IEA - Earnings call transcript Q1 2019 | Infrastructure and Energy Alternatives Inc

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Operator

Good morning, and welcome to the Infrastructure and Energy Alternatives First Quarter 2019 Conference Call.

Before I turn the call over to management, I would like to note that all participants on today's call are in a listen-only mode.

We will open up the call to your questions after the prepared remarks. And with that, I will turn the call over to Larry Clark, Investor Relations for IEA. Larry, please go ahead.

Larry Clark

us discuss joining financial first for results. you today IEA’s to quarter Thank from Roehm, are and us management With today JP Chief Officer. Andy Financial Chief Layman, Officer; Executive

SEC factors to to Before conjunction call contains with in considered as in section in to financial non-GAAP GAAP adjusted Except Any forward-looking included IEA’s growth statements of press Harbor be Since required management, filings. forward-looking direct future discussion including you undertakes by today’s about the and well appropriate financial Investors I statement. release. turning cautionary some no Today’s update to management reconciliations over website as law, the can obligation financial presenting Company’s press in today’s statements. references, would the and the statements IEA statements Safe the be measurements be as risk like its the as found release forward-looking EBITDA, expectations. should the will on

an presentation including are we accompanying can addition, that refer during call. slide In the to you

slides access go now the I’ll of And can over website. also section Investors that, on the JP JP. the Roehm. with ahead, call to Please turn You these

JP Roehm

morning, our our for you thank today to call discuss Thanks, all Good first Larry. and results. quarter joining

operational Our line were results financial with and in generally our expectations.

momentum transformational These geographic services, Saiia Group. and including us pipeline building and the the construction consolidated Charles business we provided in Construction and and are both backlog diversity. with with ACC We of are progressing line integrations smoothly acquisitions William important and

businesses, course XXXX. increases in over rail And a improved positioned wind, and and construction environmental all we in of name the to well and with results in drive backlog now are are financial pipeline prominent of our We remediation. civil

down business of winning fruit We are to efforts road. our cross remain business new selling teams, the will and optimistic bear among these the efforts early that development due in stages

week, Earlier cost created certain investment is by we the equity new Company's commitment produce $XX to or we group Ares to managed funds also and agreement agreed efficiencies management We before of entered to to close and agreement. The including conditions fund to in subject amendments overtime. equity to to with Oaktree as These terms are B newly preferred a firm and stock, an credit leading identify savings Management and a private of May welcome them investors expect IEA. a Ares million this Management meaningful expected alternative global Series transaction working diligently Management. have the purchase into Capital by are honored on is investor managed XXth.

We further appreciative also will of source for IAE. plan of premier shareholders. commitment are and our in strength strengthens our it our capital necessary We us the The support. execute and adequate the new a to investment long-term these liquidity as growth platform provide XXXX Oaktree's balance firms that drive for medium-term It sheet. underscores financing prospects of with from believe is our our business value ongoing

the of our leaseback also sale transaction. quarter some the property And to During obtained acquisitions. liquidity the executed subsequent $XX by we a leaseback that another equipments we million improved executing on sale million on we $X quarter, in end,

our to now results. Turning

one. for year-over-year this year. the first revenue us did the for always was slowest a high-end is of And sign year generate reach first development forma business we The our that on seasonally a the quarter guidance. was growth of revenue quarter productive it could perspective, different the year quarter positive a industry. a no We construction basis, pro however, the full From across in awarded increase in of our other across backlog drove year. even $X.X an lines, remaining end $X.X up billion of spread at billion, the renewables our XX% XX% the start to and higher. We the of that won This business $XXX of our was million number backlog a business markets We divisions. from new all our were across our contracts driving new

talented years the construction successful Officer. first construction IEA integration responsibilities veteran Operating acquisitions. our leadership We also construction Chief Mike industry of management our to bringing strengthened executive and of Mike on of operations His brings as Stoecker nearly and team, and experience. ongoing a XX our industry the oversight include opportunities,

strategy. more Given new strategic our COO of step executing timely appointing our greater pipeline a scale was a extensive growth business opportunities, in and next

or Our across amid refurbish are demand end in to expand increased projected markets, vital need economy healthy for and enduring XXXX and country. energy, infrastructure the growing U.S. and meanwhile beyond replace renewable to remain a

and from our for business to over power remediation of example, and capacity scale utility environmental markets. to construction, double road All by is the surge Wind for fourfold highway rail demand trends. years. for call strong those lines XXXX set capacity benefit construction secular stand nearly also while the favorable XX solar in sustained expected Industry to growth projections next is and

instance, presents ordered ash coal For investment opportunity. to year and millions complete this billion. to tons landfills. major company alone of exceeds this ash of it Carolina estimated The the $XX rebury regulators work market In lying excavate tremendous North energy management a in

and Our pipeline remains to strong grow. continues

ash on coal in reputation. large has it examples we of market, the Some the say, bidding environmental particularly of type work management our great which, a are projects,

represents well as Both recognize starting more for legacy a company. going but opportunity not when on installed well opportunities, improved that reduced lower new other perform they cross-selling projects as CCS we infrastructure. lifecycles power the upgrades existing substantial an reached to as customer for as of present XXXX well repowering stages in legacy and performing Charles diversified and turbines on with equipment to projects energy project to the through entered logistics the and costs larger and late come need this a their wind construction, large base financing, William newly selectively expenses as as These synergies We work insurance wind utilization are are equipment anticipated IEA Essentially, which also continue forward. us. We significant that projects, market profitable in wind and that are scale. and is interesting as bid opportunity

All performing are to backlog new of I well, a level that have pipeline to opportunities. of and record a want of continue our strong reiterate we businesses

remain growth, for Our year and operational the driving collaboration excellence newly platform. top organic diversified priorities across and our scaled

We fronts. on all are making progress

results of confidence over the of to the EBITDA and All $XXX will we our to billion range guidance, Andy achieve range in in this quarterly of further $X.X detail. discuss to the calls $XX for gives adjusted now call billion us revenue to that turn which $X million I'll million. in XXXX our

Andrew Layman

for and again Thanks you joining us. all thank JP

of This from that $XX previous we to this we $XXX,XXX would cost we from remaining in second revenue was quarter major from year-end For through margin. final projects a in of experienced to to million estimated We quarter our cleanup wind small, as profit revenues six wrap recognized quarter, we $XXX This essentially all our in and business on million our million that million to don't $XXX these expectations. these approximately gross call. our largely approximately projects a a reported such and the revenues substantially of gross at earnings the point I zero of revenue on these revenues consisting positive pro is This acquired the to represents increase of as discussed cost expected led a quarter's first basis. businesses. $XX projects. estimates $XX revenue from as site negative six impact further as completed. legacy forma the results profit of Included with projects net this XX% represents recorded up complete work expect million is revenue like they approximately out which The $X.X on in landscaping. our run $XXX line with impact We are associated million in million.

with the the gross revenue wind Excluding the been work margin completion six profit profit and projects, gross on nominal X.X%. both would've associated

account Our of the from loss of million. $X.X quarter SG&A first XXXX. $XX.X last business. was in our have direct million million businesses. been from a would which loss the Adjusted basis, forma $X.X EBITDA million, our EBITDA only XXXX loss adjusted adjusted for included SG&A legacy were of the That quarter of marked for year's a taking acquired $X.X quarter an improvement million expenses $XX.X of IEA a the EBITDA On into included pro acquisitions, and

seasonally quarter lowest. is always first Our

adjusted early negative base a overhead fixed having generating is in the consistent revenue EBITDA to our So incur a lower with year. over

are As revenue sequentially revenue year, the our margins across adjusted expect costs spread fixed larger a base. EBITDA throughout increases as better we

by weather related equipment, Our the the share. of Free working XXXX. diluted quarter net flow projects excluding $X.X to was for or debt six $XX.X negative $X.XX impact million capital and impacted the service were cash the that per sale-leaseback was loss in million

CapEx was for $X.X million quarter. Our the

million leases. end debt our At capital $XX to sheet. balance and in turning in million cash, quarter Now had in $XX $XXX million we

with we adjusted things, week the which the first allows reached lean the for lenders Terms credit facility, among Series amending this stock of receive the will other effective [ph] Dividends increase form as XX%. an EBITDA JP rate to expect shares amendments B the With of proceeds closing ratio paid upon Just preferred shares. of become flexibility. an agreement we in leverage in equity at in to highlighted for be XXXX, an quarterly on providing of financing. additional $XX these respect to the us with will million on raise, gross annual preferred our

the XXXX. accrued have par option any terms to and are and plus conditions, in redeem mandatorily February We interest certain under redeemable shares these at they of

equity used fully Oaktree under will capital the diluted up revolving warrants approximately X.X be As and the common of transaction. facility. borrowings credit part for transaction, the basis, purchase our of of will to at a shares million are penny on working Ares to which outstanding and proceeds The our closing to of reduce consist XX% receiving

adjusted we year our As EBITDA. are JP guidance revenue and mentioned, confirming for full

first of XX remainder the to $XXX We combined when quarter revenue over the high-end convert expect our guidance million approximately with of our backlog it range. the our of year, with aligns will revenue revenue, March

are significant also of To including reduced is risk projects completion of our focused historical to we and approximately expected expect fourth expect the we revenue the full realizing integration to year diversified which trends, and be bulk third on in In recent JP's as half generate very reach billed also without execution, as we booked newly Based adjusted we addition, XXXX, and generate our acquisitions full thirds as dates. are our over on amplify platform. from message such operational work margin year some our backlog of EBITDA two synergies entering in XXXX civil ever our and and the will of on of help. quarters scaled second

fronts. progress both to closing the pleased with With our I'll on for are back turn JP that remarks. We call

JP Roehm

Andy. Thanks,

to the like to XXXX. strengthened would Before we steady up I sheet. And open We again our our are grew call the that team a great and integration make we management progress continue to on executive we in our emphasize start acquisitions. of XXXX questions for off balance backlog, our

our for We and have national multiple a operation segments genuine strong growth. footprint poised span

positive momentum all them. across have We of

we opportunities plenty healthy have of are and markets attractive pipeline. our Our in

As on laser and always, budget. are delivering focused projects time safely, on we on

We leading maintaining industry of environment achieving that work legacy reflects are engaging high dedicated that performance. to our long

While performance long-term. of there over stronger in and to ahead that the track financial work we a potentially are remain exceed we and and our meet lot confident goals on XXXX is deliver

teams We to us a have talented excellent great will plan. platform execute enable on that and

all I and for up your in ongoing and open commitment thank and would people, to to would interest foundation Our our success. IEA. are Operator? like our to questions. investors to like now their clients the for support call I of integrity the analysts

Operator

you. Thank

Our question. be first now of line instructions] the from with conducting and Please answer question question a D.A. will with session. your Davidson. Bill We Newby proceed comes [Operator

Bill Newby

thanks morning, questions. Good gentlemen taking and my for

Andrew Layman

Hi Bill.

JP Roehm

Bill. Hey,

Bill Newby

weather revenue in of I first of through range? guys on of there? margins? contingencies high the on I guide, could in kind just the And to hand, particular, the the the the I the low seems JP end in you guess, have like and the you built parts moving Andy, talk guess type it what you us guess and kind is gets

Andrew Layman

is good take then question. some I'll This add can Andy. and Yes. JP on additional That’s items. a that

our of yes, So high range. like do to progressing end we be to the revenue

the adding actually close get then As from backlog. got revenue we've plus works would the that to additional the the bill And don't of civil indicated, book expectation and end that for are that QX we the as range. XXXX, high backlog own

our And from So margins projects on gets confident accrete a maintain as we're half progressing margin we're profile behind is progress of projects, margins we about in behind the risk us. perspective, year. revenue From perspective. how of the that, our as the a first lower us, come we the

progress year positive still flow. made early still about year in -- do very today. of we have, feel to we've it's the We the only we're three-fourths the So that

Bill Newby

how up wind And backlog areas project a much -- more that right is quarter, Right. this little the pick then I guess the versus of now? bit -- other how the of nicely much

Andrew Layman

Yeah.

So new in $XXX we presentation, that wind through in. a of space also awards. of that. have civil the the couple there's strong come kind backlog But we where well, But there's in chart specialty our growth projects that as by increased million for walks

Bill Newby

that with you you. comfort on those Is experienced the currently wind projects get anything differ materially I I to executing issues or projects guess, in XXXX. there the Thank And within in from them? I less are Okay. more guess just backlog, those that guess, that the

Andrew Layman

we some weather. nature. our contingencies weather general are very to lot have progress at our of into -- case projects did as being say said, negotiations But, do of type one, that we I we don't in we in contract build in similar in have XXXX. guidance would a that made quite but weather customers the that expect with And occur

Bill Newby

projects spread located are country? to roughly areas and all the of the across kind the same Are they out

JP Roehm

the Bill. JP, is -- same. This roughly We

we have West recurring do Kansas a starts area Coast some have in portfolios and on year. one our geographic year on But we concluded more that's of Iowa, of Illinois, Washington We State this a the and Midwest projects. did the in have diversity We of than little kind projects project the through Nebraska Michigan. balance a Texas, of Ohio and last South wind our in

Bill Newby

that then guess, if And Okay. the $XX Thanks, for to X% assume I'm the getting around year sales, thoughts million. guidance runs you, flow CapEx color. given Andy, the accurate cash JP, there? that seem free Does I of just appreciate any roughly I

Andrew Layman

together, financed We will of most just probably is but our CapEx that leases. go through with

CapEx So million. $X $X is to about the only million real

Bill Newby

Okay.

and Okay. And should know idea some leveraged there? deploy this any debt I of to how that capital of expect how mean much working debt, you're able much be the where of it deploy then to by be to to year preferred, going you time at end the to just on it new the I that goals guess to would some maybe of year, and you any you next

Andrew Layman

Yeah.

to go down will it the of most revolver. So pay

to of we year. didn't expect the levels out within to on it cash of majority for So, use to well the free that don't to as do leverage guidance year. And operations as the the we have from use up the I -- rest revolver put

Bill Newby

lastly and the Okay. runoff in on M&A into costs. And here then left just those expect you the What's on XQ? do

Andrew Layman

only resources integration. the an P&L. The perspective that items been the remaining from of for are to stuff the But will majority majority it has the types already related runoff, we've M&A deployed of of through cost that

Bill Newby

it That's Thanks, it. for right. me. appreciate Okay. All guys. I

JP Roehm

you, Thank Bill.

Operator

of Instructions] Vitanza & [Operator proceed Company. from with Cowen question comes line your with you. Our the Lance next questions. Please Thank

Lance Vitanza

items but this, to typical I is this a taking guys. specific often two-thirds forth? or those second you of amplified for know on Thanks the to quarter. the year EBITDA I revenue Is my the most and the perform in half. the seasonality well of and are write the so that just quarters slow, down. it that I due was you to was congratulations and think Hi, but is I and answered typical so. hardest this seasonally the guess in are business questions -- the mentioned question And recognized trying project seasonality

JP Roehm

for where but of seasonality finalization projects, all end year. good business, progress our we our calendar them, majority that's start a majority of the And not of question. the calendar projects will Yes, through get year. calendar to we'll the year, our of the at of the at beginning That's as typical the the

we overheads. subside, our release begin the to fixed higher, of risk and the and tremendously progressed we which volumes margins are are As able to projects contingencies then to also

Lance Vitanza

Okay.

improvement with it basis weather like for have margin, So and XXX job been been had gross up it nice issues. some it of respect looks the points not year-over-year XXX there to could

we know, was guidance it's target the -- when adjusted you in oranges, to I but the X% can Now margin adjusted for year, your apples of adjusted a what year? look last margin to X.X%, bit your little tell EBITDA EBITDA, forma pro at EBITDA full

Andrew Layman

I Yes, to on we and for to go don’t the -- back nom get didn't full year -- yes, that. you -- wanted

Lance Vitanza

EBITDA EBITDA consistent of seeing margin it the which I XXX growth the I'm actual points performance how should call it normalized to the guess the looks what we related or quarter guidance to out is Is trying that basis margin get good? year just. pretty date, -- side on to with, margin that about guidance gross in first think seen the sort you're of we've the is

Andrew Layman

Yes.

Okay.

Now I understand question. the

of we year. So actually we're the kind plan progressing for as

We margin are see the they the year, We which just whether running did last through that the some revenues growth impacted we projects, very on. margins. low came have were actually also off in -- did on but remaining were

So we towards margin. margins, strong step it's don't a to cut complete the for we're -- better our what expect year QX, to guidance. other than visibility just up in too once our in guidance. in on we've those EBITDA early really progressing have out We get And then pretty

Lance Vitanza

My is question, the helpful. that's on just guess raise. No, I enough. Fair last equity

capital. stock with could per mean versus the why six equity you Could that then bit this in trading were double to wicket. better $XX X as ago, now why play raised talk you $XX now are or not the share, equity I [ph] new a not then you're in and around story, that six months the stock much again? was what of dynamics Let little million about you're us the at the looking have at maybe when me months of presumably perhaps why numbers for raising those

Andrew Layman

Yes. really was flooded JP issues if weather, that us. can I'll kind of performance the projects at were to back end in. now incurred our and we be wind happy the those we major These XXXX. maybe history and of have significant amount in a some of behind go very for XXXX, we costs But additional completion. extreme get with hurt This just projects of -- you start to chime which really, six the are nine our to unusual

independent Board well sheet in the balance we B now business. the start We different as our go provide are directors forward. presented us XXXX right have And position and the consider XXXX. on high kind ensure the the And – of are that and all which hire a at we’re who the pleased look projects in to for several really Guggenheim to with for the directors to the we as additional into we ramp interest unanimously of delever decision. had some as as approved performance for of reassessed the Series we best for we very we the We as felt to has of the equity independent opportunities would start us are to we option liquidity plan the they the new equity to considering expectations need -- XXXX preferred Board sheets where are liquidity and with be the point a well opportunities. got visibility agreed bringing as board had after term And and the our begin full pipeline the as and -- Board into year as to to explaining the shareholders

Lance Vitanza

That’s appreciate much. guys. helpful. very it. Good really I Thanks luck

JP Roehm

Lance. you, Thank

Operator

you. Thank

to the remarks. Mr. have session. like reached turn question-and-answer the over closing our any end I call Roehm would back for We to of

JP Roehm

today. Thank call you. thank like participating you of all I for would to in our

day. If Thank you our This please great call. questions, have additional feel reach to any you. Have out. a concludes

Operator

today's Thank you. This concludes teleconference.

participation this a have wonderful disconnect time. you and You your may Thank day. at for lines your

Infrastructure and Energy Alternatives (IEA) 16 May 192019 Q1 Earnings call transcript