IEA - Earnings call transcript Q3 2021 | Infrastructure and Energy Alternatives Inc

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Operator

Good morning, and welcome to Infrastructure and Energy Alternatives Third Quarter 2021 Conference Call. I’d like to note that all participants on today’s call are in a listen-only mode. And with that, I will turn the call over to Kimberly Esterkin, Investor Relations for IEA. Kimberly, please go ahead.

Kimberly Esterkin

Hello, and thank you for joining us today to discuss IEA’s third quarter 2021 financial results. are Moerbeek, President Chief Executive management Officer; Chief Financial from Pete and Vice us JP and Roehm, Executive Officer. With President and

its filings. like the on considered Chief discussion Since press risk can the as EBITDA, reconciliations note update financial law, X, financial Executive IEA’s in JP. Except expectations. turning that, with call yesterday’s November statements Roehm, to release the Company’s presenting the with to measurements and forward-looking I will non-GAAP Before ahead, issued financial factors GAAP IEA should the be obligation XXXX. over Officer. forward-looking statements And be statements over future found after growth the call. some that conjunction by included forward-looking to turn adjusted contains go JP appropriate I’ll management in no would today’s today’s SEC Any as the statements Please call including in references, in about and required release management, be press undertakes to cautionary

JP Roehm

call. morning passage you, infrastructure That’s One everyone. this host for, waiting and certainly forward discussing earnings for to look we’ve exciting to good following conference our to XXXX what federal means thank Well, joining time We appreciate later call. just call all been our of third quarter today’s the Kimberly, the you earnings something in bill. and I IEA

structure. interest believe public approved pleased following reducing of the be made, a conversion our benefit our we to IEA, that warrants. series quarter, I’m and transactions our in have of further expense, that we’ve has warrant of to As million third strong a annual dilution any program, in to our repurchase now and $XX start simplified liquidity this reduced addition announce which been those completed the our increased significantly potential capital improved shareholders a we from Today, our a by will previously Board progress who know Directors had busy which to financial

third quarter to Turning results. the

row, revenues. XXXX achieved a third XX% in accounted record For of second our an revenue followed last QX Renewables compared XX% in increase QX million, quarter $XXX by in a to revenue and the of quarter. At XX% a year-over-year IEA quarter quarter ‘XX or with total $XXX our million has revenue million for We revenue. segment $XXX increased year’s

Our the our solar this in results million the division $XXX solar end revenues seeing install now of at of million the site XX-megawatt in in of those across EPC to solar grew a XXX,XXX solar quarter, we Kentucky. XXXX solar XXXX $XX QX including a capabilities of multiple and from building modules started XXX-acre project In Pike We $XX County, efforts. won projects, to by approximately are million QX year.

Our the work on works and the of includes project. scope mechanical installation electrical all engineering and a civil,

And affordable clean, to hope will that County begin residents. energy conversion to collection solar Clay XXX-megawatt lastly, the We power yet of a the quarter-end, solar We IEA also November well won began full work EPC with scope field projects farms totaling two in as Construction of includes these of farm substation. construction the awarded were provide on Oregon, month. anticipated for next and completion Georgia’s XXX solar September we of megawatts. two in the XXXX. just as in to

quarter. during also progress wind in the We third saw business

project, start scale backlog including of of X.X XXX-megawatt of ago. of was wind the XX and at At in erection County, access wind Renewables IEA $X.X turbine and installation farm construction utility of and system, the of announced, of end previously Huron will generators. That’s self-performing year segment one XXXX, the a of the secured contract roads collection million wind $XX Deerfield As our scope QX in team XX% from Construction EPC private is the a Michigan. increase installation II entire almost XX-mile the construction a miles quarter, billion. the our the

of XX% $XXX Specialty million, segment, the compared of our which Civil revenue. Let Civil by accounted At to for year. quarter’s me now the the decreased on revenue last comment results X% Specialty

of customers projects the and the business pleased of been end and note, value While almost a lower fourth year-over-year our their counts spending environmental result. has have up I third projects. did because at limited to revenue our however, heavy and fewer average down to decreased year, pick revenue have due rail activity primarily bidding rail quarter, of pandemic, rail doubled, civil quarter. both Railcar this as projects our am that markets into of the the a construction freight this for and continued

With and with material industry. the These of past infrastructure that as large well weekend, an improved construction include expect facing supply very bill, delays. as heavy passage new business. labor, Even the for of equipment bill environment civil challenges we there chain are bidding still the the our inflation this infrastructure

does to challenges. the cost protections call delays turning have discuss project wanted I Pete, Before to and over escalations. reduce contractual IEA some our to to these financial exposure

almost or For example, wind the the renewable all owner in turbines solar panels. procures projects, directly

delays. So, price the for owner and responsible is those escalation

the full advanced owner’s or contracts solar equipment material made receive Some purchases account or equipment receive procure keep the generally these as owners mobilization we the to other payments notice. projects Since inflation directly payments, also fund risk In time at we to trackers, high-voltage or at cabling. most use include notice immediately renewable a until receive. our components general, we such

incurred. cost includes large index, based contract and contractual paid long-term time on of at purchasing contract the costs local protections the instances, have other are of award. reduce risk by We in for the ordering materials actual In we fuel help projects a adjustments living for periodic environmental our or other project we as also the

have a of labor perfect these hedge, and also not of we are mitigate equipment much While cost contractual some instances help inflation. incurred they material inflation we had and protections cost have escalation. Similarly, the risk,

that our we staff projects. to able we craft been cost not However, date, material, to the labor been need employ have has and to that

equipment to inflation, increasing overall is the In jobs, construction on the chain to of the properly and addition Renewables clients our cost. challenges supply adverse and It inefficiencies These difficult of these construction near labor they and impacts weather to sequence are unfortunately, naturally reduced discussions delays And review conditions future. are to that segment during the based margins with for our subject inefficiencies delays. make quarter. the companies impact of creating and third expected provide market, it eventually our

margins. mitigate and do so. to fully to and assure I possible, these continue we we’ll We challenges are the you proactively whenever headwinds taking to improve can measures that are needed on these efforts our focused

when two for our Pete? range. challenges, within quarters, revenue you are year. record results. call are would As note we Even turn EBITDA guidance, the I’ll and third we top our these our our so Pete to we reemphasize the the lowering guidance note, also will range that quarter adjusted over now with increasing the revenue remaining about speak are end original to financial will Pete however, Pete to gives but we challenges, achieved reflect I

Pete Moerbeek

investor to third and press morning balance table show to Both release everyone. quarter Thanks, earnings we Form recapitalization XX-Q. release include our we JP, November slide a details filed the good yesterday earnings Last and the we our and XXXX the including transactions posted issued separate August, night, share XXXX completed our on that sheet of on count. presentation impact website our that a in

to million a quarter, third loss IEA recorded compared $XXX For net net XXXX. of million the for of the of $XX income quarter

to compared associated million operating of for revenue our comparison talk JP mentioned from X.X% rainfall moments, of a to chain margin recapitalization and quarters. in anti-dilution few reasons the by Georgia two operating year, the the to The million primary about expenses and $XXX from supply I warrants. This X.X% income inefficiencies quarter XX.X% reduction quarterly but and were with financial in and results better by included $XX.X increased the income our of This income storm-related revenue. the of expenses last that our operating year. in $XX.X believe those a provides I of percentage tropical hurricane Texas million will

showed trend percentage XX.X% decline to in revenue, this Renewables $XX.X quarter year. a the But of from in by margin to prior year from The increased a was as as $XX.X third million. the similar declined million gross margin XX.X% XX.X% margin gross concentrated Our period segment.

technology For higher expenses compared primarily the quarter, million to and expenses, by travel $X.X expenses. last SG&A increased quarter, expenses information overall third year’s compensation from

declined a the of expenses to prior year SG&A in X.X% revenue, to X.X% As percentage period. compared

Interest the from highlights. quarter financial for from third the quarter expense down million the of other million, $XX totaled transactions. $X.X recapitalization the of XXXX, primarily in benefit Some

as ended interest in XX, the At facility. billion fixed letters end as third In a in we $XX.X $XX.X will $XXX.X XX, acquisition a expense. million the million, of semiannual not quarters, were or our quarter entered balance EBITDA sheet the year September take ago. at X.XXX%. finance outstanding obligations from transactions equal compared even of million brought million compared an provide of X.X% the the totaled September When million had third cash availability. X.X% the or definition, credit our capital of of quarter, an $XX.X expect backlog Using $XXX reduction the to and capital for purchases note business. cash add $X.X to revenue revenues annual of credit million amount $XX quarter compared with revenues quarter, operations million expenditures In of $XX.X two flow $X.X of $XX.X our net third expenditures, million XXXX. the successive total that equipment we with has to $XX.X loans Please after debt million of of rate payments totaled decreased the a the for Adjusted million quarter interest-only reporting Other XXXX, the assets backlog unsecured billion equipment. million of quarter and we construction At leases. in $XXX through for cash of our of that in of record in lease included a finance and new $X.X proceeds of of $XXX.X period showed same We XXXX. we debt million, million. leaving at August, of consisted $X.X new we measure notes and We for

XX next approximately the amount months. expect of backlog $X.X to recognize in We that billion

noncash deferred about are to to B million briefly The for and stock dividend significantly the warrants make XX-Q million in quarter $XX.X years early. noncash would yesterday per filed detail the preferred premium of third-party transactions exercised. make-whole is a and cash and the of includes to fair The four which the charge these related shares the over recognized B recorded make-whole total of of almost the few million charge Before years. Included not we anti-dilution value and the million may we Form have for million a expenses last that the charge end comment $XX.X in to $XXX term we that transaction have write-off potential More that traded fair shares had that a refinancing payments to valuation The anti-dilution than fair determined We I turning is of million at warrants. for are preferred also a the and guidance, These B the X.X time the less payments anti-dilution expenses. the engaged fees had million of next Series charge calculations footnote fair as Series would the that warrants liability. the the a the redeemed is be To Series evening. share. $XXX expense from the amount amount determine firm, part found record a discounts $X.X both, loan. X value value been at previous the the to of we want about of the $X.XX publicly amount preferred shares, was issued merger $XX.X the value

anti-dilution income For changes fair and warrants. the reflect our these need value the record to the next five quarters, statement will adjust the change liability to in in that we of

XXXX. a Directors million has spend authorized warrants, IEAWW. share back buy to JP Two of our trade under needed are Board mentioned, us warrants public symbol As for March warrants November stock share XXXX, per XX, $XX which the purchase up to to of to the any expire the will on XX, and time on program will common XX, to XXXX. buyback the March of at IEA $XX.XX on begin expiration The prior

guided Finally, that are to we $X.X year billion, record our two revenue increasing $X.X billion After billion $X.XX range XXXX revenue full guidance. quarters, billion to previously. to to up we $X.X from

adjusted for as million We million narrowing year XXXX to are the million. guidance $XXX $XXX full to to previous $XXX EBITDA our to million range also from $XXX compared

that change your are to a supply this mentioned, will quarter. family for now in fourth Thank and chain direct JP. we wonderful the I holiday the time, result in turn of Junior you that JP hope and challenges I faced is the the the facing quarter third As all back have call season.

JP Roehm

Well, is substantially room Pete. of thank for providing American levels, future. that, for you IEA in the much high accelerating North to from transition The ample very cusp the grow on energy already

the forms While current conditions, very new are improve. construction source top the prospects remain particularly for long-term currently the power chain high of generation. in new of activity cost preferred the renewable bidding at States United continues our here lowest levels. of issues supply And Within mind, and are to continues generation solar all

top posted of our presentation United provides I for highlight along to some wind of goal federal with among remarks my prospects, the domestically, down XXX% for during repowering States opportunities the on state energy. production website clean wind growth second XX power to With wind, want the from efforts the investor Wood third, with Mackenzie of and now XXXX governments, XXXX. detailed November wind and Department through the our market more our new today. Beginning doubling local of a explanation ranks a their briefly While Energy, on capacity top are globally energy deploy markets

since XXXX, XXXX revenue Solar largest industry for upward to was growth is industry expected trend growth an the is the on in smaller. a when see XX% annual and substantially year-over-year the

position, solar advocating of the U.S. utility where is of from include up gigawatts to be solar leading nonrenewable drivers energy, as a goals, anticipated over IEA goals generation to The is provided forms add that of market XXXX, years. well their versus prior the generation. electricity Importantly, building corporate a XX% Solar Energy increased offtakers is competitive five a of significant XXX meet expectations Key ESG in by Association, of PV, should farms in next XX% of electricity SEIA, which emissions Industries economics or as goals state and energy At and The states present, renewable energy services D.C. than federal that IEA for requirements. that of portfolio stringent government. provides renewable some more EPC reduction of the standards, XX clean means clean call Washington, invested billions utility-scale larger recipients in will energy wind represents cost and be between XX% XX% be of and will on solar project. the That new that one average of have dollars the generation. of renewables the of IEA of increase

panels do growth project the turbines the owners for and nor any have projects able As solar the renewables risk, to any projects, industry. from CapEx of we’re in we while not typically benefit the significant procure of wind technological the

of a independent power if and of for owners course, renewable have some project they construction producers only of overall will certainty the cost Of contract project. the the

date of issues that start the that supply uncertainties In affect addition other projects. have to renewable inflation there chain and we near-term discussed, two may are the

and procure owner’s panels. The result a solar may to in the first ability issues is tariff slowdown that in regulatory

solar While the a panels on it as the tariffs. has February Biden by end XXXX, expire will the these set will on current to that to extend are November said decision of tariffs announce administration whether it X,

limit addition, Southeast the this solar Commerce and severely countervailing a Asian would at announce Chinese In of panels on import scheduled month decision is petition coming of that the the also to an of from antidumping Department end countries.

The XXXX. applies applies and is projects Back proposed potential wind projects PTC, extended legislation the Better through and second to Build solar XXXX the ITC the to extends through which The the which uncertainty ITC, PTC for credits. currently

currently forecast XXXX. scale Better original scale times Wood better, extensions, wind solar production the and installations increasing by XXXX. in base for these be by Build now adopted, legislation overall from outlook even expects for The utility capacity were for its between are in installations their expectations Mackenzie expectations if than larger Back XXXX, they that proposed Their Mackenzie solar XX% utility is Wood With were will X XX%. up

While decided, for there has benefits is the renewable support yet for tax projects. the status legislation broad not additional

including of coal years. United requirements significant investment ponds require work the to clean continues and business, side Particularly will ash the mitigate environmental risk XX federal the provide to growth to environmental state our opportunities. unwind next Southeastern to renewables, over Specialty States, in Beyond Civil up XX

the additional coal is the the down gigawatts XXX the landfills more in and Last U.S. existing of power of next impoundment X.X shut be and The early its many gigawatts decade, over There has than XX less of coal years. expectation X.X or plants last retired decommissioned XX United its opportunity coal Over in to announced or the States, this power expectations retirement were XX% retire date. will XX% coal-fired of plants. that about existing year, is plans with nearly than stages with to demolished remediated ash to of year. remains

ash discussions in potential several are We on with pond clients projects. remediation full

federal Our coal $XX dollars With many and billion to dedicated funding, where of a over other upgrades, billion highway public this relevant of Bipartisan state discussion our see next IEA upgrades, areas and billions of a billion local five very in of areas runway will our ahead began. to this business. we passenger in electrical government provides rail certainly In end the in expertise The $XX $XXX freight for communities, and and support than benefit will and grid at strong more we across the infrastructure. business. the Bill. ash I years, in removal be increased to passage legislation Infrastructure

our you you for concludes for call please progress remarks before prepared certainly third continuing quarter While today. open joining bill on along this questions? us time forward we the morning our Operator, would Thank revenues, to up impact call. the an for the share some our federal our will This infrastructure way. sees take to it to look

Operator

Thank you. Thalhimer Thompson Our Davis. from first [Operator Instructions] Adam with question is

Adam Thalhimer

S-X guys some night. wanted the give timing I details questions had that I to last from filed there? the of actually start on related us that. Can to some you clients you

Pete Moerbeek

shares, not when a The This basically Ares XX some The shares XX.X They Those the time except Sure, the We more of own outstanding shares. within because is to own was that in right ownership transactions. the take million would the but of is the that They transactions XX% million structured X.X we they requirement we vote to XX%, they cannot also all filed about at the registered that of at days. the close that Pete. active than that it S-X own of S-X Adam. real an do. what is total which cases. were way their the warrants exactly Ares procured warrants. X% certain are shares S-X file difference tractions up did

is of Ares transactions. for selling XX restricted And original So, this part was the from from any months transaction. just the shares

So, why this there’s we nothing unique point. filed S-X at in the

Adam Thalhimer

press bidding this your the thoughts up up. clearing renewables little I on year? Okay. and Thanks end and JP, the at bit a for then, end on that might of backlog And wanted the where you to

JP Roehm

Well, obviously, I mean, at where is currently. we’re very backlog happy the

week, pre-pandemic I tell to a bid a of kind return Our our levels. list calendar. get can And bidding you that environment Every is kind it’s personally very I strong. of of

‘XX strong. is backlog, see already and bidding out continuing a strong So, in the but opportunities we’re have We strong beyond. to

Adam Thalhimer

for on issues they’re supply you’re chain wind pretty curious well just I’m the issues, chain solar. And side? seeing supply the advertised then, Okay. if

JP Roehm

the or portions I’d seeing and business. -- every -- of area almost business the chain -- almost supply we’re in area of issues other resource in say almost

find trying just instance, just material. plain equipment, old or equipment trying construction period, find construction for For equipment, rental parts to to construction

different readily up to across materials were was pipe before. We’re materials from common hand construction pretty the once having once order what we’re that finding pick pretty many a country trucks send literally on or hand, to other on many, to local

XX ocean foreign. costs, that X thing business, one months than the what we’re domestic tremendous the times to our ago. area is escalation another X X of in -- greater also In costs and We’re they we’re were seeing both seeing across to shipping shipping

Adam Thalhimer

dying has a some these season, but do crystal of XXXX the that down ball, for you Nobody construction challenges? see

JP Roehm

sitting seats mean our sits these thing. is we’re everybody thinking E&C and I crystal the getting Pete in everybody in same I ball industry the like these and here out. doing are calls And

be most continue. chain supply be to of going obviously, normal. normal. it what’s hope But inflationary and will the transitory some to to will that what’s trying return of escalations, effects We’re in new a out We these particularly of to and going labor,

as call So, release obviously the get to comes in ahead on if didn’t question, and just don’t and to. anything it and ‘XX we’re -- prepared out, we aren’t this we of --

I what environment think industry, the all trying like ‘XX this of and here peers gauge like, given to sitting we’re our in in. looks we’re that

Operator

Dilts next Our Noelle Please question from is Stifel. with proceed.

Noelle Dilts

should ask basis the looking question to in points a third ‘XX, were about good, kind -- going same pretty for question XXXX, XX look should we impact mean, term when for and just am maybe kind margins, impacts But the productivity? guidance, or on is relative we sequencing below type they’re some picture about at of I longer seeing quarter, tremendous. And course, think to should into you’re think look fourth I of Thanks. into that level when about from they’re with guess, drag how we talked about some sort the we delays Of of the of implied targets at quantifying how persisting quarter your bigger what of of. still but the and we I that not of to the renewables? question think margin XXXX? the broader that you’ve or same I looked about you’ve some impacts XXX

JP Roehm

previous I question, a for term. again, back wish crystal Well, going it’s I the ball. persist think had the we near And to to

hope well subside. they’re mid-’XX -- today, sitting those alive very effects are some apparent. still we here think, and that of to start they by I But

immediate otherwise And in near for to say that term. so, difficult it me would things the change are be to going

Noelle Dilts

that higher look new at you for inefficiencies, account these to new the are I improved then, projects coming and the contracts question for And you not or when of the are other yet? pricing some labor market quite of some there maybe seeing is the -- to costs bid, up some is guess, or

JP Roehm

Well, pricing? we do right? on? tell I process How is. price the get question can can a to do revise you you What our we this best -- lot, you your what

the escalation that -- to quarterly our we’re every operations And about part process, effects before our only current talked monthly environment. seeing as is all as month a all forward, that to and and heavily to close of previous that, date and we -- to process. is Our that as but involved we not estimating And our that teams coming we’ve and is in estimating bid in seeing preconstruction bidding think calls, we’re the in -- the are real department. time in I try try go involved

say internally that market and that I’m trying trying of opportunities. to So, newest data passing along with certainly bid kind is to we’re what propose our information on the latest

Operator

Davidson. Please question is with D.A. Our Zane proceed. Karimi from next

Zane Karimi

the you’ve update can wind you and an on that’s from provide with to how I team maintenance us GE, for date? Your the off, added First business? objectives performing think

JP Roehm

calls my for with that would Yes. publicly year We’ve unit. remarks anything not from just question. I previous Good and performances cut out business their first previous expectations. separate reiterate about

we their forward. any together put we business they’ve I’ll of management’s data. from continue ‘XX short plan certainly I’ve tell that and management But And met in certainly So, for XXXX. stopped to of in of believe in that kind perspective, releasing you the expectations what

happy with progress. So, the very we’re

between XXX XXX that still technicians and somewhere continuing think well we’re group I in now.

nicely. quite up scaling it’s So,

Zane Karimi

we you. the long-term But you. I understand it’s for think trajectory Thank you talked things, we along ash it’s the of unique in bit a think few about opportunity Got years? and that. about And a little know remediation next but implications, the business can growing you today. of it for side coal the I how kind of the

JP Roehm

Well, in of opportunities, see of opportunities what pipeline the of our a there’s think over from years. plethora I we next couple certainly

these that balances, get always the of these in issue assistance has to anybody think else many business kind in or self that don’t that states, you costs. of in I regulatory our

this for of -- is utility. policy a obviously, the So those producer revenue in though not federal it’s kind even driven, a

or delay unfortunately those more the us think of over in manageably road business the any of is continue plenty us to and than many would those in that think to the next said, like. there industry I of So, years. of grow down more, being or industry I couple opportunity -- our the this can think But kick I for

Operator

We have reached end the session. over back of question-and-answer Roehm like to the JP our would comments. to conference closing I for turn

JP Roehm

you, look QX quarterly operator. joined to as year-end. we all that’s every we our one call. for of report Well, thank QX each you thank us and in March you forward We again And having early us on of and join

and see you very safe joyous thank And So, holiday again Have all. season. a you. we’ll you all in Thank March.

Operator

conclude today’s does conference. you. This Thank

for at your your You lines time. this you thank participation. And may disconnect

Infrastructure and Energy Alternatives (IEA) 9 Nov 212021 Q3 Earnings call transcript