ended | | Accounts Receivable % |
| 2020 | | 2019 | | March 31, 2020 | | December 31, 2019 |
Company A (Specialty Civil Segment) | * |
| | 21.1 | % | | * | | * |
Company B (Renewable Segment) | * |
| | 11.9 | % | | * | | * |
Company C (Renewables Segment) | 11.5 | % | | * |
| | * | | * |
Company D (Renewables Segment) | 11.1 | % | | * |
| | * | | * |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Revenue % | | | | |
| Three Months Ended | | | Accounts Receivable % | |
| March 31, 2021 | | March 31, 2020 | | | | | March 31, 2021 | | December 31, 2020 | |
Company A (Renewables Segment) | * | | 11.5 | % | | | | | * | | * | |
Company B (Renewables Segment) | * | | 11.1 | % | | | | | * | | * | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
* Amount was not above 10% threshold
Construction Joint Ventures
Certain contracts are executed through joint ventures. The arrangements are often formed for the execution of single contracts or projects and allow the Company to share risks and secure specialty skills required for project execution.
In accordance with ASC Topic 810, Consolidation the Company assesses its joint ventures at inception to determine if any meet the qualifications of a VIE. The Company considers a joint venture a VIE if either (a) the total equity investment is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) characteristics of a controlling financial interest are missing (either the ability to make decisions through voting or other rights, the obligation to absorb the expected losses of the entity or the right to receive the expected residual returns of the entity), or (c) the voting rights of the equity holders are not proportional to their obligations to absorb the expected losses of the entity and/or their rights to receive the expected residual returns of the entity and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. Upon the occurrence of certain events outlined in ASC 810, the Company reassesses its initial determination of whether the joint venture is a VIE.
The Company also evaluates whether it is the primary beneficiary of each VIE and consolidates the VIE if the Company has both (a) the power to direct the economically significant activities of the entity and (b) the obligation to absorb
losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. The Company considers the contractual agreements that define the ownership structure, distribution of profits and losses, risks, responsibilities, indebtedness, voting rights and board representation of the respective parties in determining whether it qualifies as the primary beneficiary. The Company also considers all parties that have direct or implicit variable interests when determining whether it is the primary beneficiary. When the Company is determined to be the primary beneficiary, the VIE is consolidated. In accordance with ASC 810, management’s assessment of whether the Company is the primary beneficiary of a VIE is performed continuously.
Construction joint ventures that do not involve a VIE, or for which the Company is not the primary beneficiary, are evaluated for consolidation under the voting interest model that considers whether the Company owns or controls more than 50% of the voting interest in the joint venture. For construction joint ventures that are not consolidated but for which the Company has significant influence, the Company accounts for its interest in the joint ventures using the proportionate consolidation method, whereby the Company’s proportionate share of the joint ventures’ assets, liabilities, revenue and cost of operations are included in the appropriate classifications in the Company’s consolidated financial statements. See Note 11. Joint Ventures for additional discussion regarding joint ventures.
Recently Adopted Accounting Standards - Guidance Adopted in 2020
In August 2018,December 2019, the FASBFinancial Accounting Standards Board (“FASB”) issued ASU 2018-13, Accounting Standards Update (“ASU”) No. 2019-12, “Fair Value MeasurementIncome Taxes (Topic 820), Disclosure Framework - Changes740): Simplifying the Accounting for Income Taxes,” which removes certain exceptions to the Disclosure Requirements for Fair Value Measurement,” which eliminates certain disclosure requirements for recurringgeneral principles in Topic 740 and non-recurring fair value measurements, such as the amount ofalso clarifies and reason for transfers between Level 1 and Level 2 of the fair value hierarchy, and adds new disclosure requirements for Level 3 measurements.amends existing guidance to improve consistent application. This ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, including2020, and interim periods within those fiscal years, with earlyyears. Depending on the amendment, adoption permitted for any eliminated or modified disclosures. Certain disclosures per ASU 2018-13 are required tomay be applied on athe retrospective, basis and others on amodified retrospective, or prospective basis. WeThe Company adopted the standard on January 1, 2020, and it2021 on a prospective basis, which did not have an impact on our disclosures for fair value measurements.income taxes.
In February 2016, the FASB issued ASU 2016-02,“Leases (Topic 842),” which is effective for annual reporting periods beginning after December 15, 2018. Under Topic 842, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Topic 842 requires entities to adopt the new lease standard using a modified retrospective method and initially apply the related guidance at the beginning of the earliest period presented in the financial statements.
The Company adopted Topic 842 using the modified retrospective method as of January 1, 2019 and for interim periods beginning after December 31, 2019, without adjusting comparative periods in the financial statements. The most
significant effect of the new guidance was the recognition of operating lease right-of-use assets and a liability for operating leases as of December 31, 2019. The accounting for finance leases (capital leases) was substantially unchanged. The Company elected to utilize the package of practical expedients that allowed entities to: (1) not reassess whether any expired or existing contracts were or contained leases; (2) retain the existing classification of lease contracts as of the date of adoption; (3) not reassess initial direct costs for any existing leases; and (4) not separate non-lease components for all classes of leased assets.
Recently Issued Accounting Standards Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which introduced an expected credit loss methodology for the measurement and recognition of credit losses on most financial assets, including trade accounts receivables. The expected credit loss methodology under ASU 2016-13 is based on historical experience, current conditions and reasonable and supportable forecasts, and replaces the probable/incurred loss model for measuring and recognizing expected losses under current GAAP. The ASU also requires disclosure of information regarding how a company developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes. The ASU and its related clarifying updates are effective for smaller reporting companies for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. We areThe Company is still evaluating the new standard but do not expect it to have a material impact on our estimate of the allowance for uncollectable accounts.
In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Depending on the amendment, adoption may be applied on the retrospective, modified retrospective, or prospective basis. We are currently evaluating the potential effects of adopting the provisions of ASU No. 2019-12.
Management has evaluated other recently issued accounting pronouncements and does not believe that they will have a significant impact on the financial statements and related disclosures.
During March 2020, the World Health Organization declared a global pandemic related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). The COVID-19 pandemic has significantly affected economic conditions in the United States and internationally as national, state and local governments reacted to the public health crisis by requiring mitigation measures that have disrupted business activities for an uncertain period of time.
The Company believes that the COVID-19 pandemic has not had a material adverse impact on the Company’s financial results for the period ended March 31, 2021. Currently, most of the Company’s construction services are deemed essential under governmental mitigation orders and all of our business segments continue to operate. The Company has issued several notices of force majeure for the purpose of recognizing delays in construction schedules due to COVID-19 outbreaks on certain of its work sites and has also received notices of force majeure from the owners of certain projects and certain subcontractors. Management does not believe that any delays on projects related to these events of force majeure will have a material impact on its results of operations.
Management’s top priority has been to take appropriate actions to protect the health and safety of the Company's employees, customers and business partners, including adjusting the Company's standard operating procedures to respond to
evolving health guidelines. Management believes that it is taking appropriate steps to mitigate any potential impact to the Company; however, given the uncertainty regarding the potential effects of the COVID-19 pandemic, any future impacts cannot be quantified or predicted with specificity.
The effects of the COVID-19 pandemic could affect the Company’s future business activities and financial results, including new contract awards, reduced crew productivity, contract amendments or cancellations, higher operating costs or delayed project start dates or project shutdowns that may be requested or mandated by governmental authorities or others.
Note 2. Contract Assets and Liabilities
The timing of when we bill our customers is generally dependent upon agreed-upon contractual terms, milestone billings based on the completion of certain phases of the work, or when services are provided. Sometimes, billing occurs subsequent to revenue recognition, resulting in unbilled revenue, which is accounted for as a contract asset. Also,Sometimes we sometimes receive advance payments or deposits from our customers before revenue is recognized, resulting in deferred revenue, which is accounted for as a contract liability.
Contract assets in the Condensed Consolidated Balance Sheets represent the following:
•costs and estimated earnings in excess of billings, which arise when revenue has been recorded but the amount has not been billed; and
•retainage amounts for the portion of the contract price billed by us for work performed but held for payment by the customer as a form of security until we reach certain construction milestones or complete the project.
Contract assets consistconsisted of the following:
| | | | | | | | | | | |
(in thousands) | March 31, 2021 | | December 31, 2020 |
Costs and estimated earnings in excess of billings on uncompleted contracts | $ | 60,132 | | | $ | 51,367 | |
Retainage receivable | 86,564 | | | 93,816 | |
| $ | 146,696 | | | $ | 145,183 | |
|
| | | | | | | |
(in thousands) | March 31, 2020 | | December 31, 2019 |
Costs and estimated earnings in excess of billings on uncompleted contracts | $ | 106,285 |
| | $ | 91,543 |
|
Retainage receivable | 87,566 |
| | 87,760 |
|
| 193,851 |
| | 179,303 |
|
Contract liabilities consist of the following:
| | | | | | | | | | | |
(in thousands) | March 31, 2021 | | December 31, 2020 |
Billings in excess of costs and estimated earnings on uncompleted contracts | $ | 141,231 | | | $ | 117,641 | |
Loss on contracts in progress | 189 | | | 594 | |
| $ | 141,420 | | | $ | 118,235 | |
|
| | | | | | | |
(in thousands) | March 31, 2020 | | December 31, 2019 |
Billings in excess of costs and estimated earnings on uncompleted contracts | $ | 107,207 |
| | $ | 115,570 |
|
Loss on contracts in progress | 46 |
| | 64 |
|
| $ | 107,253 |
| | $ | 115,634 |
|
The contract receivables amount as of March 31, 2020 and December 31, 2019 includes unapproved change orders of approximately $9.2 million for which the Company is pursuing settlement through dispute resolution.
Revenue recognized for the three months ended March 31, 2020 and 20192021 that was included in the contract liability balance at the beginning of each yearDecember 31, 2020 was approximately $90.9 million and $31.9 million, respectively.
$87.8 million.
Activity in the allowance for doubtful accounts for the periods indicated iswas as follows:
| | | | | | | | | | | | | | | |
| Three Months Ended | | |
| March 31, | | |
(in thousands) | 2021 | | 2020 | | | | |
Allowance for doubtful accounts at beginning of period | $ | 0 | | | $ | 75 | | | | | |
Plus: provision for (reduction in) allowance | 0 | | | 14 | | | | | |
Less: write-offs, net of recoveries | 0 | | | 0 | | | | | |
Allowance for doubtful accounts at period end | $ | 0 | | | $ | 89 | | | | | |
|
| | | | | | | |
| Three Months Ended |
| March 31, |
(in thousands) | 2020 | | 2019 |
Allowance for doubtful accounts at beginning of period | $ | 75 |
| | $ | 42 |
|
Plus: provision for (reduction in) allowance | 14 |
| | 30 |
|
Less: write-offs, net of recoveries | — |
| | — |
|
Allowance for doubtful accounts at period end | $ | 89 |
| | $ | 72 |
|
Note 3. Property, Plant and Equipment, Net
Property, plant and equipment consisted of the following:
| | | | | | | | | | | |
(in thousands) | March 31, 2021 | | December 31, 2020 |
Buildings and leasehold improvements | $ | 4,890 | | | $ | 4,402 | |
Land | 17,600 | | | 17,600 | |
Construction equipment | 197,057 | | | 192,402 | |
Office equipment, furniture and fixtures | 3,637 | | | 3,620 | |
Vehicles | 7,426 | | | 7,326 | |
| 230,610 | | | 225,350 | |
Accumulated depreciation | (103,346) | | | (94,604) | |
Property, plant and equipment, net | $ | 127,264 | | | $ | 130,746 | |
|
| | | | | | | |
(in thousands) | March 31, 2020 | | December 31, 2019 |
Buildings and leasehold improvements | $ | 3,051 |
| | $ | 2,919 |
|
Land | 17,600 |
| | 17,600 |
|
Construction equipment | 175,707 |
| | 173,434 |
|
Office equipment, furniture and fixtures | 3,537 |
| | 3,487 |
|
Vehicles | 5,375 |
| | 6,087 |
|
| 205,270 |
| | 203,527 |
|
Accumulated depreciation | (70,517 | ) | | (63,039 | ) |
Property, plant and equipment, net | $ | 134,753 |
| | $ | 140,488 |
|
Depreciation expense of property, plant and equipment was $8,516$9,183 and $8,476$8,516 for the three months ended March 31, 2021 and 2020, and 2019, respectively.
Note 4. Goodwill and Intangible Assets, Net
The following table provides the changes in the carrying amount of goodwill:goodwill, by segment:
| | | | | | | | | | | | | | | | | |
(in thousands) | Renewables | | Specialty Civil | | Total |
January 1, 2020 | $ | 3,020 | | | $ | 34,353 | | | $ | 37,373 | |
Adjustments | 0 | | | 0 | | | 0 | |
December 31, 2020 | $ | 3,020 | | | $ | 34,353 | | | $ | 37,373 | |
Adjustments | 0 | | | 0 | | | 0 | |
March 31, 2021 | $ | 3,020 | | | $ | 34,353 | | | $ | 37,373 | |
|
| | | | | | | | | | | |
(in thousands) | Renewables | | Specialty Civil | | Total |
January 1, 2019 | $ | 3,020 |
| | $ | 37,237 |
| | $ | 40,257 |
|
Acquisition adjustments | — |
| | (2,884 | ) | | (2,884 | ) |
December 31, 2019 | $ | 3,020 |
| | $ | 34,353 |
| | $ | 37,373 |
|
Adjustments | — |
| | — |
| | — |
|
March 31, 2020 | $ | 3,020 |
| | $ | 34,353 |
| | $ | 37,373 |
|
Intangible assets consisted of the following as of the dates indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2021 | | | | December 31, 2020 | | |
($ in thousands) | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Weighted Average Remaining Life | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Weighted Average Remaining Life |
Customer relationships | $ | 26,500 | | | $ | (9,427) | | | $ | 17,073 | | | 4.75 years | | $ | 26,500 | | | $ | (8,481) | | | $ | 18,019 | | | 5 years |
Trade name | 13,400 | | | (6,655) | | | 6,745 | | | 2.75 years | | 13,400 | | | (5,985) | | | 7,415 | | | 3 years |
| | | | | | | | | | | | | | | |
| $ | 53,800 | | | $ | (29,982) | | | $ | 23,818 | | | | | $ | 53,800 | | | $ | (28,366) | | | $ | 25,434 | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2020 | | | | December 31, 2019 | | |
($ in thousands) | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Weighted Average Remaining Life | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Amount | | Weighted Average Remaining Life |
Customer relationships | $ | 26,500 |
| | $ | (5,642 | ) | | $ | 20,858 |
| | 5.75 years | | $ | 26,500 |
| | $ | (4,695 | ) | | $ | 21,805 |
| | 6 years |
Trade name | 13,400 |
| | (3,990 | ) | | 9,410 |
| | 3.75 years | | 13,400 |
| | (3,305 | ) | | 10,095 |
| | 4 years |
Backlog | 13,900 |
| | (10,266 | ) | | 3,634 |
| | 9 months | | 13,900 |
| | (8,528 | ) | | 5,372 |
| | 1 year |
| $ | 53,800 |
| | $ | (19,898 | ) | | $ | 33,902 |
| | | | $ | 53,800 |
| | $ | (16,528 | ) | | $ | 37,272 |
| | |
Amortization expense associated with intangible assets for the three months ended March 31, 2021 and 2020, totaled $1.6 million and 2019, totaled $3.4 million, and $3.5 million, respectively.
The following table provides the annual intangible amortization expense currently expected to be recognized for the years 20202021 through 2024:2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | Remainder of 2021 | | 2022 | | 2023 | | 2024 | | 2025 |
Amortization expense | $ | 4,849 | | | $ | 6,466 | | | $ | 5,841 | | | $ | 3,785 | | | $ | 2,876 | |
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Remainder of 2020 | | 2021 | | 2022 | | 2023 | | 2024 |
Amortization expense | $ | 11,837 |
| | $ | 6,466 |
| | $ | 6,466 |
| | $ | 5,841 |
| | $ | 3,785 |
|
Note 5. Fair Value of Financial Instruments
The Company applies ASC Topic 820, Fair Value Measurement, which establishes a framework for measuring fair value. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.
The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below:
Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.
liabilities listed on active market exchanges.
Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities.
The following table sets forth information regarding the Company's assetsliabilities measured at fair value on a recurring basis:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2021 | | December 31, 2020 |
(in thousands) | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total |
Liabilities | | | | | | | | | | | | | | | |
Private warrants | $ | 0 | | | $ | 1,000 | | | $ | 0 | | | $ | 1,000 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
Series B Preferred Stock - Anti-dilution warrants | 0 | | | 0 | | | 8,100 | | | 8,100 | | | 0 | | | 0 | | | 8,800 | | | 8,800 | |
Series B-1 Preferred Stock - Performance warrants | 0 | | | 0 | | | 400 | | | 400 | | | 0 | | | 0 | | | 400 | | | 400 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Total liabilities | $ | 0 | | | $ | 1,000 | | | $ | 8,500 | | | $ | 9,500 | | | $ | 0 | | | $ | 0 | | | $ | 9,200 | | | $ | 9,200 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2020 | | December 31, 2019 |
(in thousands) | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total |
Liabilities | | | | | | | | | | | | | | | |
Series B Preferred Stock - Series A Conversion Warrants and Exchange Warrants | $ | — |
| | $ | — |
| | $ | 1,800 |
| | $ | 1,800 |
| | $ | — |
| | $ | — |
| | $ | 4,317 |
| | $ | 4,317 |
|
Series B-1 Preferred Stock - Additional 6% Warrants | — |
| | — |
| | 400 |
| | 400 |
| | — |
| | — |
| | 400 |
| | 400 |
|
Series B-3 Preferred - Closing Warrants | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 11,491 |
| | 11,491 |
|
Rights Offering | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1,383 |
| | 1,383 |
|
Total liabilities | $ | — |
| | $ | — |
| | $ | 2,200 |
| | $ | 2,200 |
| | $ | — |
| | $ | — |
| | $ | 17,591 |
| | $ | 17,591 |
|
The following is a reconciliation of the beginning and ending balances of recurring fair value measurements using Level 3 inputs:
| | | | | | | | | | | | | | | | | | | |
(in thousands) | | | Series B Preferred Stock - Anti-dilution warrants | | Series B-1 Preferred Stock - Performance warrants | | | | |
Beginning Balance, December 31, 2020 | | | $ | 8,800 | | | $ | 400 | | | | | |
Fair value adjustment - loss (gain) recognized in other income | | | (700) | | | 0 | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Ending Balance, March 31, 2021 | | | $ | 8,100 | | | $ | 400 | | | | | |
|
| | | | | | | | | | | | | | | |
(in thousands) | Series B Preferred - Series A Conversion Warrants and Exchange Warrants | | Series B-1 Preferred Stock - Additional 6% Warrants | | Series B-3 Preferred - Closing Warrants | | Rights Offering |
Beginning Balance, December 31, 2019 | $ | 4,317 |
| | $ | 400 |
| | $ | 11,491 |
| | $ | 1,383 |
|
Fair value adjustment - (gain) loss recognized in other income | (91 | ) | | — |
| | 1,677 |
| | (1,383 | ) |
Transfer to non-recurring fair value instrument (equity) | (2,426 | ) | | — |
| | (13,168 | ) | | — |
|
Ending Balance, March 31, 2020 | $ | 1,800 |
| | $ | 400 |
| | $ | — |
| | $ | — |
|
TheIn 2019, the Company entered into three Equity Commitmentequity purchase agreements at various dates during 2019 with Ares Management, LLC, on behalf of its affiliated funds, investment vehicles and/or managed accounts (“Ares”) and funds managed by Oaktree Capital Management (“Oaktree”). These resulted in Series B-1 Preferred Stock (the “Series B-1 Preferred Stock”), Series B-2 Preferred Stock (the “Series B-2 Preferred Stock”) and Series B-3 Preferred Stock (the “Series B-3 Preferred Stock”) (collectively referred to as “Series B Preferred Stock”).
The information below describes the balance sheet classification and the recurring/nonrecurring fair value measurement:
issued Series B Preferred Stock (non-recurring) - Theas discussed in Note 6. Debt and Series B Preferred Stock was a mandatorily redeemable financial instrument under ASC 480 and was recorded at relative fair value as debt which was estimated using a discounted cashflow model based. The agreements require that on certain significant unobservable inputs, such as accumulated dividend rates, and projected Adjusted EBITDA for the lifeconversion of any of the Convertible Series A Preferred Stock to common shares, the Series B Preferred Stock.Stock will receive additional warrants (Anti-dilution Warrants) to purchase common shares at a price of $0.0001 per share. The fair value ofagreements also require that if the liability for each ofCompany fails to meet a certain Adjusted EBITDA (as that term is defined in the transactions, wasagreements) threshold on a combined $153.7 million and recorded ontrailing twelve-month basis from May 31, 2020 through April 30, 2021, the balance sheet as debt as of March 31, 2020.
Series B Preferred Stock - Warrantswill receive additional warrants (Performance Warrants) to purchase common shares at closing(non-recurring) - The Warrants at closing, with an exercise price of $0.0001 represented (on an if-converted to common stock basis) 10% of the issued and outstanding common stock of the Company based on the Company’s fully diluted share count on May 20, 2019 (including the number of shares of common stock that may be issued pursuant to all restricted stock awards, restricted stock units, stock options and any other securities or rights (directly or indirectly) convertible into, exchangeable for or to subscribe for common stock that are outstanding on May 20,
2019 (excluding any shares of common stock issuable (a) pursuant to the merger agreement for our business combination, (b) upon conversion of shares of Series A Preferred Stock, (c) upon the exercise of any warrant with an exercise price of $11.50 or higher or (d) upon the exercise of any equity issued pursuant to the Company’s long term incentive plan or other equity plan with a strike price of $11.50 or higher). The 2,545,934 warrants at closing were valued at the closing stock price of $4.21 on May 20, 2019 which was recorded as additional paid in capital.
On August 30, 2019, warrants for 900,000 shares of common stock were issued and were valued at the closing stock price of $3.75 which was recorded as additional paid in capital.
On November 14, 2019, warrants for 3,568,750 shares of common stock were issued and were valued at the closing stock price of $2.20 and these were recorded as a liability (Series B-3 Preferred - Closing Warrants) and marked to market at December 31, 2019 at a price of $3.22. On January 21, 2020 the Company received shareholder approval for the warrants and the liability was marked to market at a price of $3.69. Upon shareholder approval, the warrants were moved from liability to equity at a fair value of $13,168 on a non-recurring basis.
Series B-3 Exchange Warrants (non-recurring) - On October 29, 2019, the holders of Series A Preferred Stock converted 50% of their shares to Series B Preferred Stock and reduced the number of the potential additional warrants. In the exchange the holders of Series A Preferred Stock were issued warrants for 657,383 shares of common stock at the closing stock price of $2.20 and these were recorded as a liability and marked to market at December 31, 2019 at a price of $3.22. On January 21, 2020 the Company received shareholder approval for the warrants and the liability was marked to market at a price of $3.69. As of March 31, 2020, these warrants reside as part of equity at a fair value of $2,426 on a non-recurring basis.
Series B-1 Preferred Stock - Series A ConversionWarrants(recurring) -per share. On May 20, 2019, the conversion rights for the Series A Preferred Stock were amended to allow the holders of Series A Preferred Stock to convert all or any portion of Series A Preferred Stock outstanding into common stock at any point in time. If converted,
The information below describes the holdersbalance sheet classification and the recurring fair value measurement for these requirements:
Private Warrants (recurring) - The Company has 295,000 private warrants that are not actively traded on the public markets and the Company adjusts the fair value at the end of each fiscal period using the price on that date multiplied by the remaining private warrants. The Private warrants were recorded as Warrant obligations at the end of the quarter and the fair value adjustment was recorded as other expense for the three months ended March 31, 2021. For further discussion see Note 8. Earnings Per Share.
Series B Preferred Stock would be entitled- Anti-dilutionWarrants(recurring) - The number of common shares attributable to additionalthe warrants with an exercise price of $0.0001. These warrants were fairissued to Series B Preferred Stockholders upon conversion by Series A Preferred Stockholders is determined on a 30-day volume weighted average. The Anti-dilution warrant liability was valued using the closing stock price at the end of $4.21 on May 20, 2019, at an estimated if-converted share countthe quarter and were recorded as a liability.
Series B-1 Preferred Stock - Additional 6%Performance Warrants (recurring) - The Additional 6% Warrants are issuable if the Company fails to meet certain Adjusted EBITDA thresholds on a trailing twelve-month basis from May 31, 2020 through April 30, 2021. The Companywarrant liability was recorded the Additional 6% Warrants at fair value which was estimatedas a liability, using a Monte Carlo Simulation based on certain significant unobservable inputs, such as a risk rate premium, Adjusted EBITDA volatility, stock price volatility and projected Adjusted EBITDA for the Company for 2019. The Additional 6% Warrants were recorded as a liability.Company.
Rights offering - The Company conducted a rights offering and each shareholder as of the record date was issued a right to purchase Series B Preferred Stock and warrants. The right that was issued was fair valued using a Black-Scholes model based on certain significant unobservable inputs, such as a risk rate premium, stock price volatility, dividend yield and expected term of rights offering. The rights offering fair value was recorded as a liability and was a deemed dividend to common stockholders and reflected as a reduction in additional paid in capital. On March 4, 2020 we completed the rights offering, removed the liability associated with the fair value (rights offering - recurring) and issued and sold 350 shares of Series B-3 Preferred Stock (Series B-3 Preferred Stock - non-recurring at a fair value of $313,000) and 12,029 warrants (non-recurring Series B Preferred Stock - Warrants at closing - non-recurring at a fair value of $37,000) to purchase common stock.
2020 Commitment - The Company is obligated to sell to, Ares and Oaktree, and they are obligated to purchase, additional shares of Series B Preferred Stock up to approximately $15.0 million based on a failure by the Company to achieve specified debt and liquidity levels. See Note 12. Subsequent Events for further discussion of the transaction.
Other financial instruments of the Company not listed in the table consist of cash and cash equivalents, accounts receivable, accounts payable and other current liabilities that approximate their fair values. Additionally, management believes that the outstanding recorded balance on the line of credit and long-term debt, approximates fair value due to their floating interest rates.
Note 6. Debt and Series B Preferred Stock
Debt consistsconsisted of the following obligations as of:
| | | | | | | | | | | |
(in thousands) | March 31, 2021 | | December 31, 2020 |
| | | |
| | | |
Term loan | $ | 173,345 | | | $ | 173,345 | |
| | | |
| | | |
Commercial equipment notes | 4,897 | | | 5,582 | |
Total principal due for long-term debt | 178,242 | | | 178,927 | |
Unamortized debt discount and issuance costs | (15,634) | | | (17,196) | |
Less: Current portion of long-term debt | (2,379) | | | (2,506) | |
Long-term debt, less current portion | $ | 160,229 | | | $ | 159,225 | |
| | | |
Debt - Series B Preferred Stock | $ | 185,998 | | | $ | 185,396 | |
Unamortized debt discount and issuance costs | (10,834) | | | (11,528) | |
Long-term Series B Preferred Stock | $ | 175,164 | | | $ | 173,868 | |
|
| | | | | |
(in thousands) | March 31, 2020 | | December 31, 2019 |
| | | |
Term loan | 173,345 |
| | 182,687 |
|
Commercial equipment notes | 3,946 |
| | 4,456 |
|
Total principal due for long-term debt | 177,291 |
| | 187,143 |
|
Unamortized debt discount and issuance costs | (20,810 | ) | | (22,296 | ) |
Less: Current portion of long-term debt | (1,693 | ) | | (1,946 | ) |
Long-term debt, less current portion | 154,788 |
| | 162,901 |
|
| | | |
Debt - Series B Preferred Stock | 188,755 |
| | 180,444 |
|
Unamortized debt discount and issuance costs | (13,610 | ) | | (14,303 | ) |
Long-term Series B Preferred Stock | 175,145 |
| | 166,141 |
|
The weighted average interest rate for the term loan as of March 31, 20202021 and December 31, 2019,2020, was 9.70%6.95% and 10.35%7.00%, respectively.
Debt Covenants
The term loan is governed by the terms of the Third A&R Credit Agreement, dated May 2019, which include customary affirmative and negative covenants and provide for customary events of default, which include,including, nonpayment of principal or interest and failure to timely deliver financial statements. Under the Third A&R Credit Agreement, the financial covenant provides that the First Lien Net Leverage Ratio (as defined therein) may not exceed (i) prior to the fiscal quarter ending December 31, 2019, 4.75:2.75:1.0, (ii) for the four fiscal quarters ending December 31, 2020, 3.50:1.0, (iii) for the four fiscal quarters ending December 31, 2021, 2.75:1.0, and (iv) for all subsequent quarters, 2.25:1.0. Under the Third A&R Credit Agreement, the Company could not use an equity infusion to cure any covenant violations for fiscal quarter ending in 2019, excluding the Series B Preferred Stock. Thereafter, the Company has access to a customary equity cure.
The Third A&R Credit Agreement also includes certain limitations on the payment of cash dividends on the Company's common shares and provides for other restrictions on (subject to certain exceptions) liens, indebtedness (including guarantees and other contingent obligations), investments (including loans, advances and acquisitions), mergers and other fundamental changes and sales and other dispositions of property or assets, among others.
LettersDebt - Series B Preferred Stock
The Series B Preferred Stock is a mandatorily redeemable financial instrument under ASC Topic 480 and has been recorded as a liability using the effective interest rate method for each tranche. The mandatory redemption date for all tranches of the Series B Preferred Stock is February 15, 2025.
The Series B Preferred Stock requires quarterly dividend payments calculated at a 12% annual rate on all outstanding Series B Preferred Stock when the Company’s First Lien Net Leverage Ratio (as defined in the Third A&R Credit Agreement) is less than or equal to 1.50:1.0 and Surety Bonds
Ina 13.5% rate if the ordinary course of business,ratio if greater. The Series B Preferred Stock agreements allow the Company is required to post lettersaccrue, but not pay, the dividends at a 15.0% annual rate. Accrued dividends increase the amount of credit and surety bonds to customers in support of performance under certain contracts. Such letters of credit are generally issued by a bank or similar financial institution. The letter of credit or surety bond commits the issuer to pay specified amounts to the holder of the letter of credit or surety bond under certain conditions. If the letter of credit or surety bond issuerSeries B Preferred Stock. Accrued dividends were required to pay any amount to a holder, the Company would be required to reimburse the issuer, which, depending upon the circumstances, could result in a charge to earnings. As of$18.3 million at March 31, 2020,2021 and December 31, 2019,2020, respectively. Dividend payments are not deductible in calculating the Company was contingently liable under letters of credit issued under its Third A&R Credit Agreement, in the amount of $23.7 millionCompany’s federal and $21.0 million, respectively, related to projects. In addition, as of March 31, 2020 and December 31, 2019, the Company had outstanding surety bonds on projects of $2.5 billion and $2.4 billion, respectively.state income taxes.
Contractual Maturities
Contractual maturities of the Company's outstanding principal on debt obligations as of March 31, 2020:2021:
| | | | | |
(in thousands) | Maturities |
Remainder of 2021 | $ | 1,821 | |
2022 | 16,938 | |
2023 | 29,986 | |
2024 | 129,368 | |
2025 | 129 | |
Thereafter | 0 | |
Total contractual maturities | $ | 178,242 | |
|
| | | |
(in thousands) | Maturities |
Remainder of 2020 | $ | 1,365 |
|
2021 | 1,228 |
|
2022 | 15,859 |
|
2023 | 29,735 |
|
2024 | 129,104 |
|
Thereafter | — |
|
Total contractual obligations | $ | 177,291 |
|
Note 7. Commitments and Contingencies
In the ordinary course of business, the Company enters into agreements that provide financing for its machinery and equipment, facility and vehicle needs. The Company reviews these agreements for potential lease classification, and at inception, determines whether a lease is an operating or finance lease. Lease assets and liabilities, which generally represent the present value of future minimum lease payments over the term of the lease, are recognized as of the commencement date. Under Topic 842, leases with an initial lease term of twelve months or less are classified as short-term leases and are not recognized in the condensed consolidated balance sheets unless the lease contains a purchase option that is reasonably certain to be exercised.
Lease term, discount rate, variable lease costs and future minimum lease payment determinations require the use of judgment as these are based on the facts and circumstances related to each specific lease. Lease terms are generally based on their initial non-cancelable terms, unless there is a renewal option that is reasonably certain to be exercised. Various factors, including economic incentives, intent, past history and business need are considered to determine if a renewal option is reasonably certain to be exercised. The implicit rate in a lease agreement is used when it can be determined. Otherwise, the Company's incremental borrowing rate, which is based on information available as of the lease commencement date, including applicable lease terms and the current economic environment, is used to determine the value of the lease obligation.
Finance Leases
The Company has obligations, exclusive of associated interest, under various finance leases for equipment totaling $61.3$51.8 million and $64.2$57.6 million at March 31, 20202021 and December 31, 2019,2020, respectively. Gross property under this capitalized lease agreement at March 31, 20202021 and December 31, 2019,2020, totaled $117.9$129.7 million and $116.1$128.0 million, less accumulated depreciation of $39.4$60.7 million and $34.0$55.1 million, respectively, for net balances of $78.5$69.0 million and $82.1$72.9 million, respectively. Depreciation ofexpense for assets held under the finance leases areis included in cost of revenue in the condensed consolidated statements of operations.
The future minimum payments of finance lease obligations are as follows:
| | | | | |
(in thousands) | |
Remainder of 2021 | $ | 19,994 | |
2022 | 21,996 | |
2023 | 7,267 | |
2024 | 3,264 | |
2025 | 1,799 | |
Thereafter | 78 | |
Future minimum lease payments | 54,398 | |
Less: Amount representing interest | (2,617) | |
Present value of minimum lease payments | 51,781 | |
Less: Current portion of finance lease obligations | 24,728 | |
Finance lease obligations, less current portion | $ | 27,053 | |
|
| | | |
(in thousands) | |
Remainder of 2020 | $ | 20,035 |
|
2021 | 22,344 |
|
2022 | 18,302 |
|
2023 | 4,108 |
|
2024 | 628 |
|
Thereafter | 157 |
|
Future minimum lease payments | 65,574 |
|
Less: Amount representing interest | 4,311 |
|
Present value of minimum lease payments | 61,263 |
|
Less: Current portion of finance lease obligations | 23,437 |
|
Finance lease obligations, less current portion | $ | 37,826 |
|
Operating Leases
In the ordinary course of business, the Company enters into non-cancelable operating leases for certain of its facilities, vehicles and equipment. The Company has obligations, exclusive of associated interest, totaling $44.3$36.5 million and $44.2$38.0 million at March 31, 20202021 and December 31, 2019,2020, respectively. Property under these operating lease agreements at March 31, 20202021 and December 31, 2019,2020, totaled $43.4$35.0 million and $43.4$36.5 million, respectively.
The Company has long-term power-by-the-hour equipment rental agreements with a construction equipment manufacturer that have a guaranteed minimum monthly hour requirement. The minimum guaranteed amount based on the Company's current operations is $3.2 million per year. Total expense under these agreements are listed belowin the following table as variable lease costs.
The future minimum payments under non-cancelable operating leases are as follows:
| | | | | |
(in thousands) | |
Remainder of 2021 | $ | 8,435 | |
2022 | 9,753 | |
2023 | 7,347 | |
2024 | 3,532 | |
2025 | 1,751 | |
Thereafter | 18,899 | |
Future minimum lease payments | 49,717 | |
Less: Amount representing interest | (13,202) | |
Present value of minimum lease payments | 36,515 | |
Less: Current portion of operating lease obligations | 8,779 | |
Operating lease obligations, less current portion | $ | 27,736 | |
|
| | | |
(in thousands) | |
Remainder of 2020 | $ | 9,784 |
|
2021 | 11,242 |
|
2022 | 8,846 |
|
2023 | 6,220 |
|
2024 | 3,116 |
|
Thereafter | 20,461 |
|
Future minimum lease payments | 59,669 |
|
Less: Amount representing interest | 15,347 |
|
Present value of minimum lease payments | 44,322 |
|
Less: Current portion of operating lease obligations | 10,191 |
|
Operating lease obligations, less current portion | $ | 34,131 |
|
Lease Information
| | | | | | | | | | |
| | Three Months Ended |
| | | March 31, 2021 | March 31, 2020 |
| | | | |
Finance Lease cost: | | | | |
Amortization of right-of-use assets | | | $ | 5,835 | | $ | 5,697 | |
Interest on lease liabilities | | | 817 | | 1,186 | |
Operating lease cost | | | 3,394 | | 3,478 | |
Short-term lease cost | | | 23,604 | | 21,635 | |
Variable lease cost | | | 1,247 | | 960 | |
Sublease Income | | | (33) | | (33) | |
Total lease cost | | | $ | 34,864 | | $ | 32,923 | |
| | | | |
Other information: | | | | |
| | | | |
Cash paid for amounts included in the measurement of lease liabilities: | | | | |
Operating cash flows from finance leases | | | $ | 817 | | $ | 1,186 | |
Operating cash flows from operating leases | | | $ | 3,245 | | $ | 3,342 | |
| | | | |
| | | | |
| | | | |
Weighted-average remaining lease term - finance leases | | | 2.41 years | 2.73 years |
Weighted-average remaining lease term - operating leases | | | 8.17 years | 8.02 years |
Weighted-average discount rate - finance leases | | | 6.18 | % | 6.49 | % |
Weighted-average discount rate - operating leases | | | 7.00 | % | 7.14 | % |
Letters of Credit and Surety Bonds
In the ordinary course of business, the Company is required to post letters of credit and surety bonds to customers in support of performance under certain contracts. Such letters of credit are generally issued by a bank or similar financial institution. The letter of credit or surety bond commits the issuer to pay specified amounts to the holder of the letter of credit or surety bond under certain conditions. If the letter of credit or surety bond issuer were required to pay any amount to a holder, the Company would be required to reimburse the issuer, which, depending upon the circumstances, could result in a charge to earnings. As of March 31, 2021, and December 31, 2020, the Company was contingently liable under letters of credit issued under its Third A&R Credit Agreement, in the amount of $22.0 million and $7.8 million, respectively, related to projects and insurance. In addition, as of March 31, 2021 and December 31, 2020, the Company had outstanding surety bonds on projects of $3.0 billion and $2.8 billion, respectively.
|
| | | | | | |
| Three months ended |
| March 31, 2020 | March 31, 2019 |
| | |
Finance Lease cost: | | |
Amortization of right-of-use assets | 5,697 |
| 5,008 |
|
Interest on lease liabilities | 1,186 |
| 1,650 |
|
Operating lease cost | 3,478 |
| 1,831 |
|
Short-term lease cost | 21,635 |
| 8,496 |
|
Variable lease cost | 960 |
| 191 |
|
Sublease Income | (33 | ) | (24 | ) |
Total lease cost | $ | 32,923 |
| $ | 17,152 |
|
| | |
Other information: | | |
Cash paid for amounts included in the measurement of lease liabilities | | |
Operating cash flows from finance leases | $ | 1,186 |
| $ | 1,650 |
|
Operating cash flows from operating leases | $ | 3,342 |
| $ | 3,247 |
|
Weighted-average remaining lease term - finance leases | 2.73 years |
| 3.36 years |
|
Weighted-average remaining lease term - operating leases | 8.02 years |
| 9.94 years |
|
Weighted-average discount rate - finance leases | 6.49 | % | 6.70 | % |
Weighted-average discount rate - operating leases | 7.14 | % | 6.89 | % |
Note 8. Earnings Per Share
The Company calculates earnings (loss) per share (“EPS”) in accordance with ASC Topic 260, Earnings per Share. Basic EPS is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares of common stock outstanding during the period.
Income (loss) available to common stockholders is computed by deducting the dividends accrued for the period on cumulative preferred stock from net income.income and net income allocated to participating securities. If there is a net loss, the amount of the loss is increased by those preferred dividends.
Diluted EPS assumes the dilutive effect of (i) contingently issuable earn-out shares, (ii) Series A cumulative convertible preferred stock, using the if-converted method, (ii) publicly traded warrants, (iii) Series B Preferred Stock - Warrants and (iii)(iv) the assumed exercise of in-the-money stock options and warrants and the assumed vesting of outstanding restricted stock units (“RSUs”), using the treasury stock method.
Whether the Company has net income, or a net loss determines whether potential issuances of common stock are included in the diluted EPS computation or whether they would be anti-dilutive. As a result, if there is a net loss, diluted EPS is
computed in the same manner as basic EPS is computed. Similarly, if the Company has net income but its preferred dividend adjustment made in computing income available to common stockholders results in a net loss available to common stockholders, diluted EPS would be computed the same as basic EPS.
The calculations of basic and diluted EPS, are as follows:
| | | | | | | | | | | | | | | |
| Three Months Ended | | |
| March 31, | | |
($ in thousands, except per share data) | 2021 | | 2020 | | | | |
Numerator: | | | | | | | |
Net loss | $ | (20,434) | | | $ | (12,743) | | | | | |
Less: Convertible Preferred Stock dividends | (656) | | | (766) | | | | | |
| | | | | | | |
| | | | | | | |
Net loss available to common stockholders | (21,090) | | | (13,509) | | | | | |
| | | | | | | |
Denominator: | | | | | | | |
Weighted average common shares outstanding - basic and diluted | 23,057,731 | | | 20,522,216 | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Anti-dilutive: | | | | | | | |
Convertible Series A Preferred | 1,628,269 | | | 6,553,041 | | | | | |
Merger Warrants (1) | 3,074,481 | | | 0 | | | | | |
Series B Preferred - Warrants (2) | 7,684,057 | | | 7,675,325 | | | | | |
Options (3) | 426,824 | | | 0 | | | | | |
RSUs (3) | 1,958,045 | | | 1,456,359 | | | | | |
| | | | | | | |
Basic EPS | (0.91) | | | (0.66) | | | | | |
Diluted EPS | (0.91) | | | (0.66) | | | | | |
(1)As of March 31, 2020, Merger Warrants to purchase 8,480,000 shares of common stock at $11.50 per share were not considered as dilutive as the warrants’ exercise price was not greater than the average market price of the common stock during the period. As of March 31, 2021, these warrants were calculated using the treasury stock method and were anti-dilutive.
(2) Series B Preferred - Warrants are considered as participating securities because the holders are entitled to participate in any distributions similar to that of common shareholders.
(3) As of March 31, 2020, there were 591,860 of vested and unvested options and 141,248 unvested RSUs, respectively. These were also not considered as dilutive as the respective exercise price or average stock price required for vesting of such awards was greater than the average market price of the common stock during the period.
Merger Warrants
On August 4, 2015, M III formed a Special Purpose Acquisition Corporation and issued public and private warrants before the Merger with the Company. As of March 31, 2021, the Company had 16,925,160 Merger Warrants outstanding, of which 295,000 are considered private warrants. Two Merger Warrants, such warrants will be exercisable for one share of our Common Stock at $11.50 per share until the expiration on March 26, 2023. For further discussion about the valuation of the private warrants see Note 5. Fair Value of Financial Instruments.
Series B Preferred Stock Anti-dilution Warrants
The Company also had the following potential outstanding warrants related to the Series B Preferred Stock issuance.
•At March 31, 2021, a total of 495,762 warrants calculated on an if-converted method for the conversion of shares related to the outstanding Series A Preferred Stock. As discussed in Note 5. Fair Value of Financial
|
| | | | | |
| Three Months Ended |
| March 31, |
($ in thousands, except per share data) | 2020 | | 2019 |
Numerator: | | | |
Net loss | (12,743 | ) | | (23,639 | ) |
Less: Convertible Preferred Stock dividends | (766 | ) | | (524 | ) |
Net loss available to common stockholders | (13,509 | ) | | (24,163 | ) |
| | | |
Denominator: | | | |
Weighted average common shares outstanding - basic and diluted | 20,522,216 |
| | 22,188,757 |
|
| | | |
Anti-dilutive: (1)(2) | | | |
Convertible Series A Preferred | 6,553,041 |
| | 5,045,149 |
|
Series B Preferred - Warrants at closing | 7,675,325 |
| | — |
|
RSUs | 1,456,359 |
| | 354,106 |
|
| | | |
Basic EPS | (0.66 | ) | | (1.09 | ) |
Diluted EPS | (0.66 | ) | | (1.09 | ) |
Instruments, these warrants are recorded as a liability. These warrants are not included in the weighted average share calculation as the contingent event (conversion of Series A Preferred Stock) had not occurred at the end of the quarter.
| |
(1)
| As of March 31, 2020 and 2019, publicly traded warrants to purchase 8,480,000 shares of common stock at $11.50 per share were not considered as dilutive as the warrants’ exercise price was greater than the average market price of the common stock during the period.
|
| |
(2) | As of March 31, 2020 and 2019, there were 591,860 and 646,405 of vested and unvested Options and 141,248 and 169,494 unvested RSUs, respectively. These were also not considered as dilutive as the respective exercise price or average stock price required for vesting of such awards was greater than the average market price of the common stock during the period. |
•The second set of additional warrants would be issued if the exercise of any warrant with an exercise price of $11.50 or higher.
•The final set of additional warrants would be issued if the exercise of any equity issued pursuant to the Company’s long term incentive plan or other equity plan with a strike price of $11.50 or higher.
Series A Preferred Stock
As of March 31, 2020,2021, we had 17,483 shares of Series A Preferred Stock with a stated value of $1,000 per share plus accumulated dividends. Dividends are paid on the Series A Preferred Stock as, if and when declared by our Board. To extent permitted, dividends are required to be paid in cash quarterly in arrears on each March 31, June 30, September 30 and December 31 on the stated value at a rate of 10% per annum.
If not paid in cash, dividends will accrue on the stated value and will increase the stated value on and effective as of the applicable dividend date without any further action by the Board at 12% per annum.
So long as any shares of Series B Preferred Stock of the Company are currently outstanding or from and after the occurrence of any non-payment event or default event and until cured or waived, the foregoing rates will increase by 2% per annum.
As of March 31, 2020,2021, the Company has accrued a cumulative of $2.5$5.0 million in dividends to holdersthe holder of Series A Preferred Stock as a reduction to additional paid-in capital.
Series B Preferred Stock
As of March 31, 2020, we had 199,474 shares of Series B Preferred Stock outstanding, with each share having a stated value of $1,000 plus accumulated dividends. Our common stock and Series A Preferred Stock are junior to the Series B Preferred Stock. Dividends are paid in cash on the Series B Preferred Stock as, if and when declared by our Board. To the extent not prohibited by applicable law, dividends are required to be declared and paid in cash quarterly in arrears on each March 31, June 30, September 30 and December 31. Any dividend period for which the Total Net Leverage Ratio is greater than 1.50:1.00, the dividend rate is 13.5% per annum and (ii) with respect to any dividend period for which the Total Net Leverage Ratio is less than or equal to 1.50:1.00, at a rate of 12% per annum.
If not paid in cash, dividends will accrue on the stated value and will increase the stated value on Series B Preferred Stock and is effective as of the applicable dividend date without any further action by the Board at a rate of 15%.
The Company has accrued a cumulative of $18.3 million in dividends to holders of Series B Preferred Stock, which is recorded in convertible debt in the Company's condensed consolidated balance sheet for the quarter ended March 31, 2020. See Note 5. Fair Value of Financial Instruments for discussion regarding the Company's valuation of Series B Preferred Stock.
Stock Compensation
Under guidance of ASC Topic 718 “Compensation“Compensation — Stock Compensation,” stock-based compensation expense is measured at the date of grant, based on the calculated fair value of the stock-based award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the award).
The fair value of the RSUs was based on the closing market price of our common stock on the date of the grant. Stock compensation expense for the RSUs is being amortized using the straight-line method over the service period. For the three months ended March 31, 20202021 and 2019,2020, we recognized $1.1$0.7 million and $1.0$1.1 million in compensation expense, respectively,respectively.
Note 9. Income Taxes
The Company’s statutory federal tax rate was 21.00% for the periods ended March 31, 20202021 and 2019,2020, respectively. State tax rates for the same period vary among states and range from approximately 0.8% to 12.0%. A small number of states do not impose an income tax.
The effective tax rates for the three months ended March 31, 20202021 and 20192020were 6.4%10.5% and 27.4%6.4%, respectively. The difference between the Company’s effective tax rate and the federal statutory rate primarily results from permanent differences related to the interest accrued for the Series B Preferred Stock and executive compensation, which isare not deductible for federal and state income taxes. There were no0 changes in uncertain tax positions during the periods ended March 31, 20202021 and 2019.2020.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)(the “CARES Act”) was enacted by the US Government in response to the COVID-19 pandemic to provide employment retention incentives. TheseWe do not believe that these relief measures did not
materially affect the condensed consolidated financial statements for the first quarterlast three quarters of 2020. We are currently assessing
The Company has also made use of the future implicationspayroll deferral provision to defer social security tax of these provisionsapproximately $13.6 million through December 31, 2020. Half of this amount is required to be paid on our condensed consolidated financial statements.December 31, 2021 and the other half by December 31, 2022.
Note 10. Segments
We operate our business as two reportable segments: the Renewables segment and the Specialty Civil segment. Each of our reportable segments is comprised of similar business units that specialize in services unique to thetheir respective markets that each segment serves.markets. The classification of revenue and gross profit for segment reporting purposes can at times require judgment on the part of management. Our segments may perform services across industries or perform joint services for customers in multiple industries. To determine reportable segment gross profit, certain allocations, including allocations of shared and indirect costs, such as facility costs, equipment costs and indirect operating expenses, were made based on segment revenue.
Separate measures of the Company’s assets, including capital expenditures and cash flows by reportable segment are not produced or utilized by management to evaluate segment performance. A substantial portion of the Company’s fixed assets are owned by and accounted for in our equipment department, including operating machinery, equipment and vehicles, as well as office equipment, buildings and leasehold improvements, and are used on an interchangeable basis across our reportable segments. As such, for reporting purposes, total under/over absorption of equipment expenses consisting primarily of depreciation is allocated to the Company's two reportable segments based on segment revenue.
The following is a brief description of the Company's reportable segments:
Renewables Segment
The Renewables segment operates throughout the United States and specializes in a range of full engineering, procurement and construction (“EPC”) services that include project delivery, design, site development, construction, installation and restoration of infrastructure services for the power delivery, solar, wind and solar industries.battery storage markets that includes design, procurement, construction, restoration, and maintenance.
Specialty Civil Segment
The Specialty Civil segment operates throughout the United States and specializes in a range of services that include:
•Heavy civil construction services such as high-altitude road and bridge construction, specialty paving, sports field development, industrial maintenance, outsourced contract mining and other local, state and government projects.heavy hauling.
•Environmental remediation services such as site development, environmental site closure, and outsourced contract mining and coal ash management services.management.
•Rail Infrastructureinfrastructure services such as planning, creationdesign, procurement, construction and maintenance of infrastructure projects for major railway and intermodal facilities construction.facilities.
Segment Revenue
Revenue by segment was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
(in thousands) | 2021 | | 2020 | | | | |
Segment | Revenue | % of Total Revenue | | Revenue | % of Total Revenue | | | | | | |
Renewables | $ | 180,374 | | 65.3 | % | | $ | 248,746 | | 69.5 | % | | | | | | |
Specialty Civil | 96,038 | | 34.7 | % | | 109,417 | | 30.5 | % | | | | | | |
| | | | | | | | | | | |
Total revenue | $ | 276,412 | | 100.0 | % | | $ | 358,163 | | 100.0 | % | | | | | | |
|
| | | | | | | | | | | |
| Three Months Ended March 31, |
(in thousands) | 2020 | | 2019 |
Segment | Revenue | % of Total Revenue | | Revenue | % of Total Revenue |
Renewables | $ | 248,746 |
| 69.5 | % | | $ | 74,031 |
| 39.0 | % |
Specialty Civil | 109,417 |
| 30.5 | % | | 115,750 |
| 61.0 | % |
Total revenue | $ | 358,163 |
| 100.0 | % | | $ | 189,781 |
| 100.0 | % |
Segment Gross Profit
Gross profit by segment was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
(in thousands) | 2021 | | 2020 | | | | |
Segment | Gross Profit | Gross Profit Margin | | Gross Profit | Gross Profit Margin | | | | | | |
Renewables | $ | 12,180 | | 6.8 | % | | $ | 25,829 | | 10.4 | % | | | | | | |
Specialty Civil | 4,361 | | 4.5 | % | | 7,212 | | 6.6 | % | | | | | | |
Total gross profit | $ | 16,541 | | 6.0 | % | | $ | 33,041 | | 9.2 | % | | | | | | |
Note 11. Joint Ventures
|
| | | | | | | | | | | |
| Three Months Ended March 31, |
(in thousands) | 2020 | | 2019 |
Segment | Gross Profit | Gross Profit Margin | | Gross Profit | Gross Profit Margin |
Renewables | $ | 25,829 |
| 10.4 | % | | $ | 1,163 |
| 1.6 | % |
Specialty Civil | 7,212 |
| 6.6 | % | | 4,581 |
| 4.0 | % |
Total gross profit | $ | 33,041 |
| 9.2 | % | | $ | 5,744 |
| 3.0 | % |
As of March 31, 2021, the Company did not have any VIEs but did have one joint venture that used the proportionate consolidation method at 25% ownership. The following balances were included in the condensed consolidated financial statements:
| | | | | | | |
(in thousands) | March 31, 2021 | | |
Assets | | | |
Cash | $ | 5,455 | | | |
Accounts receivable | 3,963 | | | |
Contract assets | 1,446 | | | |
| | | |
Liabilities | | | |
Accounts payable | $ | 3,461 | | | |
Contract liabilities | 7,403 | | | |
| | | |
| Three Months Ended |
| March 31, 2021 |
Revenue | $ | 4,501 | | | |
Cost of revenue | 4,501 | | | |
Note 11.12. Related Party Transactions
On February 9, 2021, Ares Management, LLC, on behalf of its affiliated funds, investment vehicles and/or managed accounts (“Ares”) purchased the outstanding Series B Preferred Stock and Series A Preferred Stock from funds managed by Oaktree Capital Management (“Oaktree”). As of March 31, 2021, Ares currently holds all of the outstanding Series B Preferred Stock, except for 350 shares, and all of the outstanding Series A Preferred Stock.
Related Party Shareholders
|
| | | | | | | |
Type of Equity | Holder | Ownership Percentage |
Series A Preferred Stock and Series A Conversion Warrants and Exchange Warrants, Series B-3 Preferred Stock (exchange agreement) | Infrastructure and Energy Alternatives, LLCAres | 100 | % |
Series B-1 Preferred Stock, Series A Conversion Warrants, Additional 6%Performance Warrants, Warrants at closingClosing (initial amount issued) | Ares | 60100 | % |
Series B-1 Warrants at Closing (initial amount issued), Exchange Warrants | Oaktree Power Opportunities Fund III Delaware, L.P. | 40100 | % |
2020 Commitment | Ares | 50 | % |
Oaktree Power Opportunities Fund III Delaware, L.P. | 50 | % |
Series B-2 and B-3 Preferred Stock, Warrants at closingClosing | Ares | 100 | % |
Note 12. Subsequent Event
Amendment to Equity Commitment Agreement
On May 6, 2020, the Company entered into an Amendment (the “Amendment”) to the Equity Commitment Agreement, dated as of October 29, 2019 (the “Equity Commitment Agreement”) by and between the Company, Ares and Oaktree. The Amendment amends the Equity Commitment Agreement to extend the period of time required to enter into the 2020 Commitment and purchase additional shares of Series B-3 Preferred Stock and warrants from the Company to July 14, 2020, or such other date as mutually agreed upon. Additionally, the Amendment clarifies that the 2020 Commitment shall in no event exceed $5,650,000.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This Quarterly Report on Form 10-Q 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 Quarterly Report, regarding expectations for the impact of the COVID-19 pandemic, future financial performance, business strategies, expectations for our business, future operations, liquidity positions, availability of capital resources, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements.
These forward-looking statements are based on information available as of the date of this Quarterly 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 factorsFactors that could cause actual results to differ include:
•potential risks and uncertainties relating to the ultimate impact of COVID-19, 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 treat its impact, and the potential negative impacts of COVID-19 on the global economyeconomies and financial markets;
•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;
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,equipment, fuel, materials, labor and other costs;
•our beliefs regarding the state of the renewable wind energy market generally; and
•the “Risk Factors” described in our Annual Report on Form 10-K for the year ended December 31, 2019,2020, 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.
Throughout this section, unless otherwise noted “IEA,” “Company,” “we,” “us,” and “our” refer to Infrastructure and Energy Alternatives, Inc. and its consolidated subsidiaries. Certain amounts in this section may not foot due to rounding.
Overview
We are a leading diversified infrastructure construction company with specialized energy and heavy civil expertise throughout the United States. We segregate our business into two reportable segments: the Renewables segmentspecialize in providing complete engineering, procurement and the Specialty Civil segment.
The Renewables segment operatesconstruction services throughout the United States for the renewable energy, traditional power and specializes in a range ofcivil infrastructure industries. These services that include project delivery,the design, site development, construction, installation and restoration of infrastructure services for the wind and solar industries.infrastructure. We are one of the larger providers in the renewable energy industry and have completed more than 200240 wind and solar projects in 35 states.
The Specialty Civil segment operates40 states and construct one of every five gigawatts put in to place throughout the United States and specializesU.S. in a range of services that include:
Heavy civil construction services such as high-altitude road and bridge construction, specialty paving, industrial maintenance and other local, state and government projects.
Environmental remediation services such as site development, environmental site closure and outsourced contract mining and coal ash management services.
Rail Infrastructure services such as planning, creation and maintenance of infrastructure projects for major railway and intermodal facilities construction.
We believeany given year. Although the Company has transformedhistorically focused on the renewable industry, but has recently focused on further expansion into the solar market and with our recent acquisitions have expanded its business intoconstruction capabilities and geographic footprint in the areas of environmental remediation, industrial maintenance, specialty paving, heavy civil and rail infrastructure construction, creating a diverse national platform of specialty construction capabilities with market leadershipcapabilities. We believe we have the ability to continue to expand these services because we are well-positioned to leverage our expertise and relationships in niche markets, including renewables, environmental remediationthe wind energy business to provide complete infrastructure solutions in all areas.
We have two reportable segments: the Renewables (“Renewables”) segment and industrial maintenance services, heavy civilthe Heavy Civil and rail.Industrial (“Specialty Civil”) segment. See Segment Results for a description of the reportable segments and their operations.
Coronavirus Pandemic Update
The Coronavirus Disease (“COVID-19”)COVID-19 pandemic continues to significantly impact the United States and the world generally. The impactworld. Since the start of the COVID-19 on construction businesses such as ours is evolving rapidly and its future effects are uncertain. We arepandemic, we have been focused on the safety of our employees and ensuring that our construction sites are managed by taking all reasonable precautions to protect on-site personnel.
We have taken the following actions to address the risks attributable to the COVID-19 pandemic:
We established a dedicated COVID-19 task force representing all parts of the Company to review and implement actions to prepare for the impacts on our operations, including a variety of protocols in the areas of social distancing, working from home, emergency office and project site closures, and travel restrictions.
In addition to our existing site crisis management plans, our operations expanded and implemented their pandemic response plans to ensure a consistent, comprehensive response to various COVID-19 scenarios.
We implemented more stringent office and project site cleaning and hygiene protocols in all locations. We also developed more stringent tool, vehicle and equipment cleaning protocols.
For employees, we established a regularly updated COVID-19 information hub with FAQs, important communications, regularly updated protocols, business planning tools, best practices, signage/flyers and other important resources.
We have significantly increased communications, signage and oversight of personal hygiene requirements to drive better prevention practices.
We postponed social gatherings, large in-person training sessions and other activities involving groups of 10 or more.
We have prohibited virtually all Company air travel unless approved by executive leadership. We have also required all employees to report their personal travel schedules so we can closely monitor and take any necessary steps to maintain the safety of our workforce.
We have increased our efforts to reduce SG&A expenses by implementing a hiring freeze, delaying the Company 401(k) match until later in the year, prohibiting all non-essential travel, reducing new initiatives, deferring promotions and salary changes, and canceling any non-essential capital expenditures or consulting work.
To mitigate the effects of working from home and travel bans, we have significantly increased the use of remote communication technologies.
We are actively monitoring this issue,the COVID-19 pandemic, including disease progression, vaccine response and availability, federal, state and local government actions, CDCthe Center for Disease Control (“CDC”) and WHOWorld Health Organization (“WHO”) responses, supplier and supply chain risks, and prevention and containment measures to maintain business operations. As the COVID-19 pandemic and the responses by federal, state and local governments continue to evolve, we continue to make adjustments to our practices and policies to protect the health of our employees and those we work with at our projects and office locations, while continuing to provide our essential construction services to our clients.
We believe that the foregoing actions have significantly reduced the Company’s exposure to the effects of COVID-19, including our workforce’s exposure to infection from COVID-19. As of today, we have had a drastically low incidence of infection in our workforce, none of which we believe was transmitted at work.
While we have received notices of force majeure from certain of our suppliers and customers, we don’t believe at this time, that any such notices will cause critical project delays. To date, we have not had any work stoppages or indications that any of our key projects will be significantly delayed. However, we cannot predict significant disruptions beyond our control, including quarantines and customer work stoppages, significant force majeure declarations by our suppliers or other equipment providers materialworkforce. As vaccines become increasingly available to our projects. workforce, clients and their families, we are evaluating and redoing protocols as management deems appropriate and based on federal, state and local government recommendations and policies.
We have noticed an impact of COVID-19 in adding new projects to our backlog. Our bidding activity continues at very high levels, but the final approval process for some projects, especially in our Specialty Segment, has been slowed due to COVID-19. Despite that, we were able to maintain a relatively consistent total backlog for March 31, 2021 compared to December 31, 2020.
We are taking actionsunable to preserve our liquiditypredict whether COVID-19 will continue to negatively impact the construction business and the degree of such impact as limiting our hiring and delaying spending on non-critical initiatives. At this point, wemore of the population becomes vaccinated. We do not believe that COVID-19 is having a negative impact on our liquidity. We could see a change in this status if we experience future work stoppages at our projects which would prevent us from billing customers for new work performed. If the federal, state and local governments proceed with more restrictive measures, and our customers determine to stop work or terminate projects, these actions would negatively impact our business, results of operations, liquidity and prospects. In addition, the Company is unable to predict any changes in the market for bonding by our sureties.
Current Quarter Financials
Historically, our revenues and profitability are lowest in the first quarter of the year as inclement weather can create challenging work environments that are more costly for our customers or cause delays on projects. These seasonal patterns mean that revenues tend to be lowest in the first quarter with increases in the second and third quarters and some decline in the fourth quarter. In 2020, that traditional seasonality did not occur. To ensure renewables projects would qualify for the then-anticipated step down in the production tax credit, customers initiated several projects in the fourth quarter of 2019. The Company's abilityearly mobilization and favorable weather conditions resulted in record first quarter revenue in 2020, strong second and third quarter performance, and a reduction in the 2020 fourth quarter as projects were completed earlier in the year.
For 2021, revenues are expected to obtain bonding may be negativelyrevert to the traditional seasonality with the lowest revenues in the first quarter and increasing revenues for the next quarters. The change in seasonality makes for challenging comparisons between the first quarters of 2020 and 2021.
Key financial results for the quarter ended March 31, 2021 include:
•Backlog increased 29.3%, or $606.3 million to $2.7 billion as compared to $2.1 billion for the quarter ended March 31, 2020.
•Consolidated revenues decreased 22.8% to $276.4 million as compared to $358.2 million for the quarter ended March 31, 2020, of which 65.3% was attributable to the Renewables segment and 34.7% was attributable to the Specialty Civil segment;
•Operating income decreased $11.9 million, to a loss of $8.3 million as compared to income of $3.6 million for the quarter ended March 31, 2020; and
•Net income decreased 60.4%, or $7.7 million, to a net loss of $20.4 million as compared to $12.7 million for the quarter ended March 31, 2020;
Trends and Future Opportunities
Renewables Segment
The Renewables segment was impacted by marketthe following significant operational trends:
•In late 2019, the Production Tax Credit (“PTC”) was extended for one year, which increased customer demand to complete construction on more projects for 2020. The extension provided a pull forward of the 2020 quarterly revenue timing.
•The locations of our construction projects in the first quarter of 2020 experienced more favorable weather conditions beyond its control.and early mobilization, which provided for earlier project starts.
Economic•Our consistent, safe and Market Factors
We closely monitor the effects that changes in economic and market conditions may havereliable performance with our customers on our customers. General economic and market conditions can negatively affect demandwind projects has allowed us to continue to capture further solar opportunities in backlog for our customers’ products and services, which can lead to reductions in our customers’ capital and maintenance budgets in certain end-markets. In the facefirst quarter of increased pricing pressure, we strive to maintain our profit margins through productivity improvements and cost reduction programs. Other market, regulatory and industry factors could also affect demand for our services, such as:2021.
changes to our customers’ capital spending plans;
mergers and acquisitions among the customers we serve;
access to capital for customers in the industries we serve;
changes in tax and other incentives;
new or changing regulatory requirements or other governmental policy uncertainty;
economic, market or political developments; and
changes in technology.
We cannot predict the effect that changes in such factors may have on our future results of operations, liquidity and cash flows, and we may be unable to fully mitigate, or benefit from, such changes.
Industry Trends
Our industry is composed of national, regional and local companies in a range of industries, including renewable power generation, traditional power generation and the civil infrastructure industries. We believe the following industry trends will help to drive our growth and success over the coming years:
Renewables - We have maintained a heavy focus on construction of renewable power production capacity as renewable energy, particularly from wind and solar, has become widely accepted within the electric utility industry and on December 16, 2019,has become a cost-effective solution for the federal government implemented an agreement that extended lapsed and expiring tax breaks for wind renewable projects. The extension provides a single year extensioncreation of the production tax credit (“PTC”) at a 60% level and the investment tax credit (“ITC”) at an 18% level to qualifying projects for which the construction commencement date is now prior to January 1, 2021.new generating capacity. We believe that demandthis shift coupled with the below, will continue to remain strong even after expiration duedrive opportunity in this segment over the long-term:
•The current administration has a goal of investing $2 trillion in modern, sustainable, and clean energy infrastructure.
•Renewable energy power generation has reached a level of scale and maturity that permits these technologies to the following factors:
Technological advances in turbinesnow be cost-effective competitors to more traditional power generation technologies, including on an unsubsidized basis. The most significant changes have been related to increased turbine sizes and better battery storage continue to drive lower costs of electricity generated from wind and solar farms;methods.
Approximately
•Over 40 states as well asand the District of Columbia and four territories,Colombia have adopted renewable portfolio standards or goals strengthening the backing for clean energy;energy.
•In December 2020, there was a one year extension of the PTC at 60% for projects that begin construction prior to December 31, 2021 and a two year extension of 26% Solar Investment Tax Credit (“ITC”) to 2022 (22% credit extended through 2023).
The Annual Energy Outlook 2020 published by the U.S. Department of Energy (“DOE”) in January 2020 projected the addition of approximately 117 gigawatts of new utility-scaleAs a result, wind and solar power are among the leading sources of new power generation capacity from 2020in the U.S., and the Company does not anticipate this trend to 2023. We estimate that EPC services will account for approximately 30%change in the near future as we are continuing to see growth through new awards in our backlog:
| | | | | | | | | | | | | | |
(in millions) | | | | |
Segment | December 31, 2020 | New Awards in first quarter 2021(1) | Revenue Recognized in first quarter 2021 | Backlog at March 31, 2021(2) |
Renewables | $ | 1,513.4 | | $ | 615.7 | | $ | 180.4 | | $ | 1,948.7 | |
(1) New awards consist of the original contract price of projects added to our backlog plus or minus subsequent changes to the estimated $28.4 billiontotal contract price of existing contracts.
(2) Backlog may differ from the transaction prices allocated to the remaining performance obligations as disclosed in Note 1. Business, Basis of Presentation and Significant Accounting Policies in Item 8. Such differences relate to the timing of executing a formal contract or receiving a notice to proceed. More specifically, backlog sometimes may include awards for which a contract has not yet been executed or a notice to proceed has not been issued, but for which there are no remaining major uncertainties that the project will proceed (e.g., adequate funding is in place).
Specialty Civil Segment
The Specialty Civil segment was impacted by the following significant operational trends:
•The COVID-19 pandemic continues to impact certain aspects of our projects in the rail end markets:
◦negatively impacted the budgets of some of our customers, which led to uncertainty and further delays on portions of our large rail jobs; and
◦increased the timing needed to obtain governmental approvals and environmental permitting that affected the start and bidding opportunities of certain rail projects.
•Competition increased in a few of our end markets, which led to lower margins on certain heavy civil construction projects reducing overall profitability.
•Despite the delays in project starts mentioned above we continued to see a strong bidding environment in the bidding environment for heavy civil construction and environmental remediation for 2021 and had significant awarded projects related to:
◦The environmental remediation market continues to provide opportunities for growth and the Company has been short listed on some very significant project with anticipated start dates in 2021; and
◦The heavy civil construction market continues to be consistent year over that time period.year for awarded projects.
We believe that our business relationships with customers in these factors could challengesectors are excellent and the strong reputation that our future revenue streams inacquired companies have built has provided us with the Renewables segment:
Reduction of owner financing relatedright foundation to the current COVID-19 environment which could cause delays or cancellations of future projects; and
Market price declines on natural gas and other energy products that undercut the immediate demand for increased renewable infrastructure.
Specialty Civil - Our Specialty Civil revenue has been generated through a combination of heavy civil construction, rail construction and environmental remediation. We believe that demand will continue to remain strong based on the following factors:grow our revenue base. The drivers to further growing this segment are as follows:
Heavy civil - the•The FMI 20202021 Overview Report published in the fourthfirst quarter of 2019 project2021 projects that nonresidential construction put in place for the United States will be over $850 million$500 billion per year from 20202021 to 2023.2024.
Rail - Fostering Advancements in Shipping And Transportation For The Long-Term Achievement of National Efficiencies (FASTLANE) grants are expected to provide $4.5 billion through 2020 to freight•Fast Act extension and highway projectstrust fund infusion of national or regional significance.$13.6 billion for the highway and transit account.
Environmental remediation - •According to the American Coal Ash Association, more than 102.3coal combustion residuals “CCRs” or “coal ash” are produced by coal-fired power plants and represent one of the largest categories of industrial waste in the U.S., as 78.6 million tons of coal ash was generatedCCRs were produced in 20182019. The Company anticipates this could be a $50.0 billion industry over the next ten years.
Additionally, there is significant overlap in labor, skills and 42%equipment needs between our Renewables segment and our Specialty Civil segment, which we expect will continue to provide us with operating efficiencies as we continue to expand this sector. The Company continues to cross leverage these two segments and continues to see future growth through new awards in our backlog:
| | | | | | | | | | | | | | |
(in millions) | | | | |
Segment | December 31, 2020 | New Awards in first quarter 2021(1) | Revenue Recognized in first quarter 2021 | Backlog at March 31, 2021(2) |
Specialty Civil | $ | 556.1 | | $ | 267.0 | | $ | 96.0 | | $ | 727.1 | |
(1) New awards consist of coal ash generated was disposed of.the original contract price of projects added to our backlog plus or minus subsequent changes to the estimated total contract price of existing contracts.
We believe(2) Backlog may differ from the transaction prices allocated to the remaining performance obligations as disclosed in Note 1. Business, Basis of Presentation and Significant Accounting Policies in Item 8. Such differences relate to the timing of executing a formal contract or receiving a notice to proceed. More specifically, backlog sometimes may include awards for which a contract has not yet been executed or a notice to proceed has not been issued, but for which there are no remaining major uncertainties that these factors could challenge ourthe project will proceed (e.g., adequate funding is in place).
Backlog
For companies in the construction industry, backlog can be an indicator of future revenue streamsstreams. 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. Estimated backlog for work under fixed price contracts and cost-reimbursable contracts is determined based on historical trends, anticipated seasonal impacts, experience from similar projects and estimates of customer demand based on communications with our customers. Cost-reimbursable contracts are included in backlog based on the estimated total contract price upon completion.
The following table summarizes our backlog by segment as of March 31, 2021 and December 31, 2020:
| | | | | | | | |
(in millions) | | |
Segments | March 31, 2021 | December 31, 2020 |
Renewables | $ | 1,948.7 | | $ | 1,513.4 | |
Specialty Civil | 727.1 | | 556.1 | |
| | |
Total | $ | 2,675.8 | | $ | 2,069.5 | |
The Company expects to recognize 69.2% of revenue related to its backlog in the Specialty Civil segment:next twelve months.
Based on historical trends in demandthe Company’s backlog, we believe awarded contracts to be firm and that the revenue for civilsuch contracts will be recognized over the life of the project. Timing of revenue for construction resulting from corresponding decreasesand installation projects included in state departmentsour backlog can be subject to change as a result of transportation budgets from lack of revenuescustomer delays, regulatory factors and/or other project-related factors. These changes could cause estimated revenue to be realized in periods later than originally expected, or not at all. In the past, we have occasionally experienced postponements, cancellations and reductions on construction projects, due to quarantine.
Reductionmarket volatility and regulatory factors. There can be no assurance as to our customers’ requirements or the accuracy of our estimates. As a result, our backlog as of any particular date is an uncertain indicator of future pipeline opportunitiesrevenue and earnings.
Backlog is not a term recognized under GAAP, although it is a common measurement used in certain portionsour industry. Our methodology for determining backlog may not be comparable to the methodologies used by others. See ‘‘Item 1A. Risk Factors’’ in our Annual Report on Form 10-K filed with the SEC on March 8, 2021 for a discussion of the U.S. related to further impact of COVID-19.risks associated with our backlog.
Significant Factors Impacting Results
Impact of SeasonalityOur revenues, margins and Cyclical Nature of Business
Our revenue andother results of operations are subject to seasonal and other variations. These variations arecan be influenced by weather, customer spending patterns, bidding seasons, project schedulesa variety of factors in any given period, including those described in Results of Operations and timing,Forward Looking Statements, and those factors have caused fluctuations in particular, for large non-recurring projectsour results in the past and holidays.are expected to cause fluctuations in our results in the future. Additional information with respect to certain of those factors is provided below.
Seasonality. Typically, our revenue in our Renewable segment isrevenues are lowest in the first quarter of the year because cold, snowy or wet conditions experiencedcan create challenging working environments that are more costly for our customers or cause delays on projects. In addition, infrastructure projects often do not begin in a meaningful way until our customers finalize their capital budgets, which typically occurs during the northern climatesfirst quarter. Second quarter revenues are not conducive to efficient or safe construction practices. Revenue in the second quarter is typically higher than those in the first quarter, as some projects begin, but continued cold and wet weather and effects from thawing ground conditions can often impact secondproductivity. Third quarter productivity. The third and fourth quartersrevenues are typically the most productive quartershighest of the year, as a greater number of projects are underway and operating conditions, including weather, isare normally more accommodating to construction projects. Inaccommodating. Generally, revenues during the fourth quarter are lower than the third quarter but higher than the second quarter, as many projects tend to beare completed byand customers seekingoften seek to spend their capital budgets before the end of the year which generally has a positive impact on our revenue. Nevertheless,end. However, the holiday season and inclement weather can sometimes cause delays which can reduce revenue and increase costs on affected projects. Any quarter may be positively or negatively affected by adverse or unusual weather patterns, including from excessive rainfall, warm winter weather or natural catastrophes such as hurricanes or other severe weather, making it difficult to predict quarterly revenue and margin variations. The Company has started construction on 2020 renewable projects in late 2019 due to the desire of our customers to finish these projects before September 30, 2020. This shift in demand will impact 2020 quarterly revenues, which we currently anticipate will shift revenue fromduring the fourth quarter, back into the secondreducing revenues and third quarter of 2020.
increasing costs.
Our revenue and results of operations for our Specialty Civil segment are also affected by seasonality but to a lesser extent as these projects are more geographically diverse and located in less impacted by severe weather areas.weather. While the first and second quarter revenues are typically lower than the third and fourth quarter, thisthe geographical diversity has allowed this segment to be less seasonal over the course of the year.
Our industry is also highly cyclical.Weather and Natural Disasters. The results of our business in a given period can be impacted by adverse weather conditions, severe weather events or natural disasters, which include, among other things, heavy or prolonged snowfall or rainfall, hurricanes, tropical storms, tornadoes, floods, blizzards, extreme temperatures, wildfires, pandemics and earthquakes. These conditions and events can negatively impact our financial results due to the termination, deferral or delay of projects, reduced productivity and exposure to significant liabilities.
Cyclical demand. Fluctuations in end-user demand within the industries we serve, or in the supply of services within those industries, can impact demand for our services. As a result, our business may be adversely affected by industry declines or by delays in new projects. Variations in project schedules or unanticipated changes in project schedules, in particular, in connection with large construction and installation projects, can create fluctuations in revenue, which may adversely affect us in a given period. In addition, revenue from master service agreements, while generally predictable, can be subject to volatility. The financial condition of our customers and their access to capital, variations in project margins, regional, national and global economic, political and market conditions, regulatory or environmental influences, and acquisitions, dispositions or strategic investments can also materially affect quarterly results. Accordingly, our operating results in any particular period may not be indicative of the results that can be expected for any other period.
Critical Accounting PoliciesRevenue mix. The mix of revenues based on the types of services we provide in a given period will impact margins, as certain industries and Estimatesservices provide higher-margin opportunities. Revenue derived from projects billed on a fixed-price basis totaled 96.2% for the three months ended March 31, 2021. Revenue and related costs for construction contracts billed on a time and materials basis are recognized as the services are rendered. Revenue derived from projects billed on a time and materials basis totaled 3.8% of consolidated revenue for the three months ended March 31, 2021.
Size, scope and analysiscomplexity of projects. Larger or more complex projects with design or construction complexities; more difficult terrain requirements; or longer distance requirements typically yield opportunities for higher margins as we assume a greater degree of performance risk and there is greater utilization of our financial conditionresources for longer construction timeframes. Furthermore, smaller or less complex projects typically have a greater number of companies competing for them, and resultscompetitors at times may more aggressively pursue available work. A greater percentage of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparationsmaller scale or less complex work also could negatively impact margins due to the inefficiency of transitioning between a larger number of smaller projects versus continuous production on fewer larger projects. Also, at times we may choose to maintain a portion of our condensed consolidated financial statements requiresworkforce and equipment in an underutilized capacity to ensure we are strategically positioned to deliver on larger projects when they move forward.
Project variability and performance. Margins for a single project may fluctuate period to period due to changes in the usevolume or type of estimateswork performed, the pricing structure under the project contract or job productivity. Additionally, our productivity and assumptions that affectperformance on a project can vary period to period based on a number of factors, including unexpected project difficulties or site conditions; project location, including locations with challenging operating conditions; whether the amounts reported in our condensed consolidated financial statementswork is on an open or encumbered right of way; inclement weather or severe weather events; environmental restrictions or regulatory delays; protests, other political activity or legal challenges related to a project; and the accompanying notes. We baseperformance of third parties.
Subcontract work and provision of materials. Work that is subcontracted to other service providers generally yields lower margins, and therefore an increase in subcontract work in a given period can decrease margins. Our customers are usually responsible for supplying the materials for their projects; however, under some contracts we agree to procure all or part of the required materials. Margins may be lower on projects where we furnish a significant amount of materials, including projects where we provide engineering, procurement and construction ("EPC") services, as our estimatesmarkup on historical experience andmaterials is generally lower than our markup on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis of making judgments about our operating results, including the results of construction contracts accounted for under the cost-to-cost method, and the carrying values of assets and liabilities that are not readily apparent from other sources. Given that management estimates, by their nature, involve judgments regarding future uncertainties, actual results may differ from these estimates if conditions change or if certain key assumptions used in making these estimates ultimately prove to be inaccurate. Refer to Note 1. Business, Basis of Presentation and Significant Accounting Policieslabor costs. Furthermore, fluctuations in the notes toprice of materials we procure, including as a result of changes in U.S. or global trade relationships or other economic or political conditions, may impact our condensed consolidated financial statements and to our 2019 Form 10-K for discussion of our significant accounting policies.
We believe that our key estimates include: the recognition of revenue and project profit or loss ; fair value estimates, including those related to Series B Preferred Stock; valuations of goodwill and intangible assets; asset lives used in computing depreciation and amortization; accrued self-insured claims; other reserves and accruals; accounting for income taxes; and the estimated impact of contingencies and ongoing litigation. While management believes that such estimates are reasonable when considered in conjunction with the Company’s condensed consolidated financial position and results of operations, actual results could differ materially from those estimates.
“Emerging Growth Company” Status
As of December 31, 2019, the Company's total annual gross revenues exceed $1.07 billion and we are no longermargins. In a given period, an “emerging growth company,” as definedincrease in the Jumpstart Our Business Startups Act (the “JOBS Act”). See Note 1. Business, Basispercentage of Presentation and Significant Accounting Policies towork with higher materials procurement requirements may decrease our consolidated financial statements for more information.overall margins.
Results of Operations
Three Months Ended March 31,20202021 and 20192020
The following table reflects our condensed consolidated results of operations in dollar and percentage of revenue terms for the periods indicated:
| | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, |
(in thousands) | | 2021 | | 2020 |
| | | | | | |
Revenue | | $ | 276,412 | | 100.0 | % | | $ | 358,163 | | 100.0 | % |
Cost of revenue | | 259,871 | | 94.0 | % | | 325,122 | | 90.8 | % |
Gross profit | | 16,541 | | 6.0 | % | | 33,041 | | 9.2 | % |
Selling, general and administrative expenses | | 24,846 | | 9.0 | % | | 29,484 | | 8.2 | % |
| | | | | | |
Income from operations | | (8,305) | | (3.0) | % | | 3,557 | | 1.0 | % |
Interest expense, net | | (14,359) | | (5.2) | % | | (16,065) | | (4.5) | % |
| | | | | | |
Other expense | | (162) | | (0.1) | % | | (1,102) | | (0.3) | % |
Income from continuing operations before income taxes | | (22,826) | | (8.3) | % | | (13,610) | | (3.8) | % |
Benefit for income taxes | | 2,392 | | 0.9 | % | | 867 | | 0.2 | % |
| | | | | | |
| | | | | | |
Net income | | $ | (20,434) | | (7.4) | % | | $ | (12,743) | | (3.6) | % |
|
| | | | | | | | | | | | |
| | Three Months Ended March 31, |
(in thousands) | | 2020 | | 2019 |
| | | | | | |
Revenue | | $ | 358,163 |
| 100.0 | % | | $ | 189,781 |
| 100.0 | % |
Cost of revenue | | 325,122 |
| 90.8 | % | | 184,037 |
| 97.0 | % |
Gross profit | | 33,041 |
| 9.2 | % | | 5,744 |
| 3.0 | % |
Selling, general and administrative expenses | | 29,484 |
| 8.2 | % | | 27,754 |
| 14.6 | % |
Income from operations | | 3,557 |
| 1.0 | % | | (22,010 | ) | (11.6 | )% |
Interest expense, net | | (16,065 | ) | (4.5 | )% | | (10,367 | ) | (5.5 | )% |
Other expense | | (1,102 | ) | (0.3 | )% | | (170 | ) | (0.1 | )% |
Income from continuing operations before income taxes | | (13,610 | ) | (3.8 | )% | | (32,547 | ) | (17.1 | )% |
Benefit for income taxes | | 867 |
| 0.2 | % | | 8,908 |
| 4.7 | % |
Net income | | $ | (12,743 | ) | (3.6 | )% | | $ | (23,639 | ) | (12.5 | )% |
For a detailed discussion of Revenue and Gross profit see Segment Results, below.
We review our operating results by reportable segment. See Note 10. Segments
Revenue. Revenue decreased 22.8%, or $81.8 million, in the notesfirst quarter of 2021, compared to the condensed consolidated financial statementssame period in Part 1. Financial Statements. Management’s review2020.
Gross profit. Gross profit decreased 49.9%, or $16.5 million, in the first quarter of reportable segment results includes analyses2021, compared to the same period in 2020. As a percentage of trends in revenue, and gross profit. The following table presents revenue and gross profit was 6.0% in the quarter, as compared to 9.2% in the prior-year period.
Selling, general and administrative expenses. Selling, general and administrative expenses decreased 15.7%, or $4.6 million, in the first quarter of 2021, compared to the same period in 2020. Selling, general and administrative expenses were 9.0% of revenue in the first quarter of 2021, compared to 8.2% in the same period in 2020. The decrease in selling, general and administrative expenses was primarily driven by:
•Reductions in staff related benefit costs by reportable segment$5.5 million; and
•Reductions in business travel costs by $0.4 million.
The reductions above were partially offset by expense increases for:
•Outside services fees of $0.6 million related to the secondary offering in the first quarter; and
•Information technology costs of $0.6 related to software licensing.
Interest expense, net. Interest expense, net decreased by $1.7 million, in the first quarter of 2021, compared to the same period in 2020. This decrease was primarily driven by lower effective interest rates on our term loan, partially offset by an increase in the dividend rate of 13.5% on the Company's preferred Series B stock dividend. The increase in rate was due to the Company's net lien leverage ratio being above 1.5:1.0.
Other expense. Other expense decreased by $0.9 million, to $0.2 million in the first quarter of 2021 from $1.1 million for the periods indicated:
|
| | | | | | | | | | | |
| Three Months Ended March 31, |
(in thousands) | 2020 | | 2019 |
Segment | Revenue | % of Total Revenue | | Revenue | % of Total Revenue |
Renewables | $ | 248,746 |
| 69.5 | % | | $ | 74,031 |
| 39.0 | % |
Specialty Civil | 109,417 |
| 30.5 | % | | 115,750 |
| 61.0 | % |
Total revenue | $ | 358,163 |
| 100.0 | % | | $ | 189,781 |
| 100.0 | % |
| | | | | |
| Gross Profit | Gross Profit Margin | | Gross Profit | Gross Profit Margin |
Renewables | $ | 25,829 |
| 10.4 | % | | $ | 1,163 |
| 1.6 | % |
Specialty Civil | 7,212 |
| 6.6 | % | | 4,581 |
| 4.0 | % |
Total gross profit | $ | 33,041 |
| 9.2 | % | | $ | 5,744 |
| 3.0 | % |
The followingsame period in 2020. This decrease was primarily the result of the impact of a decrease in the warrant liability in the first quarter of 2021. See further discussion and analysisin Note 5. Fair Value of our results of operations should be read in conjunction with our condensed consolidated financial statements and the notes relating thereto,Financial Instruments included in Item 1 of this Quarterly Report on Form 10-Q.
Revenue. RevenueBenefit for income taxes. Benefit for income taxes increased 88.7%, or $168.4$1.5 million, to a benefit of $2.4 million in the first quarter of 2020,2021, compared to the same period in 2019.
Renewables Segment. Renewables revenue was $248.7 million for the first quarter of 2020, as compared to $74.0$0.9 million for the same period in 2019, an increase of $174.7 million, or 236.1%. The increase was primarily due to more favorable weather conditions at job sites, the benefit from mobilization of several wind projects at the end of 2019, and an increase in the number of projects during the quarter.
Specialty Civil Segment. Specialty Civil revenue was $109.4 million for the first quarter of 2020, as compared to $115.8 million for the same period in 2019, a decrease of $6.4 million, or 5.5%. The decrease was primarily due to a reduction of revenue generated from heavy civil construction related to the completion of several civil projects at the end of 2019, offset by higher revenue generated in our rail division.
Gross profit. Gross profit increased 475.2%, or $27.3 million, in the first quarter of 2020, compared to the same period in 2019. As a percentage of revenue, gross profit was 9.2% in the quarter, as compared to 3.0% in the prior-year period. The first quarter of 2020 gross profit included the impact of recognizing increased potential future costs from the COVID-19 pandemic which reduced gross margin by $5.4 million or 1.2% of revenue.
Renewables Segment. Gross profit was $25.8 million for the first quarter of 2020, as compared to $1.2 million for the same period in 2019. As a percentage of revenue, gross profit was 10.4% in the quarter, as compared to 1.6% in the prior-year period. The increase in gross profit percentage and dollars is related to the increased revenue, coupled with reduced adverse weather conditions in the first quarter of 2020 and a larger number of construction projects. In 2019, the reduction of gross profit dollars and margin was negatively impacted by the completion of six construction projects affected by severe weather in 2018. These six projects together produced as gross margin of 0.9% and comprised 23.1% of 2019 first quarter revenue.
Specialty Civil Segment. Gross profit was $7.2 million for the first quarter of 2020, as compared to $4.6 million for the same period in 2019. As a percentage of revenue, gross profit was 6.6% in the quarter, as compared to 4.0% in the prior-year period. The increase in dollars and percentage was related to higher margins generated on the mix of projects under construction in the first quarter 2020 compared to the same period in the prior year.
Selling, general and administrative expenses. Selling, general and administrative expenses increased 6.2%, or $1.7 million, in the first quarter of 2020, compared to the same period in 2019. Selling, general and administrative expenses were 8.2% of revenue in the first quarter of 2020, compared to 14.6% in the same period in 2019. The increase in selling, general and administrative expenses was primarily driven by increased by increased compensation expense related to significantly larger operations in both of the Company's operating segments. In 2019, the percentage of revenue increase was related to higher costs associated with the Company's acquisition integration costs.
Interest expense, net. Interest expense, net increased by $5.7 million, in the first quarter of 2020, compared to the same period in 2019. This increase was primarily driven by accrued dividends on Series B Preferred Stock which are recorded as interest expense, offset by the decreased borrowings under our line of credit and term loan in the first quarter of 2020.
Other expense. Other expense increased by $0.9 million, in the first quarter of 2020, compared to the same period in 2019. This increase was primarily the result of the fair value adjustment related to our Series B Preferred Stock warrants. See further discussion in Note 5. Fair Value of Financial Instruments included in Item 1 of this Quarterly Report on Form 10-Q.
Benefit for income taxes. Benefit for income taxes decreased 90.3%, or $8.0 million, to a benefit of $0.9 million in the first quarter of 2020, compared to a benefit $8.9 million for the same period in 2019. The effective tax rates for the period ended March 31, 20202021 and 20192020were 6.4%10.5% and 27.4%6.4%, respectively. The lowerhigher effective tax rate in the first quarter of 20202021 was primarily attributable to accrued dividends for the Series B Preferred Stockhigher permanent differences related to executive compensation, which are recorded as interest expense and not deductible for federal and state income taxes. There were no changes in uncertain tax positions during the periods ended March 31, 20202021 and 2019.2020.
Segment Results
Backlog
For companiesThe Company operated our business as two reportable segments: the Renewables segment and the Specialty Civil segment. Each of our reportable segments is comprised of similar business units that specialize in services unique to the construction industry, backlog can be an indicator of future revenue streams. Estimated backlog represents the amountrespective markets that each segment serves. The classification of revenue we expect to realize fromand gross profit for segment reporting purposes can at times require judgment on the uncompleted portionspart of existing construction contracts,management. Our segments may perform services across industries or perform joint services for customers in multiple industries. To determine reportable segment gross profit, certain allocations, including new contracts under which work has not begunallocations of shared and awarded contracts for which the definitive project documentation is being prepared,indirect costs, such as well as revenue from change ordersfacility costs, equipment costs and renewal options. Estimated backlog for work under fixed price contracts and cost-reimbursable contracts is determinedindirect operating expenses, were made based on historical trends, anticipated seasonal impacts, experience from similar projects and estimates of customer demand based on communications with our customers. Cost-reimbursable contracts are included in backlog based on the estimated total contract price upon completion.segment revenue.
As of March 31, 2020 and December 31, 2019, our total backlog was approximately $2.0 billion and $2.2 billion, respectively, compared to $2.2 billion as of March 31, 2019. The decrease is primarily related to the Company's traditional seasonality. The Company expects to recognize revenue related to its backlog of 62.2% for the remainder of 2020, 14.9% in 2021, and 22.9% in 2022.
The following table summarizes our backlog bysets forth segment revenues and gross profit for the years indicated, as well as the dollar and percentage change from the prior year:
| | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | |
(in thousands) | 2021 | | 2020 | |
Segment | Revenue | % of Total Revenue | | Revenue | % of Total Revenue | |
Renewables | $ | 180,374 | | 65.3 | % | | $ | 248,746 | | 69.5 | % | |
Specialty Civil | 96,038 | | 34.7 | % | | 109,417 | | 30.5 | % | |
| | | | | | |
Total revenue | $ | 276,412 | | 100.0 | % | | $ | 358,163 | | 100.0 | % | |
| | | | | | |
Segment | Gross Profit | Gross Profit Margin | | Gross Profit | Gross Profit Margin | |
Renewables | $ | 12,180 | | 6.8 | % | | $ | 25,829 | | 10.4 | % | |
Specialty Civil | 4,361 | | 4.5 | % | | 7,212 | | 6.6 | % | |
Total gross profit | $ | 16,541 | | 6.0 | % | | $ | 33,041 | | 9.2 | % | |
Renewables Segment Results
Revenue. Renewables revenue was $180.4 million for the quarter ended March 31, 2021 as compared to $248.7 million for the same period in 2020, and December 31, 2019:
|
| | | | | | |
(in millions) | | |
Segments | March 31, 2020 | December 31, 2019 |
Renewables | 1,436.0 |
| 1,582.5 |
|
Specialty Civil | 576.6 |
| 588.7 |
|
Total | $ | 2,012.6 |
| $ | 2,171.2 |
|
Based on historical trendsa decrease of 27.5%, or $68.4 million. The decrease in revenue was primarily due to an increase in customer demand in 2020 from the extension of the PTC credit in 2019, which increased the number of wind projects in construction during the first quarter of 2020, offset by increased growth in the Company’s backlog, we believe awarded contractsSolar market during 2021:
•The company had 10 projects of greater than $5.0 million of revenue in the first quarter of 2021 compared to be firm and that13 projects during the revenue for such contracts will be recognized over the lifesame period in 2020,
•The average value of the project. Timing10 projects was $12.9 million in 2021 compared to $17.6 million related to the 13 projects during the same period in 2020, and
•Solar revenue increased $33.3 million for the quarter ended March 31, 2021 when compared to the same period for 2020.
Gross profit. Renewablesgross profit was $12.2 million for the quarter ended March 31, 2021 as compared to $25.8 million for 2020, a decrease of 52.8%, or $13.6 million. As a percentage of revenue, gross profit was 6.8% in 2021, as compared to 10.4% in 2020. The decrease was primarily attributable to the timing of the project starts being later in the first quarter of 2021, which led to an increase in unabsorbed equipment and labor costs, compared to the same period in the prior year.
Specialty Civil Segment Results
Revenue. Specialty Civil revenue was $96.0 million for the quarter ended March 31, 2021 as compared to $109.4 million for 2020, a decrease of 12.2%, or $13.4 million. The decrease in revenue was primarily due to the delay of certain projects in the rail end markets, offset by higher revenue from our construction project mix in the heavy civil market as compared to 2020:
•Rail markets continue to experience a decrease in revenue primarily due to delay in project starts for railroads and installation projects includedlower budgets decreasing bidding opportunities, and
•Offsetting the decrease in revenue was a slight increase in our backlog can be subjectheavy civil construction mix of projects.
Gross profit. Specialty Civil gross profit was $4.4 million for the quarter ended March 31, 2021 as compared to change$7.2 million for 2020, a decrease of 39.5%, or $2.9 million. As a percentage of revenue, gross profit was 4.5% in 2021, as a result of customer delays, regulatory factors and/or other project-related factors. These changes could cause estimated revenuecompared to be realized6.6% in periods later than originally expected, or not at all.2020. In the past, we have occasionally experienced postponements, cancellations and reductions onfirst quarter of 2021, the Company had lower gross margin due to the mix of the projects as there were more heavy civil construction projects, due to market volatilitywhich typically generate lower gross margins than our rail and regulatory factors. There can be no assurance as to our customers’ requirements or the accuracy of our estimates. As a result, our backlog as of any particular date is an uncertain indicator of future revenue and earnings.environmental remediation markets.
Backlog is not a term recognized under GAAP, although it is a common measurement used in our industry. Our methodology for determining backlog may not be comparable to the methodologies used by others. See ‘‘Item 1A. Risk Factors’’ in our Annual Report on Form 10-K filed with the SEC on March 12, 2020 for a discussion of the risks associated with our backlog.
Liquidity and Capital Resources
Overview
Our primary sources of liquidity are cash flows from operations, our cash balances and availability under our Third A&R Credit Agreement. Our primary liquidity needs are for working capital, debt service, dividends on our Series A Preferred Stock and Series B Preferred Stock, income taxes, capital expenditures, insurance collateral, and strategic acquisitions. As of March 31, 2020,2021, we had approximately $58.1$95.2 million in cash, and $26.3$53.0 million availability under our Third A&R Credit Agreement.
We anticipate that our existing cash balances, funds generated from operations, and borrowings will be sufficient to meet our cash requirements for the next twelve months. No assurance can be given, however, that these sources will be sufficient, because there are many factors which could affect our liquidity, including some which are beyond our control. Please see “Item 1A. Risk Factors” in Part I of our Annual Report on Form 10-K filed with the SEC on March 12, 20208, 2021 for a discussion of the risks associated with our liquidity.
Capital Expenditures
For the three months ended March 31, 2020,2021, we incurred $5.8$8.0 million in finance lease payments and an additional $2.2$3.9 million cash purchases for equipment. We estimate that we will spend approximately two percent of revenue for capital
expenditures for 2020 and 2021. Actual capital expenditures may increase or decrease in the future depending upon business activity levels, as well as ongoing assessments of equipment lease versus buy decisions based on short and long-term equipment requirements.
Working Capital
We require working capital to support seasonal variations in our business, primarily due to the effect of weather conditions on external construction and maintenance work and the spending patterns of our customers, both of which influence the timing of associated spending to support related customer demand. Our business is typically slower in the first quarter of each calendar year. Working capital needs are generally lower during the spring when projects are awarded and we receive down payments from customers. Conversely, working capital needs generally increase during the summer or fall months due to increased demand for our services when favorable weather conditions exist in many of the regions in which we operate. Again, workingWorking capital needs are typically lower and working capital is converted to cash during the winter months. These seasonal trends, however, can be offset by changes in the timing of projects, which can be affected by project delays or accelerations and/or other factors that may affect customer spending.
Generally, we receive 5% to 10% cash payments from our customers upon the inception of our Renewable projects. Timing of billing milestones and project close-outs can contribute to changes in unbilled revenue. As of March 31, 2020,2021, substantially all of our costs in excess of billings and earnings will be billed to customers in the normal course of business within the next twelve months. Net accounts receivable balances, which consist of contract billings as well as costs and earnings in excess of billings and retainage, decreasedincreased to $348.6$318.0 million as of March 31, 20202021 from $382.9$309.0 million as of December 31, 2019,2020, due primarily to lower levels of revenue, timing of project activity, and collection of billings to customers.
Our billing terms are generally net 30 days, and some of our contracts allow our customers to retain a portion of the contract amount (generally, from 5% to 10%) until the job is completed. As part of our ongoing working capital management practices, we evaluate opportunities to improve our working capital cycle time through contractual provisions and certain financing arrangements. Our agreements with subcontractors often may contain a ‘‘pay-if-paid’’ provision, whereby our payments to subcontractors are made only after we are paid by our customers.
Sources and Uses of Cash
Sources and uses of cash are summarized below:
| | | | | | | | | | | | | | |
| | Three Months Ended March 31, |
(in thousands) | | 2021 | | 2020 |
| | | | |
Net cash used in operating activities | | (53,780) | | | (74,177) | |
Net cash (used in) provided by investing activities | | (3,522) | | | 87 | |
Net cash used in financing activities | | (11,566) | | | (15,088) | |
|
| | | | | | |
| | Three Months Ended March 31, |
(in thousands) | | 2020 | | 2019 |
| | | | |
Net cash used in operating activities | | (74,177 | ) | | (37,547 | ) |
Net cash provided by (used in) investing activities | | 87 |
| | (2,063 | ) |
Net cash provided by (used in) financing activities | | (15,088 | ) | | 16,216 |
|
Operating Activities. Net cash used in operating activities for the three months ended March 31, 20202021 was $74.2$53.8 million, as compared to net cash used by operating activities of $37.5$74.2 million over the same period in 2019.2020. The increase in net cash used by operating activities reflects the timing of receipts from customers and payments to vendors in the ordinary course of business. The change was primarily attributable to $33.5 million related to reducedlower payments on payables and accrued liabilities coupled with lower collections of accounts receivable and $31.4 million reduction of contract liabilities, offset by the decrease in net loss.assets due to reduced activity level.
Investing Activities. Net cash provided byused in investing activities for the three months ended March 31, 20202021 was $0.1$3.5 million, as compared to net cash usedprovided by investing activities of $2.1$0.1 million over the same period in 2019.2020. The increase in net cash providedused by investing activities was primarily attributable to proceeds from the salean increase in purchases of property, plant and equipment.
Financing Activities. Net cash used in financing activities for the three months ended March 31, 20202021 was $15.1$11.6 million, as compared to net cash provided by $16.2of $15.1 million over the same period in 2019.2020. The reduction of cash provided byused in financing of activities of $31.3$3.5 million was primarily attributable to a sales leaseback transaction of $24.3 million and merger recapitalization costs receivedreduction in 2019.net long-term debt transactions.
Series A Preferred Stock
As of March 31, 2020,2021, we had 17,483 shares of Series A Preferred Stock withissued and outstanding. Each share of Series A Preferred Stock had an initial stated value of $1,000 per share plus accumulated dividends.(or approximately $17.5 million in the aggregate). Dividends are paid on the Series A Preferred Stock as, if and when declared by our Board. To extent permitted and only as, if and when declared by the Board, dividends are required to be paid in cash quarterly in arrears on each March 31, June 30, September 30 and December 31 on the stated value at a rate of 10% per annum.
If not paid in cash, dividends will accrue on the stated value and will increase the stated value on and effective as of the applicable dividend date without any further action by the Board at 12% per annum. OnAs of March 31, 2020, dividends with respect to2021, the quarter accrued at a rate of 12% andCompany had increased the initial stated value.value by $5.0 million in the aggregate rather than pay cash dividends.
So long as any shares of Series B Preferred Stock of the Company are currently outstanding or from and after the occurrence of any non-payment event or default event and until cured or waived, the foregoing rates will increase by 2% per annum. The Company is currently restricted from paying cash dividends on Series A Preferred Stock because it has outstanding dividends that are accrued on the Series B preferred stock.
The Series A Preferred Stock do not have a scheduled redemption date or maturity date. Subject to the terms of the Series B Preferred Stock, we may, at any time and from time to time, redeem all or any portion of the shares of Series A Preferred Stock then outstanding. As a condition to the consummation of any change of control (as described in the certificate governing the Series A Preferred Stock), we are required to redeem all shares of Series A Preferred Stock then outstanding. We are also required to use the net cash proceeds from certain transactions to redeem the maximum number of shares of Series A Preferred Stock that can be redeemed with such net cash proceeds, except as prohibited by the Third A&R Credit Agreement.
Based on the stated value of the Series A Preferred Stock as of March 31, 20202021 after giving effect to the accrual of dividends, we would be required to pay quarterly cash dividends in the aggregate of $2.5$0.6 million on the Series A Preferred Stock. If our business does not generate enough cash to pay future cash dividends,unpaid, the dividends will accrue at a rate of 12% per annum and increase the stated value of the Series A Preferred Stock, which will make cash dividends on the Series A Preferred Stock more difficult for us to make in the future.Stock. We do not presently expect to pay cash dividends, although an actual decision regarding payment of cash dividends on the Series A Preferred Stock will be made at the time of the applicable dividend payment based upon availability of capital resources, business conditions, other cash requirements, and other relevant factors.dividends.
Series B Preferred Stock
As of March 31, 2020,2021, we had 199,474 shares of Series B Preferred Stock outstanding, with eachissued and outstanding. Each share havingof Series B Preferred Stock had an initial stated value of $1,000 plus accumulated dividends.per share (or approximately $199.5 million in the aggregate). Our common stock and Series A Preferred Stock are junior to the Series B Preferred Stock. Dividends are paid in cash on the Series B Preferred Stock as, if and when declared by our Board. To the extent not prohibited by applicable law, and only as, if and when declared by the Board, dividends are required to be declared and paid in cash quarterly in arrears on each March 31, June 30, September 30 and December 31. AnyFor any dividend period for whichthat the Total Net Leverage Ratio is greater than 1.50:1.00, the dividend rate is 13.5% per annumannum; and (ii) with respect to any dividend period for which the Total Net Leverage Ratio is less than or equal to 1.50:1.00,otherwise at a rate of 12%12.0% per annum.
If not paid in cash, dividends will accrue on the stated value and will increase the stated value on Series B Preferred Stock and is effective as of the applicable dividend date without any further action by the Board at a rate of 15%. OnAs of March 31, 2020,2021, the unpaid dividends with respect to the quarter accrued at a rate of 15% andhad increased the initial stated value.value by $18.3 million in the aggregate.
Until the Series B Preferred Stock is redeemed, neither we nor any of our subsidiaries can declare, pay or set aside any dividends on shares of any other class or series of capital stock, except in limited circumstances. We are required to redeem all shares of Series B Preferred Stock outstanding on February 15, 2025 at the then stated value plus all accumulated and unpaid dividends thereon through the day prior to such redemption. Subject to compliance with the terms of any credit agreement, we are also required to redeem all of the Series B Preferred Stock as a condition to the consummation of certain changes in control (as defined in certificate governing the Series B Preferred Stock), as well as use the net cash proceeds from certain transactions to redeem shares of Series B Preferred Stock.
Based on the stated value of the Series B Preferred Stock as of March 31, 20202021 after giving effect to the accrual of dividends, we would be required to pay quarterly cash dividends in the aggregate of $18.3$6.6 million on the Series B Preferred Stock. If our business does not generate enough cash to pay future cash dividends,paid the dividends will accrue at a rate of 15% per annum and increase the stated value of the Series A Preferred Stock, which will make cash dividends on the Series B Preferred Stock more difficult for us to make in the future. We do not presently expect to pay cash dividends, although an
actual decisionStock. Actual decisions regarding payment of cash dividends on the Series B Preferred Stock will be made at the time of the applicable dividend payment based upon availability of capital resources, business conditions, other cash requirements, and other relevant factors.
Deferred Taxes - COVID-19
The CARES Act was enacted on March 27, 2020, in response to the COVID-19 emergency. The CARES Act includes many measures to assist companies, including temporary changes to income and non-income-based tax laws. Some of the key income tax-related provisions of the CARES Act include:
•Eliminating the 80% of taxable income limitation by allowing corporate entities to fully utilize net operating losses (“NOLs”) to offset taxable income in 2018, 2019 or 2020.
•Allowing NOLs originating in 2018, 2019 or 2020 to be carried back five years.
•Increasing the net interest expense deduction limit to 50% of adjusted taxable income from 30% for tax years beginning 1 January 2019 and 2020.
•Allowing taxpayers with alternative minimum tax (“AMT”) credits to claim a refund in 2020 for the entire amount of the credit instead of recovering the credit through refunds over a period of years, as originally enacted by the Tax Cuts and Jobs Act (“TCJA”).
•Payroll tax deferral.
IEA has also made use of the payroll deferral provision to defer the 6.2% social security tax, or approximately $13.6 million, through December 31, 2020. This amount is required to be paid at 50% on December 31, 2021 and December 31, 2022.
Amendment to Third A&R Credit Agreement
On October 30, 2020, the Company entered into a First Amendment to its Third A&R Credit Agreement (the “Amendment”). The Amendment provides for, among other things, an increase in the revolving credit commitments previously available by $25.0 million, bringing the aggregate principal amount of the revolving credit commitments under the Third A&R Credit Agreement to $75.0 million, upon the terms and subject to the satisfaction of the conditions set forth in the Third A&R Credit Agreement, as amended by the Amendment.
In addition, the Amendment provides that on and after the Amendment’s effective date and until delivery of the financial statements for the fiscal quarter ended December 31, 2020, as required under the Amendment, the percentage per annum interest rate for revolving loans and swing line loans is, at the Company’s option, (x) LIBOR plus a margin of 2.75% or (y) the applicable base rate plus a margin of 1.75%. Thereafter, for any day, the applicable percentage per annum interest rate for revolving loans and swing line loans is LIBOR or the base rate plus a margin depending upon the Company’s first lien net leverage ratio as of the last day of the most recently ended consecutive four fiscal quarter period, as set forth below:
| | | | | | | | |
First Lien Net Leverage Ratio | LIBOR Loans | Base Rate Loans |
Less than 1.00:1.00 | 2.50% | 1.50% |
Less than 2.00:1.00 but greater than or equal to 1.00:1.00 | 2.75% | 1.75% |
Less than 3.00:1.00 but greater than or equal to 2.00:1.00 | 3.00% | 2.00% |
Less than 3.50:1.00 but greater than or equal to 3.00:1.00 | 3.25% | 2.25% |
Greater than or equal to 3.50:1.00 | 3.50% | 2.50% |
The Amendment also further specifies the unused commitment fee rate. On and after the Amendment’s effective date and until delivery of the financial statements for the fiscal quarter ended December 31, 2020, as required under the Amendment, the rate is 0.40% per annum. Thereafter, for any day, the applicable percentage per annum depends upon the Company’s senior secured net leverage ratio, as set forth below:
| | | | | |
Senior Secured Net Leverage Ratio | Applicable Unused Commitment Fee Rate |
Less than 1.00:1.00 | 0.35% |
Less than 2.00:1.00 but greater than or equal to 1.00:1.0 | 0.40% |
Less than 3.00:1.00 but greater than or equal to 2.00:1.00 | 0.45% |
Greater than or equal to 3.00:1.00 | 0.50% |
Contractual Obligations
The following table sets forth our contractual obligations and commitments for the periods indicated as of March 31, 2020.2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Payments due by period | | | | |
(in thousands) | | Total | | Remainder of 2021 | | 2022 | | 2023 | | 2024 | | 2025 | | Thereafter |
| | | | | | | | | | | | | | |
Debt (principal) (1) | | 178,242 | | | 1,821 | | | 16,938 | | | 29,986 | | | 129,368 | | | 129 | | | — | |
Debt (interest) (2) | | 37,912 | | | 9,242 | | | 12,020 | | | 10,285 | | | 6,362 | | | 3 | | | — | |
Debt - Series B Preferred Stock (3) | | 199,474 | | | — | | | — | | | — | | | — | | | 199,474 | | | — | |
Dividends - Series B Preferred Stock (4) | | 119,325 | | | 19,585 | | | 26,113 | | | 26,113 | | | 26,113 | | | 21,401 | | | — | |
Finance leases (5) | | 54,398 | | | 19,994 | | | 21,996 | | | 7,267 | | | 3,264 | | | 1,799 | | | 78 | |
Operating leases (6) | | 49,717 | | | 8,435 | | | 9,753 | | | 7,347 | | | 3,532 | | | 1,751 | | | 18,899 | |
Total | | $ | 639,068 | | | $ | 59,077 | | | $ | 86,820 | | | $ | 80,998 | | | $ | 168,639 | | | $ | 224,557 | | | $ | 18,977 | |
(1)Represents the contractual principal payment due dates on our outstanding debt.
(2)Includes variable rate interest using March 31, 2021 rates.
(3)Represents the mandatorily redeemable debt - Series B Preferred with expected redemption date of February 15, 2025.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Payments due by period | | | | |
(in thousands) | | Total | | Remainder of 2020 | | 2021 | | 2022 | | 2023 | | 2024 | | Thereafter |
| | | | | | | | | | | | | | |
Debt (principal) (1) | | 366,046 |
| | 1,365 |
| | 1,228 |
| | 15,859 |
| | 29,735 |
| | 129,104 |
| | 188,755 |
|
Debt (interest) (2) | | 110,170 |
| | 7,488 |
| | 27,584 |
| | 24,356 |
| | 21,234 |
| | 18,130 |
| | 11,378 |
|
Finance leases (3) | | 65,574 |
| | 20,035 |
| | 22,344 |
| | 18,302 |
| | 4,108 |
| | 628 |
| | 157 |
|
Operating leases (4) | | 59,669 |
| | 9,784 |
| | 11,242 |
| | 8,846 |
| | 6,220 |
| | 3,116 |
| | 20,461 |
|
Total | | $ | 601,459 |
| | $ | 38,672 |
| | $ | 62,398 |
| | $ | 67,363 |
| | $ | 61,297 |
| | $ | 150,978 |
| | $ | 220,751 |
|
| |
(1) | Represents the contractual principal payment due dates on our outstanding debt, including the convertible debt - Series B Preferred with expected redemption date of February 15, 2025. Future declared dividends have been excluded, as payment determination will be evaluated each quarter resulting in differing accumulated dividend rates. |
| |
(2) | Includes variable rate interest using March 31, 2020 rates. |
| |
(3) | We have obligations, exclusive of associated interest, recognized under various finance leases for equipment totaling $65.6 million at March 31, 2020. Net amounts recognized within property, plant and equipment, net in the condensed consolidated balance sheet under these financed lease agreements at March 31, 2020 totaled $78.5 million. |
| |
(4) | We lease real estate, vehicles, office equipment and certain construction equipment from unrelated parties under non-cancelable leases. Lease terms range from month-to-month to terms expiring through 2038. |
(4)Future declared dividends have been included at 12% but payment determination will be evaluated each quarter resulting in differing accumulated dividend rates.
(5)We have obligations, inclusive of associated interest, recognized under various finance leases for equipment totaling $54.4 million at March 31, 2021. Net amounts recognized within property, plant and equipment, net in the condensed consolidated balance sheet under these financed lease agreements at March 31, 2021 totaled $69.0 million.
(6)We lease real estate, vehicles, office equipment and certain construction equipment from unrelated parties under non-cancelable leases. Lease terms range from month-to-month to terms expiring through 2038.
For detailed discussion and additional information pertaining to our debt instruments, see Note 6. Debt and Note 7. Commitments and Contingencies in the notes to our condensed consolidated financial statements, included in Part I, Item 1.
Off-Balance Sheet Arrangements
As is common in our industry, we have entered into certain off-balance sheet arrangements in the ordinary course of business. Our significant off-balance sheet transactions include liabilities associated with letter of credit obligations, surety and performance and payment bonds entered into in the normal course of business, liabilities associated with deferred compensation plans, liabilities associated with certain indemnification and guarantee arrangements.
As of March 31, 20202021 and December 31, 2019,2020, the Company was contingently liable under letters of credit issued under its revolving credit facility or its old credit facility respectively, in the amount of $23.7$22.0 million and $21.0$7.8 million, respectively, related to projects.projects and insurance.
As of March 31, 20202021 and December 31, 2019,2020, the Company had outstanding surety bonds on projects of $2.5$3.0 billion and $2.4$2.8 billion, respectively, including the bonding line of the acquired ACC Companies and Saiia.respectively.
Recently Issued Accounting Pronouncements
See Note 6. Debt in the notes to condensed consolidated financial statements, included in Item 1 of this Quarterly Report on Form 10-Q, for discussion pertaining to our off-balance sheet arrangements. See Note 1. Business, Basis of Presentation and Summary of Significant Accounting Policies and Note 11. Related Party Transactions in the notes to our condensed consolidated financial statements, included in Item 1, for discussion pertaining to certain of our investment arrangements.
Recently Issued Accounting Pronouncements
See Note 1. Business, Basis of Presentation and Summary of Significant Accounting Policies in the notes to condensed consolidated financial statements, included inPart I, Item 1.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Credit Risk
We are subject to concentrations of credit risk related to our net receivable position with customers, which includes amounts related to billed and unbilled accounts receivable and costs and earnings in excess of billings (‘‘CIEB’’) on uncompleted contracts net of advanced billings with the same customer. We grant credit under normal payment terms, generally without collateral, and as a result, we are subject to potential credit risk related to our customers’ ability to pay for services provided. This risk may be heightened if there is depressed economic and financial market conditions. However, we believe the concentration of credit risk related to billed and unbilled receivables and costs and estimated earnings in excess of billings on uncompleted contracts is limited because of the lack of concentration and the high credit rating of our customers.
Interest Rate Risk
Borrowings under the new credit facilityThird A&R Credit Agreement and certain other borrowings are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. The outstanding debt balance as of March 31, 20202021 was $177.3$178.2 million. A one hundred basis point change in the LIBOR rate would increase or decrease interest expense by $1.8 million. As of March 31, 2020,2021, we had no derivative financial instruments to manage interest rate risk.
Item 4. Control and Procedures
Attached as exhibits to this Quarterly Report on Form 10-Q are certifications of IEA’s Chief Executive Officer and Chief Financial Officer that are required in accordance with Rule 13a-14 of the Exchange Act of 1934. This section includes information concerning the controls and controls evaluation referred to in the certifications, and it should be read in conjunction with the certifications.
Evaluation of Disclosure Controls and Procedures
Our management has established and maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. The disclosure controls and procedures are also designed to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
As of the end of the period covered by this Quarterly Report, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Exchange Act. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on this evaluation, these officers have concluded that, as of March 31, 2020,2021, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
As previously discussed in Item 2. Management Discussion and Analysis, the Company is using remote technology for employees working from home due to COVID-19. Although certain employees are working remotely, there There has been no change in our internal control over financial reporting during the quarter ended March 31, 2020,2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Part II. OTHER INFORMATION
Item 1A. Risk Factors
At March 31, 2020,2021, there have been no other material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K filed with the SEC on March 12, 2020,8, 2021, which is accessible on the SEC's website at www.sec.gov, except as described below.
The ultimate effects of the current COVID-19 pandemic are unknown and evolving, and could result in negative effects on our business, financial condition, results of operations and prospects.
The COVID-19 pandemic is a rapidly developing situation around the globe that has adversely impacted economic activity and conditions in the United States and worldwide. In particular, efforts to control the spread of COVID-19 have led to local and worldwide shutdowns and stay-at-home orders, stock price declines, employee layoffs, and governmental programs to support the economy.
The COVID-19 pandemic could affect us in a number of other ways, including but not limited to:
Inability to properly staff our construction projects due to quarantines and stay at home orders.
Inabilities of customers to fund project obligations due to liquidity issues.
Termination or delay in project construction at our customers’ discretion due to financial uncertainties.
Inability of, or delays by, our subcontractors to deliver equipment and services.
Restrictions on our ability to obtain new business if our customer base is financially constrained.
Inability to obtain bonding from our sureties due to tightening of credit markets.
Decrease in demand for civil construction resulting from corresponding decreases in federal, state and local budgets.
Each of the foregoing would cause project delays, force majeure events and project terminations which could negatively impact our ability to recognize revenues and bill our customers for current costs. In addition, if our customers are unable to finance new projects as a result of their liquidity issues during and in the aftermath of the pandemic, our business outlook will be negatively impacted. A prolonged continuation of the COVID-19 pandemic, or a resurgence of the pandemic even if the current pandemic is significantly reduced, could also result in additional impacts to our business, financial condition, results of operations and prospects. The ultimate effects of the COVID-19 pandemic are unknown at this time. We are continuing to monitor developments but cannot predict at this time whether COVID-19 will have a material impact on our business, financial condition or results of operations.
Item 5. Other Information
Amendment to Equity Commitment Agreement
On May 6, 2020, the Company entered into an Amendment (the “Amendment”) to the Equity Commitment Agreement, dated as of October 29, 2019 (the “Equity Commitment Agreement”) by and among the Company, each Commitment Party (as defined in the Equity Commitment Agreement), Oaktree Power Opportunities Fund III Delaware, L.P., a Delaware limited partnership, Infrastructure and Energy Alternatives, LLC, a Delaware limited liability company and OT POF IEA Preferred B Aggregator, L.P., a Delaware limited partnership.
The Amendment amends the Equity Commitment Agreement to extend the period of time the Backstop Parties (as defined in the Equity Commitment Agreement) may be required to enter into the 2020 Commitment (as defined in the Equity Commitment Agreement) and purchase additional shares of Series B-3 Preferred Stock and warrants from the Company to July 14, 2020, or such other date as mutually agreed between the Backstop Parties and the Company. Additionally, the Amendment clarifies that, after giving effect to reductions in the commitment amount to date, the 2020 Commitment shall in no event exceed $5,650,000.
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, which is filed herewith as Exhibit 10.1 and is incorporated in this “Item 5. - Other Information” by reference.
Amended and Restated2021 Annual Incentive Compensation Program
On May 6, 2020,5, 2021, the Company adopted an amended and restatedthe 2021 annual incentive compensation program (the “A&R“2021 AICP”), which amends and restates the Company’s current amended and restated annual incentive compensation program. The purpose of the A&R2021 AICP is to encourage excellence and high levels of performance, emphasize safety as a key goal, recognize the contributions of key employees to the overall profitability and safety of the Company, and encourage key employees to cooperate, share information and work together for the overall benefit of the Company and its shareholders.
The A&R2021 AICP provides for potential cash bonuses to eligible participants based upon achievement of one or more performance criteria, including Adjustedincluding:
•earnings, as measured by adjusted EBITDA on a consolidated basis or business unit operating income on a business unit basis;
•growth, as measured by change in year-end backlog;
•cash generation, as measured by free cash flow on a consolidated basis or change in work in progress on a business unit basis; and
•safety, as measured by target total reportable incident rate (“TRIR”) on a consolidated basis or a business unit or operating company division basis,mix of a TRIR and target gross profitvehicle, equipment, environmental and property rate (“VEEP”) on a business unit or operating company division basis.
The Compensation Committee of the Board of Directors of the Company (the “Committee”) is delegated authority to determine target bonus awards, the performance criteriacalculation of the metric that will be used to determine the payment of target bonuses, as well as any minimum or maximum thresholds that may be used in determining the amount earned with respect to any specific performance criteria. The Committee may assign participants into different classes, with each class being subject to different target bonuses, performance criteria, and weightings.
The foregoing description of the A&R2021 AICP does not purport to be complete and is qualified in its entirety by reference to the full text of the A&R2021 AICP, which is filed herewith as Exhibit 10.210.4 and is incorporated in this “Item 5. - Other Information” by reference.
Item 6. Exhibits
(a) Exhibits.
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Exhibit Number | | Description | |
2.1# | | Agreement and Plan of Merger, dated as of November 3, 2017, by and among the Company, IEA Energy Services LLC, Wind Merger Sub I, Inc., Wind Merger Sub II, LLC, Infrastructure and Energy Alternatives, LLC, Oaktree Power Opportunities Fund III Delaware, L.P., solely in its capacity as the representative of the seller, and, solely for purposes of Section 10.3 thereof, and, to the extent related thereto, Article 12 thereof, M III Sponsor I LLC and M III Sponsor I LP (incorporated by reference to Exhibit 2.1 to the Company’s Amendment No. 1 to its Current Report on Form 8-K (File No. 001-37796) filed November 8, 2017). | |
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2.2 | | Amendment No. 1 to the Agreement and Plan of Merger, dated as of November 15, 2017, by and among IEA Energy Services LLC, M III Acquisition Corp., Wind Merger Sub I, Inc., Wind Merger Sub II, LLC, Infrastructure and Energy Alternatives, LLC, Oaktree Power Opportunities Fund III Delaware, L.P., solely in its capacity as the representative of the seller, and solely for purposes of Section 10.3 thereof, and, to the extent related thereto, Article 12 thereof, M III Sponsor I LLC and M III Sponsor I LP (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K (File No. 001-37796) filed November 21, 2017). | |
2.3 | | Amendment No. 2 to the Agreement and Plan of Merger, dated as of December 27, 2017, by and among IEA Energy Services LLC, M III Acquisition Corp., Wind Merger Sub I, Inc., Wind Merger Sub II, LLC, Infrastructure and Energy Alternatives, LLC, Oaktree Power Opportunities Fund III Delaware, L.P., solely in its capacity as the representative of the seller, and solely for purposes of Section 10.3 thereof, and, to the extent related thereto, Article 12 thereof, M III Sponsor I LLC and M III Sponsor I LP (incorporated by reference to Exhibit 2.3 to the Company’s Current Report on Form 8-K (File No. 001-37796) filed January 2, 2018). | |
2.4 | | Amendment No. 3 to the Agreement and Plan of Merger, dated as of January 9, 2018, by and among IEA Energy Services LLC, M III Acquisition Corp., Wind Merger Sub I, Inc., Wind Merger Sub II, LLC, Infrastructure and Energy Alternatives, LLC, Oaktree Power Opportunities Fund III Delaware, L.P., solely in its capacity as the representative of the seller, and solely for purposes of Section 10.3 thereof, and, to the extent related thereto, Article 12 thereof, M III Sponsor I LLC and M III Sponsor I LP (incorporated by reference to Exhibit 2.4 to the Company’s Current Report on Form 8-K (File No. 001-37796) filed January 10, 2018). | |
2.5 | | Amendment No. 4 to the Agreement and Plan of Merger, dated as of February 7, 2018, by and among IEA Energy Services LLC, M III Acquisition Corp., Wind Merger Sub I, Inc., Wind Merger Sub II, LLC, Infrastructure and Energy Alternatives, LLC, Oaktree Power Opportunities Fund III Delaware, L.P., solely in its capacity as the representative of the seller, and solely for purposes of Section 10.3 thereof, and, to the extent related thereto, Article 12 thereof, M III Sponsor I LLC and M III Sponsor I LP (incorporated by reference to Exhibit 2.5 to the Company’s Current Report on Form 8-K (File No. 001-37796) filed February 9, 2018). | |
2.6 | | Amendment No. 5 to the Agreement and Plan of Merger, dated as of March 8, 2018, by and among IEA Energy Services LLC, M III Acquisition Corp., Wind Merger Sub I, Inc., Wind Merger Sub II, LLC, Infrastructure and Energy Alternatives, LLC, Oaktree Power Opportunities Fund III Delaware, L.P., solely in its capacity as the representative of the seller, and solely for purposes of Section 10.3 thereof, and, to the extent related thereto, Article 12 thereof, M III Sponsor I LLC and M III Sponsor I LP (incorporated by reference to Exhibit 2.6 to the Company’s Current Report on Form 8-K (File No. 001-37796) filed March 8, 2018). | |
2.7 | | | |
2.8# | | | |
2.9 | | | |
3.1 | | | |
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3.8 | | | |
3.9 | | | |
3.10 | | | |
4.1 | | | |
4.2 | | | |
4.24.3 | | | |
4.34.4 | | | |
4.44.5 | | | |
4.54.6 | | | |
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4.64.7 | | | |
4.74.8 | | | |
4.84.9 | | | |
4.94.10 | | | |
4.104.11 | | | |
4.114.12 | | | |
4.124.13 | | | |
4.134.14 | | |
4.14 | | |
4.15 | | | |
10.1*4.16 | | | |
4.17 | | | |
4.18 | | | |
10.1 | | | |
10.2 | | Fifth Amendment to the Equity CommitmentAmended and Restated Registration Rights Agreement, dated as of May 6, 2020,February 3, 2021, by and among the Company, each Commitment Party (as defined in the Equity Commitment Agreement), Oaktree Power Opportunities Fund III Delaware, L.P.Infrastructure and Energy Alternatives, Inc., Infrastructure and Energy Alternatives, LLC, Ares Special Situations Fund IV, L.P., ASOF Holdings I, L.P. and OT POF IEA Preferred B Aggregator, L.P. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 001-37796) filed on February 4, 2021). | |
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31.2* | | | |
32.1** | | | |
32.2** | | | |
101.INS* | | XBRL Instance Document | |
101.SCH* | | XBRL Taxonomy Extension Schema Document | |
101.CAL* | | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | | XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.INS) | |
*Filed herewith.
**Furnished herewith.herewith
† Indicates a management contract or compensatory plan or arrangement.
# Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. We will furnish the omitted schedules to the
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.
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| INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC. |
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Dated: May 7, 202010, 2021 | By: | /s/ JP Roehm |
| Name: JP Roehm |
| Title: Chief Executive Officer |
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Dated: May 7, 2020 | By: | /s/ Peter J. Moerbeek |
| Name: Peter J. Moerbeek |
| Title: Executive Vice President, Chief Financial Officer |
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Dated: May 7, 2020 | By: | /s/ Bharat Shah |
| Name: Bharat Shah |
| Title: Chief Principal Financial and Accounting Officer |