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

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

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

Fourth Quarter Highlights

-- Revenue totaled $520.0 million, an increase of 89% year-over-year.

-- Net income totaled $11.0 million, consistent with the prior-year period.

-- Adjusted EBITDA totaled $47.1 million, or 9.1% of revenues, as compared
to a loss of $18.8 million, or (6.8)% of revenues, in the prior-year
period.

-- Gross margins were 12.9%, as compared to (3.3)% in the prior-year period.

-- Completed an $80.0 million capital raise of Series B Preferred Stock and
warrants to purchase common stock, using the proceeds to reduce
borrowings under the Company's term loan facility and significantly
improve liquidity.

Full Year Highlights

-- Revenue totaled approximately $1.5 billion, up 87% year over year.

-- Net income of $6.2 million, up 46.8% year over year.

-- Adjusted EBITDA of $100.7 million, or 6.9% of revenues.

-- Backlog of $2.2 billion provides excellent visibility into 2020.

-- Raised a total of $180.0 million in Series B Preferred Stock to address
the Company's liquidity needs and reduce outstanding debt.

-- Strong year-end liquidity, including $147.3 million in cash and cash
equivalents.

-- Generated $79.8 million of operating cash flow.

Management Commentary

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

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

Fourth Quarter Results

Revenue for the fourth quarter of 2019 totaled $520.0 million, up $244.1 million, or 89%, from the fourth quarter of 2018. This increase was primarily due to an improvement in weather conditions in the fourth quarter of 2019, which allowed the Company to complete more projects at the end of the year and to start work on several projects that were initially slated to begin in 2020. Revenue increases were also the result of growth in IEA's acquired businesses by $52.2 million compared to the prior year. For 2019, revenue from the Renewables and Specialty Civil Segments represented 57.1% and 42.9% of total revenue, respectively.

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

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

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

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

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

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

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

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

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

Balance Sheet

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

Backlog

Backlog as of December 31, 2019 totaled $2.2 billion, which was approximately the same at the end of the previous year. IEA defines "backlog" as the amount of revenue the Company expects to realize from the uncompleted portions of existing construction contracts, including new contracts under which work has not begun and awarded contracts for which the definitive project documentation is being prepared, as well as the impact of change orders and renewal options.

Outlook

IEA is now a significantly larger and more diversified engineering and construction business. The Company remains confident in its long-term growth outlook, driven primarily by a strong existing backlog, growing pipeline of opportunities and continued tailwinds across all of its end markets.

The Company is reiterating full year 2020 guidance issued in Form 8-K filed on February 20, 2020. IEA continues to anticipate revenue in the range of $1.50 billion to $1.65 billion and Adjusted EBITDA to be in the range of $105.0 million to $125.0 million. For a reconciliation of Adjusted EBITDA and discussion of further adjustments for cost savings and synergies, please see the appendix to this release.

Subsequent Events

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

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

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