ANN UAL REPO RT
2020 Infrastructure and Energy Alternatives, Inc.
Letter to Stockholders
March 26, 2021
To Our Fellow Stockholders:
2020 was a challenging year affecting us all personally and professionally. As IEA’s business is
considered essential infrastructure, we were able to continue our operations in the midst of a
global pandemic. Fortunately, thanks to our exceptional team and adherence to the utmost
health and safety standards, we were able to successfully weather the storm and achieve a
significant amount of growth for our company. I would like to thank all of our employees, our
Board and our stockholders for your strong support over the past year.
Many Accomplishments in 2020
For IEA, this past year was one of many achievements. Financially, we achieved record revenue
and profitability, as measured by adjusted EBITDA, despite the pandemic. Operationally, we
implemented a number of COVID-19 protocols to provide the maximum protection to our
construction teams.
Our safety performance improved as we again set a company-record low and below industry-
average of 0.61 for our total reportable incident rate (TRIR) based on almost 8.5 million hours
worked. TRIR is a statistic used by OSHA and our clients to track recordable safety incidents.
For comparison purposes, in 2019, our TRIR was 0.87 with 6.5 million hours worked.
As many of our customers and governmental agencies continue to work from home, our ability
to book new business has required more effort and taken longer than in the past. That said, we
ended 2020 with $2.1 billion in backlog, down very slightly from the end of 2019.
Capital Market Activities
We added a number of institutional holders to our stockholder base in February 2021 through
the successful completion of a common stock offering. When IEA became a publicly listed
company on the Nasdaq in March of 2018, our private equity sponsor, Oaktree Capital, owned
almost half of our outstanding common stock. That changed when Oaktree sold almost all of
its shares. As a result, even after exercising their warrants, Oaktree would own less than two
million shares of IEA.
Strong Commitment to ESG
This past year IEA was added to three ESG indices, validating our commitment to sustainability
best practices. As a leader in the renewable energy space, our mission, employees, and
stakeholders are all naturally aligned with advancing clean energy solutions as the primary
source of power in America.
As one of the leaders in the construction of renewable sources of power, we have contributed
significantly to our country’s move toward carbon neutrality. Since launching our renewables
business over 20 years ago, we have cumulatively completed over 21.4 gigawatts of capacity
in wind construction, wind repower, and solar construction projects. This figure equates to
powering an estimated 6.4 million homes in the US each year.
We are also making significant investments in our employees and our overall company culture
to drive best social practices for our industry. We believe that our diverse and inclusive
workplace is essential to our success, and we continue to enhance our initiatives in diversity
and inclusion (D&I). In 2020, we appointed our first head of D&I, established a diversity and
inclusion leadership structure, and instilled initiatives to increase diversity in our workplace
and among our suppliers. As part of these efforts, we are supporting opportunities for
minority groups in order to establish their presence and build successful careers.
From a governance standpoint, recently we have added two new, fully independent directors
to our Board. We are preparing our inaugural ESG Report which will be issued in the coming
weeks.
Growth Opportunities in 2021 and Beyond
As we look forward to 2021, we see many opportunities to expand our business. Our
country’s continued emphasis on environmental improvements should create significant
opportunities for IEA in the coal ash remediation space. There are over 700 coal ash
impoundments and landfills in the US today, but only 15 percent have been closed or
remediated. IEA is one of the few companies that has the experience and financial
wherewithal to be a major player in coal ash remediation.
Another key component in reducing carbon emissions is freight and commuter rail. The
Association of American Railroads has stated that railroads are three to four times more fuel
efficient than semi-trucks. Future legislation funding transportation infrastructure would also
benefit IEA over the next several years.
We see significant opportunities across our renewables business. The new Administration has
made the reduction of the country’s carbon footprint a major focus. This drive at the federal
level should create opportunities for new utility-scale solar and wind construction projects for
the next decade.
At present, the best way toward renewable power generation requires the construction of
facilities wind or solar accompanied by sufficient storage capabilities. That is the core of our
business, and IEA is one of the few opportunities for equity investors to participate in this
market. In the past year, we added a wind renewable services platform that we expect will
provide on-going revenues and allow us to interact and demonstrate our capabilities to both
current and prospective customers on a regular basis.
IEA Built for Continued Profitable Growth
2020 was an unprecedented year, but through a combination of strong financial performance
and dedication to our employees and our customers, IEA remained resilient. Going forward,
our focus on improved financial performance, strong cash flow generation, and the
consistent development of new business opportunities will be key contributors to the
strength of our company and value of our stock.
Sincerely,
JP Roehm
President, Chief Executive Officer and Director
"I'd put my money on the sun and solar energy, What a source of power." Thomas Edison
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☑
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO ________
COMMISSION FILE NUMBER: 001-37796
Infrastructure and Energy Alternatives, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction
of Incorporation)
6325 Digital Way
Suite 460
Indianapolis, Indiana
(Address of Principal Executive Offices)
47-4787177
(IRS Employer
Identification No.)
46278
(Zip Code)
Registrant’s telephone number, including area code: (800) 688-3775
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Exchange on Which Registered
Common Stock, $0.0001 par value
Warrants for Common Stock
IEA
IEAWW
The NASDAQ Stock Market LLC
The NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes þ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes þ No
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 ☑ 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes þ No
The aggregate market value of the registrant’s outstanding Common Stock held by non-affiliates of the registrant computed by reference to the price at which the
Common Stock was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $43.5 million on
June 30, 2020. The registrant, solely for purposes of this required presentation, deemed the Board of Directors, Executive Officers and Infrastructure and Energy
Alternatives, LLC as affiliates.
Number of shares of Common Stock outstanding as of the close of business on March 8, 2021: 22,905,031.
Portions of the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A for the 2020 annual
meeting of shareholders is incorporated by reference in Part III of this Form 10-K to the extent stated herein.
Infrastructure and Energy Alternatives, Inc.
Table of Contents
PART I
Item 1
Business
Item 1A
Risk Factors
Item 1B
Unresolved Staff Comments
Item 2
Item 3
Item 4
Properties
Legal Proceedings
Mine Safety Disclosures
PART II
Item 5
Item 6
Item 7
Market for the Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A
Quantitative and Qualitative Disclosures About Market Risk
Item 8
Item 9
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A
Controls and Procedures
Item 9B
Other Information
PART III
Item 10
Directors, Executive Officers and Corporate Governance
Item 11
Executive Compensation
Item 12
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
Item 13
Certain Relationships and Related Transactions, and Director Independence
Item 14
Principal Accounting Fees and Services
PART IV
Item 15
Exhibits and Financial Statement Schedules
Item 16
Form 10-K Summary
SIGNATURES
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Forward-Looking Statements
This Annual Report on Form 10-K (“Annual Report”) 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. Other than statements of historical fact included in
this Annual Report, all statements regarding expectations for future financial performance, business strategies, expectations for
our business, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives
and beliefs of management are forward-looking statements.
These forward-looking statements are based on information available as of the date of this Annual 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 factors
that could cause actual results to differ include:
•
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•
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•
•
•
•
•
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•
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potential risks and uncertainties relating to 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 permitting and
project construction cycles, the U.S. economy 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;
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 equipment, fuel, materials, labor and other costs;
our beliefs regarding the state of the renewable energy market generally; and
the “Risk Factors” described in this Annual Report, 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.
3
ITEM 1. BUSINESS
Business Overview
PART I
Infrastructure and Energy Alternatives, Inc., a Delaware corporation (‘‘IEA’’, the ‘‘Company’’, ‘‘we’’, ‘‘us’’, or
‘‘our’’) is a holding company that, through various subsidiaries, is a leading diversified infrastructure construction company
with specialized energy and heavy civil expertise throughout the United States (“U.S.”). We were founded in 1947 as White
Construction and we became a public company in March 2018 when we merged with a special purpose acquisition company.
Our Common Stock trades on the NASDAQ Capital Market under the symbol ‘‘IEA’’.
The Company specializes in providing complete engineering, procurement and construction (“EPC”) services
throughout the U.S. for the renewable energy, traditional power and civil infrastructure industries. In 2019, Engineering
News-Record (“ENR”) ranked IEA as the 2nd leading provider of wind EPC services based on revenue. These services
include the design, site development, construction, installation and restoration of infrastructure. We believe we have the
ability to continue to expand these services to leverage our expertise and relationships in the wind energy business to provide
additional infrastructure solutions to the clean energy markets.
The acquisitions we made in 2018 have expanded our construction 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. See Note 2. Merger and Acquisitions in the notes
to the audited consolidated financial statements for more information on the acquisitions.
Reportable Segments
The Company operates its business in two reportable segments:
Renewables Segment
The Renewables segment operates throughout the U.S. and specializes in a range of services that include full EPC
project delivery, design, site development, construction, installation and maintenance of infrastructure services for the wind and
solar industries.
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 has become a cost-
effective solution for the creation of new generating capacity.
Specialty Civil Segment
The Specialty Civil segment operates throughout the U.S. and specializes in a range of services that include:
•
•
•
Environmental remediation services such as site development, environmental site closure, outsourced contract
mining and coal ash management services.
Rail Infrastructure services such as planning, design, procurement, construction and maintenance of
infrastructure projects for major railway and intermodal facilities.
Heavy civil construction services such as road and bridge construction, specialty paving, industrial
maintenance and other local, state and government projects.
4
Strategy
The key elements of our business strategy are as follows:
Retention of strong relationships with our customers to expand services offered — We believe that we have strong,
long-term relationships with each of our customers and have historically worked together with them to meet their needs. By
leveraging our established relationships with these customers, we intend to provide expanded products and services that will
continue to diversify our revenue streams and assist our customers with their business strategies.
Maintain Operational Excellence — We have a continual focus on maintaining operational excellence, which
includes the following:
•
•
•
•
Quality - We believe in satisfying our clients, mitigating risk, and driving improvement by performing
work right the first time.
Technical Expertise - We have an established reputation for safe, high quality performance, reliable
customer service and technical expertise in constructing technically demanding projects.
Safety - We believe the safety of our employees, the public and the environment is a moral obligation as
well as good business. By identifying and concentrating resources to address jobsite hazards, we
continually strive to reduce our incident rates and the costs associated with accidents.
Productivity - We strive to use our resources efficiently to deliver work on time and on budget.
Ownership of Equipment — Many of our services are equipment intensive and certain key equipment used by us is
specialized or customized for our businesses. The cost of construction equipment, and in some cases the availability of
construction equipment, provides a significant barrier to entry into several of our businesses. We believe that our ownership
and if needed, ability to lease a large and varied construction fleet at a reasonable cost, enables us to compete more
effectively by ensuring availability and maximizing returns on investment of the equipment.
Maintain a strong balance sheet and an optimal capital structure — We believe that continued focus on our capital
structure provides our customers, our lenders, and our bonding companies assurance of our financial capabilities. We will
continue to focus on optimizing our capital structure in order to find the best mix of debt and equity financing that can
maximize the Company's market value while minimizing our cost of capital. We maintain a revolving credit facility to
provide letter of credit capability and, if needed, to augment our liquidity needs.
Future Strategic Acquisitions and Arrangements — We will continue to pursue selected and opportunistic
acquisitions, that fit our strategy of acquiring businesses with complementary cultures, niche market capabilities, excellent
relationships with blue chip customers and strong, proven management teams that are retained post acquisition.
Customers
We have longstanding customer relationships with many established companies in the renewable energy, thermal
power, environmental remediation, civil and industrial power industries, with a recurring base of blue-chip utility customers,
as well as with original equipment manufacturers that produce the equipment for our business. We have completed
renewable projects for top U.S. developers and owners, rail infrastructure projects with top tier railroads and heavy civil
construction projects with many government agencies.
Although we are not dependent upon any one customer in any year, a relatively small number of repeat customers
constitute a substantial portion of our total revenues. Accordingly, our senior management is responsible for developing and
maintaining existing relationships with customers to secure additional projects and increase revenue from our current
customer base. We believe that our strategic relationships with customers will result in future opportunities. Our
management is also focused on pursuing growth opportunities with prospective new customers.
5
The Company had the following approximate revenue and accounts receivable concentrations, net of allowances, for
the periods ended:
Company A (Renewables Segment)
Company B (Specialty Civil Segment)
———
* Amount was not above 10% threshold.
Revenue %
Accounts Receivable %
Year Ended December 31,
December 31,
2020
2019
2018
2020
2019
*
*
*
10.9
21.0
*
*
*
*
*
Our work is generally performed pursuant to contracts for specific projects or jobs that require the construction or
installation of an entire complex of specified units within an infrastructure system. Generally, customers are billed monthly
throughout the completion of work on a project; however, some contracts provide for additional billing upon the
achievement of specific completion milestones, which may increase the billing period to more than one month. Many
contracts may include retainage provisions under which, generally, from 5% to 10% of the contract price is withheld until the
work has been completed and accepted by the customer.
We believe that our industry experience, technical expertise and reputation for customer service, as well as the
relationships developed between our customers and our senior management and project management teams are important to
our being retained by our customers.
Backlog
Estimated backlog represents the amount of revenue we expect to realize in 2021 and beyond 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. These contracts are included in backlog based on the estimated total contract price upon
completion.
The following table summarizes our backlog by segment for December 31:
(in millions)
Segments
Renewables
Specialty Civil
Total
December 31, 2020
December 31, 2019
$
$
1,513.4 $
556.1
2,069.5 $
1,582.5
588.7
2,171.2
We expect to realize approximately $1,628.9 million of our estimated backlog during 2021 and $440.6 million during
2022 and beyond.
Based on historical trends in the Company’s backlog, we believe awarded contracts to be firm and that the revenue for
such contracts will be recognized over the life of the project. Timing of revenue for construction and installation projects
included in our backlog can be subject to change as a result of customer delays, regulatory factors, COVID-19 pandemic,
weather 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 market 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 revenue and earnings and may not result in actual revenue or profits.
Backlog is not a term recognized under U.S. GAAP, although it is a common measurement used in our industry.
Backlog also differs from the amount of our remaining performance obligations, which are described in Note 1 - Business,
Basis of Presentation and Significant Accounting Policies in the notes to the consolidated financial statements.
Additionally, our methodology for determining backlog may not be comparable to the methodologies used by others. See
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‘‘Risk Factors’’ for a discussion of the risks associated with our backlog. As of December 31, 2020, total backlog differed
from the amount of our remaining performance obligations primarily due to the inclusion of contracts that were awarded but
not yet fully executed.
Competition
We compete with a number of companies in the markets in which we operate, ranging from small local independent
companies to large national firms, and some of our customers employ their own personnel to perform some of the services we
provide.
The primary factors influencing competition in our industry are price, reputation, quality and delivery, relevant
expertise, adequate financial resources, geographic presence, high safety ratings and a proven track record of operational
success. We believe that our national platform, track record of completion, relationships with vendors, strong safety record and
access to skilled labor enables us to compete favorably in all of these factors. We also believe that our ability to provide
unionized and non-unionized workforces across a national footprint allows us to compete for a broad range of projects. While
we believe our customers consider a number of factors when selecting a service provider, they award most of their work
through a bid process. We believe our safety record, experience, quality of service and price are often principal factors in
determining which service provider is selected.
Seasonality
Our revenues and results of operations can be subject to seasonal and other variations. These variations are
influenced by weather, customer spending patterns, bidding seasons, receipt of required regulatory approvals, permits and
rights of way, project timing and schedules and holidays. See ‘‘Management’s Discussion and Analysis of Financial
Condition and Results of Operations-Impact of Seasonality and Cyclical Nature of Business.’’
Safety and Insurance/Risk Management
We strive to instill and enforce safe work habits in our employees, and we require that our employees participate in
training programs relevant to their employment, including all those required by law. We evaluate employees in part based
upon their safety performance and the safety performance of the employees they supervise. Our business units have
established robust safety programs to encourage, monitor and improve compliance with safety procedures and regulations
including, behavioral based safety, jobsite safety analysis, site-specific safety orientation, subcontractor orientation, site
safety audits, accident and incident safety investigations, OSHA 30-hour and 10-hour training, drug and alcohol testing and
regular trainings in fall protection, confined spaces, crane rigging and flagman, first aid, CPR and AED, among others.
Our business involves the use of heavy equipment and exposure to potentially dangerous workplace conditions.
While we are committed to operating safely and prudently, we may be subject to claims by employees, customers and third
parties for property damage and personal injuries that occur in connection with our work. We maintain insurance policies for
worker’s compensation, employer liability, automobile liability, general liability, inland marine property and equipment,
professional and pollution liability, excess liability, and director and officers’ liability. See Note 9. Commitments and
Contingencies in the notes to the audited consolidated financial statements.
Our business may subject us to the risk of adverse site conditions and unfavorable weather. While we mitigate these
risks contractually to the extent possible, market conditions prevent us from fully passing these risks to our customers, and
there is not a robust insurance market to cover these risks. While we have evaluated the feasibility of insurance products to
mitigate weather risk, we do not believe that the current insurance market offers commercially practicable solutions to
protect the Company against significant losses caused by adverse weather.
Suppliers and Materials
Under many of our contracts, our customers provide the necessary materials and supplies for projects, such as wind
turbines, and we are responsible for the installation, but not the cost or warranty of those materials. Under certain other
projects, we purchase the necessary materials and supplies on behalf of our customers from third-party providers. We are not
dependent upon any one vendor and have not experienced significant difficulty in obtaining project-related materials or
supplies as and when required for the projects we manage.
We utilize independent contractors to assist on projects and to help manage our work flow. Our independent
7
contractors typically provide their own vehicles, tools and insurance coverage.
We bear some risk of increases in the price of materials and supplies used in the performance of our work, such as
aggregate, reinforced steel, cable, and fuel. These risks are managed contractually, by entering into contracts with suppliers that
fix the price paid by the Company within the budget established for a project, or by passing the risk of commodity cost
increases to the customer.
Regulation
Our operations are subject to various federal, state, and local laws and regulations including:
•
•
•
•
•
•
•
licensing, permitting and inspection requirements applicable to contractors, electricians and engineers;
regulations relating to worker safety and environmental protection;
permitting and inspection requirements applicable to construction projects;
wage and hour regulations;
regulations relating to transportation of equipment and materials, including licensing and permitting
requirements;
building and electrical codes; and
special bidding, procurement and other requirements on government projects.
We believe we have all material licenses and permits needed to conduct operations and that we are in material
compliance with applicable regulatory requirements. However, we could incur significant liabilities if we fail to comply
with applicable regulatory requirements.
Environmental and Climate Change Matters
We are also subject to numerous environmental laws, including the handling, transportation and disposal of non-
hazardous and hazardous substances and wastes, as well as emissions and discharges into the environment, including
discharges into air, surface water, groundwater and soil. We also are subject to laws and regulations that impose liability and
cleanup responsibility for releases of hazardous substances into the environment.
The potential impact of climate change on our operations is highly uncertain. Climate change may result in, among
other things, changes in rainfall patterns, storm patterns and intensity and temperature levels. Our operating results are
significantly influenced by weather and major changes in historical weather patterns could significantly impact our future
operating results. For example, if climate change results in significantly more adverse weather conditions in a given period, we
could experience reduced productivity and increases in certain other costs, which could negatively impact revenues and gross
margins.
Production Tax Credit (the ‘‘PTC’’) and Investment Tax Credit (‘‘ITC’’)
In light of changes in federal government priorities and the cost-competitiveness of wind and solar power production,
certain of the tax credits for production of renewable energy are phasing out. The Consolidated Appropriations Act of 2016
(‘‘CAA’’), which contains certain federal tax incentives applicable to the renewable energy industry, provided for the gradual
elimination of certain of these incentives. In December 2020, the federal government implemented an agreement that extended
lapsed and expiring tax breaks. The extension provides a one year extension of the PTC for wind projects at a 60% level for
projects that begin construction on or before December 31, 2021 and a two year extension of 26% ITC for projects that begin
construction before January 1, 2023 and 22% ITC for projects that begin construction before January 1, 2024 for all solar
projects placed into service prior to December 31, 2025.
Employees
As of December 31, 2020, we employed 745 salaried employees and 2,627 hourly employees. The total number of
hourly personnel employed is subject to the volume of specialty services and construction work in progress.
We believe that our employees are the most valuable resource in successfully completing our projects. Our ability to
maintain sufficient, continuous work for hourly employees helps us to maintain a stable workforce with a loyalty to and an
understanding of our policies and culture and contributes to our strong performance, safety and quality record. Our talent
acquisition team uses internal and external resources to recruit highly skilled and talented workers, and we encourage employee
referrals for open positions. In addition, we have partnerships with technical schools where we recruit and hire craft employees.
8
We employ a dynamic mix of people to create the strongest company possible. Our policy forbids discrimination in
employment on the basis of age, culture, gender, national origin, sexual orientation, physical appearance, race or religion. We
are an inclusive, diverse company with people of all backgrounds, experience, culture, styles and talents.
As part of our compensation philosophy, we believe that we must offer and maintain market competitive total rewards
programs for our employees in order to attract and retain superior talent. In addition to base wages, additional programs include
annual bonus opportunities, a Company matched 401(k) Plan, healthcare and insurance benefits, health savings and flexible
spending accounts, paid time off, family leave, flexible work schedules, and employee assistance programs.
We strive to develop and sustain a skilled labor advantage by providing on and off-site training programs, project
management training, and leadership development programs. Our leadership development program is designed to further
develop each participant’s leadership skills and requires program participants to challenge themselves and their peers as they
progress.
We are committed to the health, safety and wellness of our employees, and we pride ourselves on above-average
workplace safety. We track and maintain several key safety metrics, which senior management reviews monthly, and we
evaluate management on their ability to provide safe working conditions on job sites and to create a safety
Available Information
Our principal executive offices are located at 6325 Digital Way, Suite 460, Indianapolis, Indiana 46278, and our
telephone number is (800) 688-3775. Our website is located at www.iea.net. We make available our periodic reports and other
information filed with or furnished to the Securities and Exchange Commission (the “SEC”), including our annual reports on
Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, proxy statements, and all amendments to
those reports, free of charge through our website, as soon as reasonably practicable after those reports and other information are
electronically filed with or furnished to the SEC. Any materials filed with the SEC may be read and copied at the SEC’s website
at www.sec.gov.
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ITEM 1A. RISK FACTORS
Risk Factor Summary
Below is a summary of the principal factors that make an investment in IEA and our Common Stock speculative or
risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk
factor summary, and other risks that we face, can be found below, after this summary, and should be carefully considered,
together with other information in this Annual Report on Form 10-K and our other filings with the SEC before making an
investment decision regarding IEA and our Common Stock.
Risks Related to IEA:
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Our business is seasonal and is affected by adverse weather conditions and the spending patterns of our customers,
exposing us to variable quarterly results.
Our failure to recover adequately on claims against project owners, subcontractors or suppliers for payment or
performance could have a material adverse effect on our financial results.
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.
Our business is affected by delays, which could increase our costs and reduce profitability.
• We may be unable to obtain sufficient bonding capacity to support certain service offerings, and the need for
performance and surety bonds may reduce our availability under our Third A&R Credit Agreement.
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Our business is subject to physical hazards that could result in substantial liabilities for us which could materially and
adversely affect our business, financial conditions, profitability and growth prospects.
• We are self-insured against certain potential liabilities.
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Our failure to recover adequately on claims against project owners, subcontractors or suppliers for payment or
performance could have a material adverse effect on our financial results.
Acquisition activity presents certain risks to our business, operations and financial positions, and we may not realize
the financial and strategic goals contemplated at the time of a transaction.
If we are unable to attract and retain qualified and skilled employees we will be unable to operate efficiently, which
could reduce our revenue, profitability and liquidity.
Our business benefits from economic incentives and governmental policies. A significant change in these incentives
and policies could adversely affect our business, financial conditions, results of operations, cash flows and growth
prospects.
• We derive a portion of our revenues from government contracts which pose risks of inadequate funding and
competitive bidding processes,
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Amounts included in our backlog may not result in actual revenue or translate into profits.
• Many of our customers are regulated by federal, state and local government agencies, and the addition of new
regulations or changes to existing regulations may adversely impact the demand and profitability of our services.
• We recognize revenue from installation/construction fixed price contracts using the cost-to cost input method
(formerly known as percentage-of-completion method); and variations of actual results from our assumptions may
reduce our profitability.
• We derive a significant portion of our revenue from a concentrated base of customers, and the loss of a small number
of our significant customers, due to decreased demand or otherwise, could impair our financial performance.
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Certain of our businesses have employees subject to collective bargaining agreements; any related obligations to such
agreements could adversely affect our business, financial condition, profitability and growth prospects.
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Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other
tax returns could adversely affect our financial condition and results of operations.
• We rely on information, communication and data systems in our operations, and systems and information technology
disruptions could adversely affect our ability to operate and could result in harm to our reputation.
Risks Related to Our Capital Structure
• We have a significant amount of debt, and our substantial indebtedness could adversely affect our business, financial
condition, results of operations and our ability to meet our payment obligations.
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Our Third A&R Credit Agreement, the Series A Preferred stock and Series B Preferred Stock impose restrictions on us
that may prevent us from engaging in transactions that might benefit us.
There may be future sales of our Common Stock or other dilution of our equity that could adversely affect the market
price of our Common Stock.
• Mohsin Meghji has significant ability to influence corporate decisions.
• Ares and the Ares Parties may have the ability to influence certain corporate decisions through their ownership of
Common Stock obtainable upon conversion of the Series A Preferred Stock and the exercise of rights, including under
the respective certificates of designation for the Series A Preferred Stock and Series B Preferred Stock.
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Our liquidity remains seasonally constrained and we could require additional sources of liquidity in the future to fund
our operations and service our indebtedness.
Our quarterly operating results may fluctuate significantly and could fall below the expectations of analysts and
investors due to certain factors, some of which are beyond our control, resulting in a decline in our stock price.
Our Certificate of Incorporation, Bylaws and certain provisions of Delaware law contain certain anti-takeover
provisions that could impair a takeover attempt, even if a change of control would be of benefit to our stockholders.
The terms of our Series A Preferred Stock and Series B Preferred Stock reduce the likelihood of dividends payments
on our Common Stock, and may otherwise adversely affect the Common Stock.
Our Common Stockholders may face substantial dilution as a result of warrants.
The Series A Preferred Stock may result in substantial dilution to holders of our Common Stock.
Our stock price has experienced significant volatility.
Risks Related to Our Industry and Our Customers’ Industries
Economic downturns could reduce capital expenditures in the industries we serve, which could result in decreased
demand for our services.
Our industry is highly competitive, which may reduce our market share and harm our financial performance.
Our customers may be adversely affected by market conditions and economic downturns, which could impair their
ability to pay for our services.
Risks Related to IEA
Our business is seasonal and is affected by adverse weather conditions and the spending patterns of our customers, exposing
us to variable quarterly results.
Some of our customers reduce their expenditures and work order requests towards the end of the calendar year.
Adverse weather conditions, particularly during the fall and winter seasons, can also affect our ability to perform outdoor
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services in certain regions of North America. As a result, we generally experience reduced revenue in the first quarter of each
calendar year. Natural catastrophes such as hurricanes or other severe weather could also have a negative effect on the economy
overall and on our ability to perform outdoor services in affected regions or utilize equipment and crews stationed in those
regions, which could negatively affect our results of operations, cash flows and liquidity.
Our results for the year ended December 31, 2019 and 2018, reflect the effect of multiple severe weather events on our
wind business that began late in the third quarter of 2018 and were completed in the second quarter of 2019. These weather
conditions had a significant impact on the construction of six wind projects across South Texas, Iowa, and Michigan, resulting
in additional labor, equipment and material costs as well as change orders.
The cumulative impact of these severe weather events negatively impacted our liquidity during 2019 and, combined
with the inability to timely recover excess costs from these adverse weather conditions required us to seek additional financing
and to renegotiate our senior credit facility. There can be no assurance that our liquidity will not be negatively impacted in the
future due to significant adverse weather conditions.
Our failure to recover adequately on claims against project owners, subcontractors or suppliers for payment or performance
could have a material adverse effect on our financial results.
We occasionally bring claims against project owners for additional costs that exceed the contract price or for amounts
not included in the original contract price. Similarly, we present change orders and claims to our subcontractors and suppliers.
If we fail to properly document the nature of change orders or claims, or are otherwise unsuccessful in negotiating a reasonable
settlement, we could incur reduced profits, cost overruns or a loss on the project. These types of claims can often occur due to
matters such as owner-caused delays, changes from the initial project scope and adverse conditions, which result in additional
cost, both direct and indirect, or from project or contract terminations. From time to time, these claims can be the subject of
lengthy and costly proceedings, and it is often difficult to accurately predict when these claims will be fully resolved. When
these types of events occur and unresolved claims are pending, we may invest significant working capital in projects to cover
cost overruns pending the resolution of the relevant claims. A failure to promptly recover on these types of claims could have a
material adverse effect on our liquidity and financial results.
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 constantly evolving situation 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 reoccurring
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:
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Delays in receiving permits resulting in unanticipated changes to construction schedules;
Inabilities 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; and
Decrease in demand for civil construction resulting from corresponding decreases in federal, state and local
budgets.
Each of the foregoing could 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, liquidity or results of operations.
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Our business may be affected by delays, which could increase our costs and reduce profitability.
Our projects involve challenging engineering, procurement and construction phases that may occur over extended time
periods and that may involve many parties. Delays on a particular project can arise from a number of events involving the
customer, third parties and us, including delays in design and engineering; delays or difficulties in obtaining equipment and
materials; schedule changes; failures to timely obtain permits or rights-of-way or to meet other regulatory requirements; delays
due to epidemics and pandemics (including COVID-19); weather-related delays; and other governmental, market and political
events, many of which are beyond our control. A significant amount of equipment used in our projects is sourced from China.
The current COVID-19 outbreak could cause meaningful delays in owner and third party provided equipment being
manufactured and shipped out of China. Excessive delays in connection with the COVID-19 outbreak could result in project
delays and increased costs.
We perform work under a variety of conditions, including, but not limited to, challenging and hard to reach terrain and
difficult site conditions. Some of our contracts require that we assume the risk should actual site conditions vary from those
expected, and these projects may be at increased risk for delays.
Delays may result in the cancellation or deferral of project work (including through a customer and or third party’s
assertion of force majeure, or our assertion of force majeure), which could lead to a decline in revenue from lost project work,
or, for project deferrals, could cause us to incur costs which are not reimbursable by the customer, and may lead to personnel
shortages on other projects scheduled to commence at a later date. In some cases, delays and additional costs may be
substantial, and we may be required to cancel a project and/or compensate the customer for the delay. We may not be able to
recover any of such costs. Any such delays or cancellations or errors or other failures to meet customer expectations could
result in damage claims substantially in excess of the revenue associated with a project. Delays or cancellations could also
negatively impact our reputation or relationships with our customers, which could adversely affect our ability to secure new
contracts and our business, financial condition, results of operations, profitability, cash flows and growth prospects.
We may be unable to obtain sufficient bonding capacity to support certain service offerings, and the need for performance
and surety bonds may reduce our availability under our Third A&R Credit Agreement.
Some of our contracts require performance and payment bonds. If we are not able to renew or obtain a sufficient level
of bonding capacity in the future, we may be precluded from being able to bid for certain contracts or successfully contract with
certain customers. In addition, even if we are able to successfully renew or obtain performance or payment bonds, we may be
required to post letters of credit or other collateral security in connection with the bonds, which would only be obtainable if we
have sufficient availability under our Third A&R Credit Agreement and, if available, would reduce availability for borrowings
under our Third A&R Credit Agreement. Furthermore, under standard terms in the surety market, sureties issue bonds on a
project-by-project basis and can decline to issue bonds at any time or require the posting of additional collateral at any time. If
we were to experience an interruption or reduction in the availability of bonding capacity as a result of these or any other
reasons, we may be unable to compete for or work on certain projects that require bonding.
Our business is subject to physical hazards that could result in substantial liabilities and weaken our financial condition.
Construction projects undertaken by us expose our employees to heavy equipment, mechanical failures, transportation
accidents, adverse weather conditions and the risk of damage to equipment and property. These hazards can cause personal
injuries and loss of life, severe damage to or destruction of property and equipment and other consequential damages and could
lead to suspension of operations and large damage claims which could, in some cases, substantially exceed the amount we
charge for the associated services. In addition, if serious accidents or fatalities occur, or if our safety records were to deteriorate,
we may be restricted from bidding on certain work and obtaining new contracts and certain existing contracts could be
terminated. Our safety processes and procedures are monitored by various agencies and ratings bureaus. The occurrence of
accidents in our business could result in significant liabilities, employee turnover, increase the costs of our projects, or harm our
ability to perform under our contracts or enter into new customer contracts, all of which could materially adversely affect our
business, financial condition, results of operations, profitability, cash flows and growth prospects.
Our experience modification rate, a measure of our history and safety record as compared to other businesses in our
industry, was 0.58 and our total recordable incident rate was 0.61 in 2020, both of which were significantly below the industry
averages of 1.0 and 2.8, respectively, reported by the U.S. Department of Labor and U.S. Bureau of Labor Statistics. While
these standards are still below industry averages, we experienced a fatality at one of our work sites in 2018 and there is no
guarantee, based on the hazards discussed above, that we can maintain these averages.
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We are self-insured against certain potential liabilities.
Although we maintain insurance policies with respect to employer’s liability, general liability, auto and workers
compensation claims, those policies are subject to deductibles or self-insured retention amounts of up to $500,000 per
occurrence. We are primarily self-insured for all claims that are less than the amount of the applicable deductible/self-insured
retention. In addition, for health insurance coverage for our employees not part of a collective bargaining agreement, we
provide employee health care benefit plans. Our health insurance plans have a self-insurance component up to specified
deductibles per individual per year.
Our insurance policies include various coverage requirements, including the requirement to give appropriate notice. If
we fail to comply with these requirements, our coverage could be denied.
Projected losses under our insurance programs are accrued based upon our estimates of the ultimate liability for claims
reported and an estimate of claims incurred but not reported. Insurance liabilities are difficult to assess and estimate due to
unknown factors, including the severity of an injury, the extent of damage, the determination of our liability in proportion to
other parties and the number of incidents not reported. The accruals are based upon known facts and historical trends.
Acquisition activity presents certain risks to our business, operations and financial position, and we may not realize the
financial and strategic goals contemplated at the time of a transaction.
We expect that the acquisitions will be an important part of our long-term growth strategy. Successful execution
following the closing of an acquisition is essential to achieving the anticipated benefits of the transaction. We have made
acquisitions to expand into new markets and our acquisition strategy depends on our ability to complete and integrate the
acquisitions. Mergers and acquisitions are inherently risky, and any mergers and acquisitions that we complete may not be
successful. The process of integrating an acquired company’s business into our operations and investing in new technologies is
challenging and may result in expected or unexpected operating or compliance challenges, which may require significant
expenditures and a significant amount of our management’s attention that would otherwise be focused on the ongoing operation
of our business. The potential difficulties or risks of integrating an acquired company’s business include, among others:
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the effect of the acquisition on our financial and strategic positions and our reputation;
risk that we fail to successfully implement our business plan for the combined business;
risk that we are unable to obtain the anticipated benefits of the acquisition, including synergies or economies of scale;
risk that we are unable to complete development and/or integration of acquired technologies;
risk that the market does not accept the integrated product portfolio;
challenges in reconciling business practices or in integrating product development activities, logistics or information
technology and other systems;
challenges in reconciling accounting issues, especially if an acquired company utilizes accounting principles different
from those we use;
retention risk with respect to key customers, suppliers and employees and challenges in retaining, assimilating and
training new employees;
potential failure of the due diligence processes to identify significant problems, liabilities or other shortcomings or
challenges of an acquired company, which could result in unexpected litigation, regulatory exposure, financial
contingencies and known and unknown liabilities; and
challenges in complying with newly applicable laws and regulations, including obtaining or retaining required
approvals, licenses and permits.
Our acquisitions may also result in the expenditure of available cash and amortization of expenses any of which could
have a material adverse effect on our operating results or financial condition. Investments in immature businesses with
unproven track records and technologies have an especially high degree of risk, with the possibility that we may lose the value
of our entire investments or incur additional unexpected liabilities. Large or costly acquisitions or investments may also
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diminish our capital resources and liquidity or limit our ability to engage in additional transactions for a period of time. All of
the foregoing risks may be magnified as the cost, size or complexity of an acquisition or acquired company increases, or where
the acquired company’s products, market or business are materially different from ours, or where more than one integration is
occurring simultaneously or within a short period of time.
In addition, in the future we may require significant financing to complete an acquisition or investment, whether
through bank loans, raising of debt or otherwise. We cannot assure you that such financing options will be available to us on
reasonable terms, or at all. If we are not able to obtain such necessary financing, it could have an impact on our ability to
consummate a substantial acquisition or investment and execute our growth strategy. Alternatively, we may issue a significant
number of shares as consideration for an acquisition, which would have a dilutive effect on our existing stockholders.
If we are unable to attract and retain qualified managers and skilled employees, we will be unable to operate efficiently,
which could reduce our revenue, profitability and liquidity.
Our business is labor intensive, and some of our operations experience a high rate of employee turnover. In addition,
given the nature of the highly specialized work we perform, many of our employees are trained in, and possess, specialized
technical skills that are necessary to operate our business and maintain productivity and profitability. At times of low
unemployment rates in the areas we serve, it can be difficult for us to find qualified and affordable personnel. We may be
unable to hire and retain a sufficiently skilled labor force necessary to support our operating requirements and growth strategy.
Our labor and training expenses may increase as a result of a shortage in the supply of skilled personnel. We may not be able to
pass these expenses on to our customers, which could adversely affect our profitability. Additionally, our business is managed
by a number of key executive and operational officers and is dependent upon retaining and recruiting qualified management.
Labor shortages, increased labor or training costs, or the loss of key personnel could materially adversely affect our business,
financial condition, results of operations, profitability, cash flows and growth prospects.
The U.S. wind and solar industries benefit from tax and other economic incentives and political and governmental policies.
A significant change in these incentives and policies could materially and adversely affect our business, financial condition,
results of operations, cash flows and growth prospects.
The Consolidated Appropriations Act of 2016 (“CAA”) extended certain provisions of the Internal Revenue Code,
which contains federal tax incentives applicable to the renewable energy industry, provided for the gradual elimination of
certain of these incentives. Currently, the tax code provides that the production tax credit for wind projects (the ‘‘PTC’’) applies
to qualifying projects for which the construction commencement date was prior to January 1, 2021. The PTC was reduced by
20% for 2018, has been reduced by 40% for 2019, and finally will be reduced by 60% for 2020, and by 40% for 2021.
Similarly, a phase down rate of the investment tax credit (the ‘‘ITC’’), which is available in lieu of PTC, is available for wind
projects: 30% ITC for projects commencing before 2017, 24% for projects commencing in 2017, 18% for projects commencing
in 2018 and 12% for projects commencing in 2019, and 18% for projects commencing in 2020. Solar projects, however, will be
eligible for an investment tax credit (the ‘‘Solar ITC’’) only. The Solar ITC is 30% for projects commencing prior to 2020 and
will be reduced to 26% for projects commencing in 2020 and to 26% for projects commencing in 2021. After 2021, the Solar
ITC will remain at 26% for projects that commence in 2022, but will be reduced to 22% for projects that commence in 2023.
After 2023, the Solar ITC will permanently remain at 10% for projects that commence in 2024 and onwards.
In December 2020, there was a one year extension of the Production Tax Credit (“PTC”) at 60% for projects that begin
construction on or before December 31, 2021 and a two year extension of 26% Solar Investment Tax Credit (“ITC”) to 2022
(22% credit extended through 2023).
The PTC, ITC, and Solar ITC program provide material incentives to develop wind energy generation facilities and
thereby impact the demand for our manufactured products and services. The increased demand for our products and services
resulting from the credits and incentives may continue until such credits or incentives lapse. The failure of Congress to extend
or renew these incentives beyond their current expiration dates could significantly delay the development of wind energy
generation facilities and the demand for wind turbines, towers and related components. In addition, we cannot assure you that
any subsequent extension or renewal of the PTC, ITC or Solar ITC program would be enacted prior to its expiration or, if
allowed to expire, that any extension or renewal enacted thereafter would be enacted with retroactive effect. It is possible that
these federal incentives will not be extended beyond their current expiration dates. Any delay or failure to extend or renew the
PTC, ITC or Solar ITC program in the future could have a material adverse impact on our business, results of operations,
financial performance and future development efforts.
State renewable energy portfolio standards generally require state-regulated electric utilities to supply a certain
proportion of electricity from renewable energy sources or devote a certain portion of their plant capacity to renewable energy
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generation. Typically, subject utilities comply with such standards by qualifying for renewable energy credits evidencing the
share of electricity that was produced from renewable sources. Under many state standards, these renewable energy credits can
be unbundled from their associated energy and traded in a market system allowing generators with insufficient credits to meet
their applicable state mandate. These standards have spurred significant growth in the wind energy industry and a
corresponding increase in the demand for our manufactured products. Currently, the majority of states and the District of
Columbia have renewable energy portfolio standards in place and certain states have voluntary utility commitments to supply a
specific percentage of their electricity from renewable sources. The enactment of renewable energy portfolio standards in
additional states or any changes to existing renewable energy portfolio standards, or the enactment of a federal renewable
energy portfolio standard or imposition of other greenhouse gas regulations may impact the demand for our products. We
cannot assure you that government support for renewable energy will continue. The elimination of, or reduction in, state or
federal government policies that support renewable energy could have a material adverse impact on our business, financial
condition, results of operations, profitability, cash flows and growth prospects.
Contracts with federal, state and local governments pose additional risks, including lack of funding, onerous terms, and
competitive bidding processes.
We derive a portion of our revenues from contracts with federal, state and local governments and their agencies and
departments. These contracts are directly affected by changes in governmental spending and availability of adequate funding.
Factors that could affect current and future governmental spending include:
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policy or spending changes implemented by current administrations, departments or other government agencies;
governmental shutdowns, failure to pass budget appropriations, continuing funding resolutions or other budgetary
decisions;
changes, delays or cancellations of government programs or requirements;
adoption of new laws or regulations that affect companies providing services;
curtailment of the governments’ outsourcing of services to private contractors; or
the level of political instability due to war, conflict, epidemics, pandemics or natural disasters.
Contracts with federal, state and local governments and their agencies and departments are often subject to various
uncertainties, rules, restrictions, regulations, oversight audits and profit and cost controls. If we violate a rule or regulation, fail
to comply with a contractual or other restriction or do not satisfy an audit, a variety of penalties can be imposed on us including
monetary damages, withholding or delay of payments to us and criminal and civil penalties. In “qui tam” actions brought by
individuals or the government under the U.S. Federal False Claims Act or under similar state and local laws, treble damages can
be awarded. Government contracts may also contain unlimited indemnification obligations. In addition, most of our government
clients may modify, delay, curtail, renegotiate or terminate contracts at their convenience any time prior to their completion.
Many government contracts are awarded through a rigorous competitive process. Governments and their agencies have
increasingly relied upon multiple-year contracts with multiple contractors that generally require those contractors to engage in
an additional competitive bidding process for each task order issued under a contract. This process may result in us facing
significant additional pricing pressure and uncertainty and incurring additional costs. Moreover, we may not be awarded
government contracts because of existing policies designed to protect small businesses and under-represented minorities. Any
of the foregoing events could negatively affect our results of operations, cash flows and liquidity.
Amounts included in our backlog may not result in actual revenue or translate into profits. Our backlog is subject to
cancellation and unexpected adjustments and therefore is an uncertain indicator of future operating results.
Our backlog consists of the estimated amount of services to be completed from future work on uncompleted contracts
or work that has been awarded with contracts still being negotiated. It also includes revenue from change orders and renewal
options. Most of our contracts are cancelable on short or no advance notice. Reductions in backlog due to cancellation by a
customer, or for other reasons, could significantly reduce the revenue that we actually receive from contracts in backlog. In the
event of a project cancellation, we may be reimbursed for certain costs, but we typically have no contractual right to the total
revenues reflected in our backlog.
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Backlog amounts are determined based on target price estimates that incorporate historical trends, anticipated seasonal
impacts, experience from similar projects and from communications with our customers. These estimates may prove inaccurate,
which 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 in expected future work due to changes in our
customers’ spending plans, as well as on construction projects, due to market volatility, regulatory and other 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. In addition, contracts included in our backlog may not be
profitable. If our backlog fails to materialize, our business, financial condition, results of operations, profitability, cash flows
and growth prospects could be materially and adversely affected.
Many of our customers are regulated by federal and state government agencies, and the addition of new regulations or
changes to existing regulations may adversely impact demand for our services and the profitability of those services.
Many of our energy customers are regulated by the Federal Energy Regulatory Commission, or FERC, and our utility
customers are regulated by state public utility commissions. These agencies could change the way in which they interpret the
application of current regulations and/or may impose additional regulations. Interpretative changes or new regulations having
an adverse effect on our customers and the profitability of the services they provide could reduce demand for our services,
which could adversely affect our results of operations, cash flows and liquidity.
Any future restrictions or regulations that might be adopted could lead to operational delays, increased operating costs
for our customers in the wind industry, reduced capital spending and/or delays or cancellations of future wind infrastructure
projects, which could materially and adversely affect our business, financial condition, results of operations, profitability, cash
flows and growth prospects.
We could incur substantial costs to comply with environmental, health, and safety laws and regulations and to address
violations of or liabilities under these requirements.
Our operations and products are subject to a variety of environmental laws and regulations in the jurisdictions in which
we operate and sell products governing, among other things, air emissions, wastewater discharges, the use, handling and
disposal of hazardous materials, soil and groundwater contamination, employee health and safety, and product content,
performance and packaging. We cannot guarantee that we will at all times be in compliance with such laws and regulations and
if we fail to comply with these laws and regulations or our permitting and other requirements, we may be required to pay fines
or be subject to other sanctions. Also, certain environmental laws can impose the entire or a portion of the cost of investigating
and cleaning up a contaminated site, regardless of fault, upon any one or more of a number of parties, including the current or
previous owner or operator of the site. These environmental laws also impose liability on any person who arranges for the
disposal or treatment of hazardous substances at a contaminated site. Third parties may also make claims against owners or
operators of sites and users of disposal sites for personal injuries and property damage associated with releases of hazardous
substances from those sites.
Changes in existing environmental laws and regulations, or their application, could cause us to incur additional or
unexpected costs to achieve or maintain compliance. The assertion of claims relating to on- or off-site contamination, the
discovery of previously unknown environmental liabilities, or the imposition of unanticipated investigation or cleanup
obligations, could result in potentially significant expenditures to address contamination or resolve claims or liabilities. Such
costs and expenditures could have a material adverse effect on our business, financial condition, results of operations,
profitability, cash flows and growth prospects.
We may not accurately estimate the costs associated with services provided under fixed price contracts, which could impair
our financial performance.
We derive a significant portion of our revenue from fixed-price contracts. Under these contracts, we typically set the
price of our services on a per unit or aggregate basis and assume the risk that certain costs associated with our performance may
be greater than what we estimated. In addition, we enter into contracts for specific projects or jobs that may require the
installation or construction of an entire infrastructure system or specified units within an infrastructure system, which are priced
on a per unit basis. Profitability will be reduced if actual costs to complete each unit exceed our original estimates. If estimated
costs to complete the remaining work for the project exceed the expected revenue to be earned, the full amount of any expected
loss on the project is recognized in the period the loss is determined. Our profitability is therefore dependent upon our ability to
accurately estimate the costs associated with our services and our ability to execute in accordance with our plans. A variety of
factors affect these costs, such as lower than anticipated productivity, conditions at work sites differing materially from those
anticipated at the time we bid on the contract and higher costs of materials and labor. These variations, along with other risks
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inherent in performing fixed price contracts, may cause actual project revenue and profits to differ from original estimates. As a
result, if actual costs exceed our estimates, we could have lower margins than anticipated, or losses, which could reduce our
business, financial condition, results of operations, profitability, cash flows and growth prospects.
We recognize revenue from installation/construction fixed price contracts using the cost-to cost input method (formerly
known as percentage-of-completion method) and variations of actual results from our assumptions may reduce our
profitability.
Revenues derived from fixed-price contracts that are recognized as performance obligations are satisfied over time
(formerly known as the percentage-of-completion method), measured by the relationship of total cost incurred compared to
total estimated contract costs (cost-to-cost input method). The cost-to-cost input method therefore relies on estimates of total
expected contract costs. Contract revenue and total cost estimates are reviewed and revised on an ongoing basis as the work
progresses. Adjustments arising from changes in the estimates of contracts revenue or costs are reflected in the fiscal period in
which such estimates are revised. Estimates are based on management’s reasonable assumptions, judgment and experience, but
are subject to the risks inherent in estimates, including unanticipated delays or technical complications. Variances in actual
results from related estimates on a large project, or on several smaller projects, could be material. The full amount of an
estimated loss on a contract is recognized in the period that our estimates indicate such a loss. Such adjustments and accrued
losses could result in reduced profitability, which could negatively impact our liquidity and results of operations.
We derive a significant portion of our revenue from a concentrated base of customers, and the loss of a small number of our
significant customers, or a reduction in their demand for our services, could impair our financial performance.
Our business is concentrated among relatively few customers, and a significant proportion of our services are provided
on a project-by-project basis. Although we have not been dependent upon any one customer, our revenue could significantly
decline if we were to lose a small number of our significant customers, or if a few of our customers elected to perform the work
that we provide with in-house service teams. In addition, our results of operations, cash flows and liquidity could be negatively
affected if our customers reduce the amount of business they provide to us, or if we complete the required work on non-
recurring projects and cannot replace them with similar projects. Many of the contracts with our largest customers may be
canceled on short or no advance notice. Any of these factors could negatively impact our results of operations, cash flows and
liquidity. See “Note 1. Business, Basis of Presentation and Significant Accounting Policies” and “Note 9. Commitments and
Contingencies,” in the notes to audited consolidated financial statements.
In the ordinary course of our business, we may become subject to lawsuits, indemnity or other claims, which could
materially and adversely affect our business, financial condition, results of operations, profitability, cash flows and growth
prospects.
From time to time, we are subject to various claims, lawsuits and other legal proceedings brought or threatened against
us in the ordinary course of our business. These actions and proceedings may seek, among other things, compensation for
alleged personal injury, workers’ compensation, employment discrimination and other employment-related damages, breach of
contract, property damage, environmental liabilities, multiemployer pension plan withdrawal liabilities, punitive damages and
civil penalties or other losses, liquidated damages, consequential damages, or injunctive or declaratory relief. We may also be
subject to litigation involving allegations of violations of the Fair Labor Standards Act and state wage and hour laws. In
addition, we generally indemnify our customers for claims related to the services we provide and actions we take under our
contracts, and, in some instances, we may be allocated risk through our contract terms for actions by our customers or other
third parties.
Claimants may seek large damage awards and defending claims can involve significant costs. When appropriate, we
establish reserves against these items that we believe to be adequate in light of current information, legal advice and
professional indemnity insurance coverage, and we adjust such reserves from time to time according to developments. See
“Note 9. Commitments and Contingencies” in the notes to the audited consolidated financial statements. We could experience a
reduction in our profitability and liquidity if our legal reserves are inadequate, our insurance coverage proves to be inadequate
or becomes unavailable, or our self-insurance liabilities are higher than expected. The outcome of litigation is difficult to assess
or quantify, as plaintiffs may seek recovery of very large or indeterminate amounts in these types of lawsuits or proceedings,
and the magnitude of the potential loss may remain unknown for substantial periods of time. Furthermore, because litigation is
inherently uncertain, the ultimate resolution of any such claim, lawsuit or proceeding through settlement, mediation, or court
judgment could have a material adverse effect on our business, financial condition or results of operations. In addition, claims,
lawsuits and proceedings may harm our reputation or divert management’s attention from our business or divert resources away
from operating our business, and cause us to incur significant expenses, any of which could have a material adverse effect on
our business, financial condition, results of operations, profitability, cash flows and growth prospects.
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Certain of our businesses have employees who are represented by unions or are subject to collective bargaining agreements.
The use of a unionized workforce and any related obligations could adversely affect our business, financial condition,
results of operations, profitability, cash flows and growth prospects.
Certain of our employees are represented by labor unions and collective bargaining agreements. Although all such
collective bargaining agreements prohibit strikes and work stoppages, we cannot be certain that strikes or work stoppages will
not occur despite the terms of these agreements. Strikes or work stoppages could adversely affect our relationships with our
customers and cause us to lose business. Additionally, as current agreements expire, the labor unions may not be able to
negotiate extensions or replacements on terms favorable to their members, or at all, or avoid strikes, lockouts or other labor
actions from time to time that may affect their members. Therefore, it cannot be assured that new agreements will be reached
with employee labor unions as existing contracts expire, or on desirable terms. Any action against us relating to the union
workforce we employ could have a material adverse effect on our business, financial condition, results of operations,
profitability, cash flows and growth prospects.
Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax
returns could adversely affect our financial condition and results of operations.
We are subject to income taxes in the United States, and our domestic tax liabilities are subject to the allocation of
expenses in differing jurisdictions. Our future effective tax rates could be subject to volatility or adversely affected by a number
of factors, including:
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changes in the valuation of our deferred tax assets and liabilities;
expected timing and amount of the release of any tax valuation allowances;
tax effects of stock-based compensation;
costs related to intercompany restructurings;
changes in tax laws, regulations or interpretations thereof; and
lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than
anticipated future earnings in jurisdictions where we have higher statutory tax rates.
In addition, we may be subject to audits of our income, sales and other transaction taxes by U.S. federal and state
authorities. Outcomes from these audits could have an adverse effect on our financial condition and results of operations.
We rely on information, communications and data systems in our operations.
Systems and information technology interruptions and/or breaches in our data security could adversely affect our
ability to operate and our operating results or could result in harm to our reputation. We are heavily reliant on computer,
information and communications technology and related systems in order to operate. From time to time, we experience system
interruptions and delays. Our operations could be interrupted or delayed, or our data security could be breached, if we are
unable to add software and hardware, effectively maintain and upgrade our systems and network infrastructure and/or take other
steps to improve the efficiency of and protect our systems. In addition, our computer and communications systems and
operations could be damaged or interrupted by natural disasters, power loss, telecommunications failures, computer viruses,
acts of war or terrorism, physical or electronic break-ins and similar events or disruptions, including breaches by computer
hackers and cyber-terrorists. Any of these or other events could cause system interruptions, delays and/or loss of critical data
including private data, could delay or prevent operations, including the processing of transactions and reporting of financial
results, processing inefficiency, downtime, or could result in the unintentional disclosure of customer or our information, which
could adversely affect our operating results, harm our reputation and result in significant costs, fines or litigation. Similar risks
could affect our customers and vendors, indirectly affecting us. While management has taken steps to address these concerns by
implementing network security and internal control measures, there can be no assurance that a system failure or loss or data
security breach will not materially adversely affect our financial condition and operating results.
Risks Related to Our Capital Structure
We have a significant amount of debt. Our substantial indebtedness could adversely affect our business, financial condition
and results of operations and our ability to meet our payment obligations.
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We have a significant amount of debt and substantial debt service requirements. This level of debt could have
significant consequences on our future operations, including:
• making it more difficult for us to meet our payment and other obligations;
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our failure to comply with the financial and other restrictive covenants contained in our debt agreements, which could
trigger events of default that could result in all of our debt becoming immediately due and payable;
reducing the availability of our cash flows to fund working capital, capital expenditures, acquisitions or strategic
investments and other general corporate requirements, and limiting our ability to obtain additional financing for these
purposes;
subjecting us to increased interest expense related to our indebtedness with variable interest rates, including
borrowings under our credit facility;
limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to changes in our business, the
industry in which we operate and the general economy;
placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged;
• making cash dividends more expensive under our Series B Preferred Stock; and
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preventing us from paying dividends.
Any of the above-listed factors could have an adverse effect on our business, financial condition and results of
operations and our ability to meet our payment obligations. Our ability to meet our payment and other obligations under our
debt instruments depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general
economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. We
cannot assure you that our business will generate cash flow from operations, or that future borrowings will be available to us
under our Third A&R Credit Agreement in an amount sufficient to enable us to meet our payment obligations and to fund other
liquidity needs. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or
restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital, and some of these
activities may be on terms that are unfavorable or highly dilutive. Our ability to refinance our indebtedness will depend on the
capital markets and our financial condition at such time. If we are unable to implement one or more of these alternatives, we
may not be able to meet our payment obligations.
Our Third A&R Credit Agreement, the Series A Preferred Stock and Series B Preferred Stock impose restrictions on us that
may prevent us from engaging in transactions that might benefit us.
The Third A&R Credit Agreement contains restrictions that, among other things prevents or restricts us from:
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engaging in certain transactions with affiliates;
buying back shares or paying dividends in excess of specified amounts;
• making investments and acquisitions in excess of specified amounts;
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incurring additional indebtedness in excess of specified amounts;
creating certain liens against our assets;
prepaying subordinated indebtedness;
engaging in certain mergers or combinations;
failing to satisfy certain financial tests; and
engaging in transactions that would result in a “change of control.”
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Additionally, the holders of our Series A Preferred Stock and Series B Preferred Stock have the right to consent to
certain actions prior to us undertaking them, including, but not limited to:
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creating or authorizing any senior stock, parity stock and stock that votes together with the Series A Preferred Stock or
Series B Preferred Stock, or capital stock of a subsidiary;
reclassifications, alterations or amendments of any of our capital stock or of our subsidiaries that would render such
capital stock senior or on parity to the Series A Preferred Stock or Series B Preferred Stock;
entering into any agreement with respect to, or consummating, any merger, consolidation or similar transaction with
any other person pursuant to which we or a subsidiary of ours would not be the surviving entity, if as a result of such
transaction, any capital stock or equity or equity-linked securities of such person would rank senior to or pari passu
with the Series A Preferred Stock or Series B Preferred Stock;
entering certain agreements with respect to, or consummating, any merger, consolidation or similar transaction with
any other person pursuant to which we or a subsidiary of ours would not be the surviving entity, if as a result of such
transaction, any capital stock or equity or equity-linked securities of such person would rank senior to or on parity with
such Series A Preferred Stock or Series B Preferred Stock;
assuming, incurring or guarantying, or authorizing the creation, assumption, incurrence or guarantee of, any
indebtedness for borrowed money (subject to certain exceptions);
authorizing or consummating certain change of control events or liquidation events; or
altering, amending, supplementing, restating, waiving or otherwise modifying the certificates governing the Series A
Preferred Stock or Series B Preferred Stock or any other of our documents in a manner that would reasonably be
expected to be materially adverse to the rights or obligations of the holders of Series A Preferred Stock or Series B
Preferred Stock.
The Series B Preferred Stock contains additional consent rights, including with respect to:
increasing the size of the Board;
conducting any business or entering into or conducting any transaction or series of transaction with, or for the benefit
of, any affiliate, subject to limitations;
entering into any transaction, contract, agreement or series of related transactions, contracts, or agreement with respect
to the provision of services to customers exceeding certain amounts; or
with respect to Saiia, subject to certain limitations: (i) entering into any agreement with respect to, or consummate any,
merger, consolidation or similar transaction with Saiia or any of its subsidiaries, (ii) assuming, incurring or
guaranteeing, or authorizing the creation, assumption, incurrence or guarantee of any indebtedness by, or for the
benefit of Saiia or any of its subsidiaries, (iii) creating, incurring, assuming or suffering to exist any lien upon or with
respect to any property or assets for the benefit of Saiia or any of its subsidiaries or security any obligations of Saiia or
any of its subsidiaries above certain limits, (iv) consummating any sale, lease, transfer, issuance or other disposition,
including by means of a merger, consolidation or similar transaction, of any shares of capital stock of a subsidiary or
any other of our assets or of or any subsidiary to Saiia or any of its subsidiaries, or (v) subject to certain exceptions,
making any advance, loan, extension of credit or capital contribution to, or purchase any capital stock, bonds, notes,
debentures or other debt securities of Saiia or any of its subsidiaries.
Accordingly, provisions in the Third A&R Credit Agreement that restrict our business could make compliance with the
terms and conditions of the Third A&R Credit Agreement more difficult. Furthermore, provisions in the Third A&R Credit
Agreement, as well as rights of holders of the Series A Preferred Stock and Series B Preferred Stock could impact our ability to
engage in transactions we deem beneficial.
There may be future sales of our Common Stock or other dilution of our equity that could adversely affect the market price
of our Common Stock. In connection with certain completed acquisitions, we have issued shares of our Common Stock, and
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we additionally have the option to issue shares of our Common Stock instead of cash as consideration for future earn-out
obligations.
We may agree to issue additional shares in connection with other future acquisition or financing transactions, which, if
issued, would dilute your share ownership and could lead to volatility in our Common Stock price. We grow our business
organically as well as through acquisition. One method of acquiring companies or otherwise funding our corporate activities is
through the issuance of equity securities. In connection with certain acquisitions, we have the option to issue shares of our
Common Stock instead of paying cash for the related earn-out obligations. Such issuances could have the effect of diluting our
earnings per share as well as our existing stockholders’ individual ownership percentages and could lead to volatility in our
Common Stock price.
We are not restricted from issuing additional Common Stock. The issuance of additional shares of our Common Stock
in connection with future acquisitions, convertible securities or other issuances of our Common Stock, including restricted stock
awards, restricted stock units and/or options, or otherwise, will dilute the ownership interest of our holders of our Common
Stock. Sales of a substantial number of shares of our Common Stock or other equity-related securities in the public market
could depress the market price of our Common Stock and impair our ability to raise capital through the sale of additional equity
or equity-linked securities. We cannot predict the effect that future sales of our Common Stock or other equity-related securities
would have on the market price of our Common Stock.
Mohsin Meghji has significant ability to influence corporate decisions.
Mr. Meghji directly and indirectly through M III Sponsor I LLC (“M III Sponsor”) and other entities, beneficially
owns 979,308 shares of Common Stock (representing approximately 4.3% of the issued and outstanding Common Stock as of
March 8, 2021) and warrants exercisable for an additional 1,434,496 shares of Common Stock.
Pursuant to the terms of the Third Amended and Restated Investor Rights Agreement, dated as of January 23, 2020
(the "Third A&R Investor Rights Agreement"), M III Sponsor has consent rights over certain matters for so long as M III
Sponsor and certain of their permitted transferees and affiliates, directly or indirectly, beneficially own at least fifty percent
(50%) of the Common Stock beneficially owned by them as of the closing of our business combination, including entering into,
waiving, amending or otherwise modifying the terms of certain transactions or agreements, and except as contemplated by the
Third A&R Investor Rights Agreement, increasing or decreasing the size of our Board. Under the Third A&R Investor Rights
Agreement, M III Sponsor also has ongoing rights to nominate one director, depending on the ownership interests of M III
Sponsor.
Our Certificate of Incorporation also provides that M III Sponsor and its respective partners, principals, directors,
officers, members, managers and/or employees, including any of the foregoing who serve as officers or directors of the post-
combination company, do not have any fiduciary duty to refrain from engaging directly or indirectly in the same or similar
business activities or lines of business as the post-combination company or any of its subsidiaries.
Accordingly, Mr. Meghji has the ability to influence corporate decisions, whether through a representative on our
Board, voting shares of Common Stock (including those obtained upon exercise of warrants), or rights granted under
agreements entered into with Mr. Meghji and M III Sponsor.
The interests of Mr. Meghji and M III Sponsor may not align with the interests of our other stockholders. M III
Sponsor is in the business of making investments in companies and may acquire and hold interests in businesses that compete
directly or indirectly with us. M III Sponsor may also pursue acquisition opportunities that may be complementary to our
business, and, as a result, those acquisition opportunities may not be available to us.
Ares and the Ares Parties may have the ability to influence certain corporate decisions through their ownership of Common
Stock obtainable upon conversion of the Series A Preferred Stock, and the exercise of rights, including under the respective
certificates of designation for the Series A Preferred Stock and Series B Preferred Stock.
Ares Special Situations Fund IV, L.P. (“ASSF IV”) and ASOF Holdings I, L.P. (“ASOF Holdings, and together with
ASSF IV, the “Ares Parties”), each a fund affiliated with Ares Management LLC (“Ares”), on behalf of its affiliated funds,
investment vehicles and/or managed accounts collectively own:
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17,482.50 shares of our Series A Preferred Stock (constituting all of the issued and outstanding Series A Preferred
Stock);
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50,000 shares Series B-1 Preferred Stock (constituting all of the issued and outstanding Series B-1 Preferred Stock);
50,000 shares of Series B-2 Preferred Stock (constituting all of the issued and outstanding Series B-2 Preferred Stock);
99,123.87 shares of Series B-3 Preferred Stock (constituting 99.6% of the 99,473.87 issued and outstanding Series B-3
Preferred Stock); and
• Warrants to purchase 5,996,310 shares of Common Stock.
Ares has the right to appoint two directors to our Board pursuant to the terms of the certificate of designations for the
Series B-1 Preferred Stock and Series B-2 Preferred Stock, but has agreed to only nominate one member so long as the terms of
a waiver agreement are satisfied. On March 4, 2020, Ares designated a director to our Board. Ares has consent rights under the
certificate of designations for the Series A Preferred Stock and Series B Preferred Stock. The Series A Preferred Stock and
Series B Preferred Stock impose restrictions on us that may prevent us from engaging in transactions that might benefit us.
Accordingly, Ares and the Ares Parties have the ability to influence corporate decisions, whether through a representative
on our Board, voting shares of Common Stock obtained upon conversion of the Series A Preferred Stock or exercise of
warrants, or rights granted under the certificate of designations of the Series A Preferred Stock and Series B Preferred Stock,
and other agreements entered into with such parties.
The interests of Ares, ASSF IV and ASOF Holdings may not align with the interests of our other stockholders. Ares,
ASSF IV and ASOF Holdings are in the business of making investments in companies and may acquire and hold interests in
businesses that compete directly or indirectly with us. Ares, ASSF IV and ASOF Holdings may also pursue acquisition
opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available
to us.
Our liquidity remains seasonally constrained and we could require additional sources of liquidity in the future to fund our
operations and service our indebtedness.
We have experienced decreased liquidity due to the increase of our required seasonal payments and interest under our
Third A&R Credit Agreement, acquisition integration costs and delayed collections for costs relating to the multiple severe
weather events in the third quarter 2018 and were completed in the second quarter of 2019. Although we have taken steps to
enhance our liquidity, our liquidity remains seasonally constrained.
We believe the cash generated from operations, along with our unused credit capacity of $67.2 million and available
cash balances as of December 31, 2020, will be sufficient to fund any working capital needs for the next 12 months, but we
cannot provide any assurance that these sources will be sufficient because there are many factors that could affect our liquidity,
including some that are beyond our control. Factors that could cause our future liquidity to vary materially from expectations
include, but are not limited to, weather events, bonding obligations, contract disputes with customers, loss of customers,
spending patterns of customers, unforeseen costs and expenses and our ability to maintain compliance with the covenants and
restrictions in our Third A&R Credit Agreement (or obtain waivers in the event of noncompliance). If we encounter
circumstances that place unforeseen constraints on our capital resources, we will be required to take additional measures to
conserve or enhance liquidity.
In the future, we may require additional funds for operating purposes and may seek to raise additional funds through
debt or equity financing. If we ever need to seek additional financing, there is no assurance that this additional financing will be
available, or if available, will be on reasonable terms. If our liquidity and capital resources are insufficient to meet our working
capital requirements or fund our debt service obligations, we could face substantial liquidity problems, may not be able to
generate sufficient cash to service all our indebtedness and may be forced to take other actions to satisfy our obligations under
our indebtedness, which may not be successful. In the event we are not able to fund our working capital, we will not be able to
implement or may be required to delay all or part of our business plan, and our ability to improve our operations, generate
positive cash flows from operating activities and expand the business would be materially adversely affected.
If our results of operations were negatively impacted by unforeseen factors, or impacted to a greater degree than
anticipated, we might not be able to maintain compliance with the covenants and restrictions in our Third A&R Credit
Agreement. If we are unable to comply with the financial covenants in the future, and are unable to obtain a waiver or
forbearance, it would result in an uncured default under the Third A&R Credit Agreement. If a default under the Third A&R
Credit Agreement were not cured or waived, we would be unable to borrow under the Third A&R Credit Agreement and the
indebtedness thereunder could be declared immediately due and payable. A default under our Third A&R Credit Agreement
may also be considered a default under certain other of our instruments and contracts. If we were unable to borrow under the
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Third A&R Credit Agreement, we would need to meet our capital requirements using other sources. Alternative sources of
liquidity may not be available on acceptable terms if at all. Even if we were able to obtain an amendment, forbearance
agreement or waiver in the future, we might be required to agree to other changes to the Third A&R Credit Agreement,
including increased interest rates or premiums, more restrictive covenants and/or pay a fee for such amendment, forbearance
agreement or waiver. Any of these events would have a material adverse effect on our business, financial condition and
liquidity.
Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and
investors due to seasonality and other factors, some of which are beyond our control, resulting in a decline in our stock
price.
Our quarterly operating results may fluctuate significantly because of several factors, including:
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weather events;
labor availability and costs for hourly and management personnel;
profitability of our products and services, especially in new markets and due to seasonal fluctuations;
changes in interest rates;
impairment of long-lived assets;
• macroeconomic conditions, both nationally and locally;
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negative publicity relating to products and services we offer;
changes in consumer preferences and competitive conditions;
expansion to new markets; and
fluctuations in commodity prices.
Our Certificate of Incorporation, Bylaws and certain provision of Delaware law contain anti-takeover provisions that could
impair a takeover attempt.
As a Delaware corporation, anti-takeover provisions may impose an impediment to the ability of others to acquire
control of us, even if a change of control would be of benefit to our stockholders. In addition, certain provisions of our
Certificate of Incorporation and our Bylaws, also may impose an impediment or discourage others from a takeover.
These provisions include:
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a staggered board of directors providing for three classes of directors, which limits the ability of a stockholder or group
to gain control of our board of directors;
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or
special meeting of our stockholders;
a prohibition on stockholders calling a special meeting and the requirement that a special meeting of stockholders may
only be called by (i) the chairman of our Board, (ii) our Chief Executive Officer, (iii) a majority of our Board, or (iv)
directors designated by M III Sponsor subject to certain conditions set forth in the Third A&R Investor Rights
Agreement; and
the requirement that changes or amendments to certain provisions of our Certificate of Incorporation or Bylaws must
be approved by holders of at least two-thirds of the Common Stock and, in some cases under our Bylaws, 80% of the
Common Stock.
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The terms of our Series A Preferred Stock and Series B Preferred Stock reduce the likelihood of dividend payments on our
Common Stock, and may otherwise adversely affect the Common Stock.
If not paid in cash at a rate of 10% per annum, dividends on our Series A Preferred Stock will accrue and increase the
stated value of the Series A Preferred Stock at a rate of 12% per annum. If not paid in cash at a rate of 13.5% per annum (or
12% in the event our Total Net Leverage Ratio is less than or equal to 1.50 to 1.00), dividends on our Series B Preferred Stock
will accrue and increase the stated value of the Series B Preferred Stock at a rate of 15% per annum.
If we elect not to pay cash dividends, or our business does not generate enough cash to make the cash dividends on the
Series A Preferred Stock and Series B Preferred Stock, dividends will accrue and increase the stated value. An increase in the
stated value would result in an increase in the aggregate amount of cash we need to pay future cash dividends. Dividends on the
Series A Preferred Stock and Series B Preferred Stock rank senior in priority to dividends on our Common Stock. Accordingly,
the terms of the Series A Preferred Stock and Series B Preferred Stock reduce the likelihood that we will pay dividends on our
Common Stock in the future, which may cause the price of our Common Stock to decline. An increase in the stated value may
also result in holders of Series A Preferred Stock and Series B Preferred Stock having larger claims in the event of our
liquidation or dissolution.
Our Common Stockholders may face substantial dilution as a result of warrants.
On May 20, 2019, under the First Equity Commitment Agreement, we issued the First ECA Warrants exercisable into
an aggregate of 2,545,934 shares of Common Stock. On August 30, 2019, under the Second Equity Commitment Agreement,
we issued the Second ECA Warrants exercisable into an aggregate of 900,000 shares of Common Stock. On November 14,
2019, we issued the Third ECA Warrants exercisable into 3,568,750 shares of Common Stock. On November 14, 2019, we also
issued the Preferred Exchange Agreement Warrants exercisable into 657,383 shares of Common Stock pursuant to the Preferred
Exchange Agreement.
Each of the First Equity Commitment Agreement, Second Equity Commitment Agreement, Third Equity Commitment
Agreement and Preferred Exchange Agreement has provisions that require us to issue additional warrants upon additional
issuances of Common Stock and warrants. These additional issuances may result in a significant additional number of warrants
and Common Stock, the exact number of which cannot be determined and which may are depend on future events, many of
which are out of our control
The warrants issued under the First Equity Commitment Agreement, Second Equity Commitment Agreement, Third
Equity Commitment Agreement and Preferred Exchange Agreement are exercisable into our Common Stock at an exercise
price per share of $0.0001, which the holder may pay by check or wire transfer, or by instructing us to withhold a number of
shares of Common Stock then issuable upon exercise of the Warrant with an aggregate fair market value as of the date of
exercise equal to the aggregate exercise price, or any combination of the foregoing. The number of shares of Common Stock
issuable upon exercise of the warrants adjust for dividends, subdivisions or combinations; cash distributions or other
distributions; reorganization, reclassification, consolidation or merger; and spin-offs.
The shares of Common Stock that may be issued under the warrants pursuant to the First Equity Commitment
Agreement, Second Equity Commitment Agreement, Third Equity Commitment Agreement and Preferred Exchange
Agreement are subject to that certain Amended and Restated Registration Rights Agreement, dated March 26, 2018, as
amended (the “Registration Rights Agreement”), and accordingly, we may be required to register the shares of Common Stock
underlying the warrants for resale.
Accordingly, our presently existing warrants and warrants that may be issued in the future may result in substantial
additional issuances and resales of Common Stock. In certain instances, the timing and number of additional warrants that may
be issued is unknown and dependent upon future events and circumstances, some of which are outside of our control.
Additional issuances of Common Stock, and/or sales of Common Stock, would have the effect of diluting our earnings per
share as well as our existing shareholders’ individual ownership percentages and could lead to volatility in our Common Stock
price. Sales of a substantial number of shares of our Common Stock could depress the market price of our Common Stock and
impair our ability to raise capital through the sale of additional equity or equity-linked securities.
The Series A Preferred Stock may result in substantial dilution to holders of our Common Stock.
On November 14, 2019, we issued 19,123.87 shares of Series B-3 Preferred Stock and 657,383 Preferred Exchange
Agreement Warrants to IEA LLC in exchange for 50% of the outstanding Series A Preferred Stock pursuant to the Preferred
Exchange Agreement. As of the date hereof, we have 17,482.5 shares of Series A Preferred Stock outstanding. Any holder of
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Series A Preferred Stock may elect, by written notice to us (w) at any time and from time to time on or after the third
anniversary of March 26, 2018, (x) at any time and from time to time if the terms of the Series B Preferred Stock or Third A&R
Credit Agreement (or other facility) would prohibit the payment of cash dividends on the Series A Preferred Stock, (y) at any
time any shares of Series B Preferred Stock are outstanding, or (z) at any time and from time to time on or after the non-
payment of dividends when due, failure to redeem shares of Series A Preferred Stock when required or any other material
default (in each case, as further specified in the certificate) until such non-payment, failure or default is cured by us, to cause us
to convert, without the payment of additional consideration by such holder, all or any portion of the issued and outstanding
shares of Series A Preferred Stock held by such holder, as specified by such holder in such notice, into a number of shares of
Common Stock determined by dividing (i) the stated value plus accrued and unpaid dividends by (ii) the VWAP per share of
Common Stock for the 30 consecutive trading days ending on the trading day immediately preceding the conversion date. In the
event the Series A Preferred Stock is converted following an uncured non-payment, failure or default event, or if a holder of
Series A Preferred Stock is converting pursuant to (x) or (y) above, for the purposes of the foregoing calculation, VWAP per
share shall be multiplied by 90%. The “VWAP per share” is defined as the per share volume-weighted average price as reported
by Bloomberg (as further described in the certificate governing the Series A Preferred Stock).
The shares of Common Stock that may be issued upon conversion of the Series A Preferred Stock are subject to the
Registration Rights Agreement, and accordingly, we may be required to register the shares of Common Stock underlying the
Series A Preferred Stock for resale.
Accordingly, the Series A Preferred Stock may result in substantial additional issuances and resales of Common Stock.
The timing and number of shares of Common Stock that may be issued as a result of the Series A Preferred Stock is unknown
and dependent upon future events and circumstances, some of which are outside of our control. Additional issuances of
Common Stock, and/or sales of Common Stock, would have the effect of diluting our earnings per share as well as our existing
shareholders’ individual ownership percentages and could lead to volatility in our Common Stock price. Sales of a substantial
number of shares of our Common Stock could depress the market price of our Common Stock and impair our ability to raise
capital through the sale of additional equity or equity-linked securities.
Our stock price has experienced significant volatility.
Our stock price has exhibited substantial volatility in 2020. Our price may fluctuate in response to a number of events
and factors, including, but not limited to:
•
•
•
•
•
•
actual or anticipated quarterly operating results;
new developments and significant transactions;
the financial projections we provide to the public, and any changes to the projections or failure to meet the projections;
changes in our credit ratings;
the public’s reaction to our press releases, other public announcements and filings with the SEC;
changes in financial estimates, recommendations and coverages by securities analysts;
• media coverage of our business and financial performance;
•
•
•
•
trends in our industry;
significant changes in our management;
lawsuits threatened or filed against us; and
general economic conditions.
Price volatility over a given period or a low stock price may result in a number of negative outcomes, including, but
not limited to:
•
creating potential limitations on the ability to raise capital through the issuance of equity or equity linked securities;
26
•
•
•
•
impacting the value of our equity compensation, which affects our ability to recruit and retain employees;
decreasing the value of the contingent earn-out related to our merger agreement, held in large part by members of
management, which could cause a decline in job satisfaction or lead to management turnover;
difficulty complying with the listing standards of NASDAQ; and
increasing the risk of regulatory proceedings and litigation, including class action securities litigation
If any of these outcomes were to occur, it could materially and adversely affect our business, financial condition, or
results of operations, and the value of your investment.
Risks Related to Our Industry and Our Customers’ Industries
Economic downturns could reduce capital expenditures in the industries we serve, which could result in decreased demand
for our services.
The demand for our services has been, and will likely continue to be, cyclical in nature and vulnerable to general
downturns in the U.S. economy. During economic downturns, our customers may not have the ability to fund capital
expenditures for infrastructure, or may have difficulty obtaining financing for planned projects. In addition, uncertain or
adverse economic conditions that create volatility in the credit and equity markets may reduce the availability of debt or equity
financing for our customers, causing them to reduce capital spending. This has resulted, and in the future could result, in
cancellations of projects or deferral of projects to a later date. Such cancellations or deferrals could materially and adversely
affect our results of operations, cash flows and liquidity. These conditions could also make it difficult to estimate our
customers’ demand for our services and add uncertainty to the determination of our backlog.
In addition, our customers are negatively affected by economic downturns that decrease the need for their services or
the profitability of their services. During an economic downturn, our customers also may not have the ability or desire to
continue to fund capital expenditures for infrastructure or may outsource less work. A decrease in related project work could
negatively impact demand for the services we provide and could materially adversely affect our business, financial condition,
results of operations, profitability, cash flows and growth prospects.
Our industry is highly competitive, which may reduce our market share and harm our financial performance.
We compete with other companies in most of the markets in which we operate, ranging from small independent firms
servicing local markets to larger firms servicing regional and national markets. We also face competition from existing and
prospective customers that employ in-house personnel to perform some of the services we provide. Additionally, organizations
that have adequate financial resources and access to technical expertise and skilled personnel may become a competitor. Most
of our customers’ work is awarded through a bid process. Consequently, although management believes reliability is often more
important to customers than price, price is often the principal factor that determines which service provider is selected,
especially on smaller, less complex projects. Smaller competitors sometimes win bids for these projects based on price alone
due to their lower costs and financial return requirements. Additionally, our bids for certain projects may not be successful
because of a customer’s perception of our relative ability to perform the work as compared to our competitors or a customer’s
perception of technological advantages held by our competitors as well as other factors. Our business, financial condition,
results of operations, profitability, cash flows and growth prospects could be materially and adversely affected if we are
unsuccessful in bidding for projects or renewing our contracts, or if our ability to win such projects or agreements requires that
we accept lower margins.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not Applicable.
ITEM 2. PROPERTIES
Our corporate headquarters, located in Indianapolis, Indiana, is a leased facility approximating 27,000 square feet.
We also lease a 56,000 square foot office and 26,000 square foot maintenance facility in Clinton, Indiana. As of
December 31, 2020, our operations were conducted from approximately 15 locations within the U.S. None of these
facilities is material to our operations because most of our services are performed on customers’ premises or on public
rights of way and suitable alternative locations are available in substantially all areas where we currently conduct business.
27
We also own property and equipment that had a net book value of approximately $130.7 million as of December 31, 2020.
This property and equipment includes trucks, tractors, trailers, forklifts, backhoes, sidebooms, bulldozers, excavators,
trenchers, graders, loaders, scrapers, drilling machines, cranes, computers, computer software, office and building
equipment, including furniture and fixtures and other equipment. Substantially all of our equipment is acquired from third-
party vendors, upon none of which we depend, and we did not experience any difficulties in obtaining desired equipment in
2020.
ITEM 3. LEGAL PROCEEDINGS
For information regarding legal proceedings, see Note 9. Commitments and Contingencies of the Notes to
Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K, which is incorporated herein by
reference.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information and Holders
Our Common Stock is listed on the NASDAQ stock market under the symbol IEA. As of February 9, 2021 there were
2,855 holders of record of our Common Stock. Our warrants are listed on the NASDAQ Capital Market under the symbol
IEAW. As of February 9, 2021, there were 2,626 holders of record of our warrants.
Dividend Policy
Our current credit facility and the certificate of designation for our Series B Preferred Stock includes certain
limitations on the payment of cash dividends on our Common Stock. We have not paid any cash dividends since our initial
public offering and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future.
Stock Performance
The performance graph below compares the cumulative total return for our Common Stock with the cumulative total
return (including reinvestment of dividends) of the Russell Broadbased Index Total Return (“Russell 3000”), and our peer
group, which is composed of MasTec, Inc., Quanta Services, Inc., MYR Group, Inc., Construction Partners, Inc., Emcor
Corporation, Granite Construction, Inc., Tetra Tech, Inc., Willdan Group, Inc., Dycom Industries, Inc. and Primoris Services
Corporation. The graph assumes that the value of the investment in our Common Stock, as well as that of the Russell 3000 and
our peer group, was $100 on March 31, 2018 and tracks it quarterly through December 31, 2020. The comparisons in the graph
are based upon historical data and are not intended to forecast or be indicative of possible future performance of our Common
Stock.
The performance graph shall not be deemed incorporated by reference by any general statement incorporating by
reference this Annual Report into any filing under the Securities Act or Exchange Act, except to the extent we specifically
incorporate this information by reference, and shall not otherwise be deemed filed under such acts.
28
29
ITEM 6. SELECTED FINANCIAL DATA
The information below is only a summary and should be read in conjunction with “Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and the
accompanying notes included in “Item 8. Financial Statements and Supplementary Data” in this Annual Report.
(in thousands, except per share data)
Statement of Operations Data:
Revenue(1)
Cost of revenue
Gross profit
2020
For the Years Ended December 31,
2017
2018
2019
2016
$ 1,752,905 $ 1,459,763 $ 779,343 $ 454,949 $ 602,665
517,419
1,564,213
85,246
$ 188,692 $ 157,017 $
388,928
66,021 $
747,817
31,526 $
1,302,746
Selling, general and administrative expenses
Income (loss) from operations
Other (expense) income, net:
$ 113,266 $ 120,186 $
75,426
(62,118)
36,831
(27,959)
72,262 $
(40,736)
32,038
33,543 $
32,478
(2,090)
30,705
54,541
(303)
Net income (loss) from continuing operations
Net income (loss) from discontinued operations
Net income (loss)
Less: Convertible Preferred Stock dividends
Less: Contingent consideration fair value
adjustment
Net income (loss) available for common
stockholders
Earnings Per Share Data:(2)
Net (loss) income from continuing operations per
common share - basic
Net income (loss) from discontinued
operations per common share - basic
Net (loss) income per common share - basic
$
$
$
$
$
Cash Flow Data:
728 $
—
728 $
(2,628)
—
(1,900) $
6,231 $
—
6,231 $
(2,875)
(23,082)
(19,726) $
4,244 $
—
4,244 $
(1,597)
(46,291)
(43,644) $
16,525 $
—
16,525 $
—
—
16,525 $
64,451
1,087
65,538
—
—
65,538
(0.09) $
(0.97) $
(2.01) $
0.77 $
—
—
—
—
(0.09) $
(0.97) $
(2.01) $
0.77 $
2.99
0.05
3.04
Net cash provided by (used in) operating activities $
Net cash (used in) provided by investing activities
Net cash provided by (used in) financing activities
57,746 $
(3,113)
(37,850)
79,812 $
610
(4,474)
47,018 $
(169,834)
189,250
(9,109) $
(3,508)
(4,113)
53,591
(3,000)
(29,617)
Balance Sheet Data:
Cash and cash equivalents
Total assets
Long-term debt
Debt Series B Preferred Stock
Total liabilities
Preferred stock
Total stockholders' (deficit) equity
2020
2019
As of December 31,
2018
2017
2016
$ 164,041 $ 147,259 $
729,140
159,225
173,868
801,818
17,483
(90,161)
824,921
162,901
166,141
916,541
17,483
(109,103)
71,311 $
639,228
295,727
—
735,441
34,965
(131,178)
4,877 $
126,703
33,674
—
136,722
—
(10,019)
21,607
147,716
—
—
134,841
—
12,875
(1) The Company completed two acquisitions in late 2018. For the years ended December 31, 2019 and 2018, the acquired businesses revenue
was $582.3 million and $125.6 million respectively.
(2) The calculation of weighted average common shares outstanding during the periods preceding a reverse recapitalization generally requires
the Company to use the capital structure of the entity deemed to be the acquirer for accounting purposes to calculate earnings per
share. However, as a limited liability company, IEA Services had no outstanding common shares prior to the Merger. Therefore, the weighted
average common shares outstanding for all comparable prior periods preceding the Merger is based on the capital structure of the acquired
company, as management believes that is the most useful measure. See Note 10. Earnings (Loss) Per Share in the notes to the audited
consolidated financial statements included in Item 8.
30
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in
conjunction with our audited consolidated financial statements and the notes to those financial statements included as Item 8 in
this Annual Report. This discussion and analysis includes forward-looking statements that are based on current expectations
and are subject to uncertainties and unknown or changed circumstances. For further discussion, please see “Forward-Looking
Statements” at the beginning of this Annual Report. Our actual results may differ materially from those anticipated in these
forward-looking statements as a result of many factors, including those risks inherent with our business as discussed in “Item
1A. Risk Factors.”
Throughout this section, unless otherwise noted, “IEA,” the “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 specialize in providing complete engineering, procurement and construction services
throughout the United States for the renewable energy, traditional power and civil infrastructure industries. These services
include the design, site development, construction, installation and restoration of infrastructure. We have completed more than
240 wind and solar projects in 40 states and construct one of every five gigawatts put in to place throughout the U.S. in any
given year. Although the Company has historically focused on the renewable industry, but has recently focused on further
expansion into the solar market and with our recent acquisitions have expanded its construction 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. We believe we have the ability to
continue to expand these services because we are well-positioned to leverage our expertise and relationships in the wind energy
business to provide complete infrastructure solutions in all areas.
We have two reportable segments: the Renewables (“Renewables”) segment and the Heavy Civil and Industrial
(“Specialty Civil”) segment. See Segment Results for a description of the reportable segments and their operations.
Coronavirus Pandemic Update
The COVID-19 pandemic continues to significantly impact the United States and the world. Since the start of the
COVID-19 pandemic, 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 took the following actions in the first half of 2020 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 significantly increased communications, signage and oversight of personal hygiene requirements to drive
better prevention practices.
31
• We postponed social gatherings, large in-person training sessions and other activities involving groups of 10
or more.
• We prohibited virtually all Company air travel unless approved by executive leadership. We also required all
employees to report their personal travel schedules in order to closely monitor and take any necessary steps to
maintain the safety of our workforce.
• We increased our efforts to reduce selling, general and administrative 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 significantly increased the use of remote
communication technologies.
We are actively monitoring the COVID-19 pandemic, including disease progression, federal, state and local
government actions, the Center for Disease Control (“CDC”) and World 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 low incidence of infection in our
workforce.
The impact of COVID-19 on construction businesses such as ours is evolving rapidly and its future effects are
uncertain. The Company has received several notices of force majeure from project owners as a result of delivery delays due to
COVID-19. We have experienced project interruptions and restrictions that have delayed project timelines from those
originally planned, and we have experienced some temporary work stoppages. This has led to general inefficiencies from
having to start and stop work, re-sequencing work, requiring on-site health screenings before entering a job site, and following
proper social distancing practices. The Company incurred $3.0 million of specific expenses related to the COVID-19 pandemic
and believe $5.0 to $8.0 million in estimated costs from production inefficiencies for the year ended December 31, 2020. We
cannot predict if there will be further significant disruptions beyond our control, including quarantines and customer work
stoppages, significant force majeure declarations by our suppliers or other equipment providers material to our projects.
We have also 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 has been slowed due to COVID-19. Despite that, we were
able to maintain a relatively consistent total backlog for 2020 compared to 2019.
We are still evaluating the effects that the vaccination and new strains of COVID-19 may have on the current
construction business. Therefore, we are continuing to take actions to preserve our liquidity such as limiting our hiring and
delaying spending on non-critical initiatives. At this point, 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 Year Financial Highlights
Key financial results for the year ended December 31, 2020 include:
•
Consolidated revenues increased 20.1% to $1.8 billion as compared to $1.5 billion for the year ended
December 31, 2019, of which 65.2% was attributable to the Renewables segment and 34.8% was attributable
to the Specialty Civil segment;
32
•
•
•
•
Operating income increased 104.8%, or $38.6 million, to $75.4 million as compared to $36.8 million for the
year ended December 31, 2019;
Operating income as a percentage of revenue also increased significantly at December 31, 2020 to 4.3%
compared to 2.5% for the year ended December 31, 2019;
Net income decreased 88.3%, or $5.5 million, to $0.7 million as compared to $6.2 million for the year ended
December 31, 2019. Included in the net income for December 31, 2019, was a $23.1 million contingency
gain; and
Diluted loss per share increased 90.7%, or $0.88, to $(0.09) as compared to $(0.97) for the year ended
December 31, 2019.
2020 Trends and Future Opportunities
Renewables Segment
During 2020, results of the Renewables segment were impacted by the 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 2020 experienced more favorable weather conditions, which
provided for less construction delays.
Our consistent, safe and reliable performance with our customers on our wind projects have allowed us to
further expand our services into the solar market.
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 has become a cost-
effective solution for the creation of new generating capacity. We believe that this shift coupled with the below, will continue
to drive 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 now 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 methods.
Over 40 states and the District of Colombia have adopted renewable portfolio standards for clean 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).
As a result, wind and solar power are among the leading sources of new power generation capacity in the U.S., and
the Company does not anticipate this trend to change in the near future as we are continuing to see growth through new
awards in our backlog:
(in millions)
Segment
Renewables
December 31, 2019
New Awards
in 2020(1)
Revenue Recognized
in 2020
Backlog at
December 31,
2020(2)
$
1,582.5 $
1,073.7 $
1,142.8 $
1,513.4
33
(1) New awards consist 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.
(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
During 2020, our results of the Specialty Civil segment was impacted by the following significant operational trends:
•
•
•
The COVID-19 pandemic impacted certain aspects of our projects in the rail and environmental remediation
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 environmental remediation and 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 over
the course of 2020 and had significant awarded projects related to:
◦ The rail market started two sizeable projects that will continue with consistent revenue through
2024; and
◦
The heavy civil construction market was consistent year over year for awarded projects.
We believe that our business relationships with customers in these sectors are excellent and the strong reputation that
our acquired companies have built has provided us with the right foundation to continue to grow our revenue base. The drivers
to further growing this segment our as follows:
•
•
•
The FMI 2021 Overview Report published in the first quarter of 2021 projects that nonresidential
construction put in place for the United States will be over $500 billion per year from 2021 to 2024.
Fast Act extension and highway trust fund infusion of $13.6 billion for the highway and transit account.
According to the American Coal Ash Association, coal 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 CCRs were produced in 2019. 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 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
Specialty Civil
December 31, 2019
New Awards
in 2020(1)
Revenue Recognized
in 2020
Backlog at
December 31,
2020(2)
$
588.7 $
577.5 $
610.1 $
556.1
34
(1) New awards consist 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.
(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).
Backlog
See Backlog on Item 1. Business.
Significant Factors Impacting Results
Our revenues, margins and other results of operations can be influenced by a variety of factors in any given period,
including those described in Item 1A. Risk Factors and in Results of Operations and Forward Looking Statements, and those
factors have caused fluctuations in our results in the past and 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 revenues are lowest in the first quarter of the year because cold, snowy or wet conditions
can 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 first quarter. Second quarter revenues are typically higher than those in the first quarter, as some projects
begin, but continued cold and wet weather can often impact productivity. Third quarter revenues are typically the highest of the
year, as a greater number of projects are underway and operating conditions, including weather, are normally more
accommodating. Generally, revenues during the fourth quarter are lower than the third quarter but higher than the second
quarter, as many projects are completed and customers often seek to spend their capital budgets before year end. However, the
holiday season and inclement weather can sometimes cause delays during the fourth quarter, reducing revenues and increasing
costs.
Our revenue and results of operations for our Specialty Civil segment are also effected by seasonality but to a lesser
extent as these projects are more geographically diverse and located in less severe weather areas. While the first and second
quarter revenues are typically lower than the third and fourth quarter, the geographical diversity has allowed this segment to be
less seasonal over the course of the year.
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.
Revenue mix. The mix of revenues based on the types of services we provide in a given period will impact margins, as
certain industries and services provide higher-margin opportunities. Revenue derived from projects billed on a fixed-price basis
totaled 97.7% for the year ended December 31, 2020. 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 2.3% of consolidated revenue for the year ended December 31, 2020.
Size, scope and complexity 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
35
assume a greater degree of performance risk and there is greater utilization of our resources for longer construction timeframes.
Furthermore, smaller or less complex projects typically have a greater number of companies competing for them, and
competitors at times may more aggressively pursue available work. A greater percentage of smaller 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 workforce 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
volume or type of work performed, the pricing structure under the project contract or job productivity. Additionally, our
productivity and performance 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 work 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 performance 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 markup on materials is generally lower
than our markup on labor costs. Furthermore, fluctuations in the price 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 margins. In a given period, an
increase in the percentage of work with higher materials procurement requirements may decrease our overall margins.
Results of Operations
A discussion of results of operations changes between the years ended December 31, 2019 and 2018 is included below
if changes were deemed significant and all other changes were in Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2019, which was
filed with the SEC on March 12, 2020.
Comparison of Years Ended December 31, 2020 and 2019
The following table reflects our consolidated results of operations in dollar and percentage of revenue terms for the
periods indicated:
(in thousands, except percentages)
Revenue
Cost of revenue
Gross profit
Year Ended December 31,
2020
2019
Change
$
%
$ 1,752,905
100.0 % $ 1,459,763
100.0 %
293,142
1,564,213
89.2 % 1,302,746
89.2 %
261,467
188,692
10.8 %
157,017
10.8 %
31,675
20.1
20.1
20.2
Selling, general and administrative expenses
113,266
6.5 %
120,186
8.2 %
(6,920)
(5.8)
75,426
4.3 %
36,831
2.5 %
38,595
104.8
Income from operations
Other income (expense), net:
Interest expense, net
Other expense
Income before income taxes
(Provision) benefit for income taxes
Contingent consideration fair value adjustment
—
— %
23,082
1.6 %
(23,082)
(61,689)
(3.5) %
(51,260)
(3.5) %
(10,429)
(429)
— %
(4,043)
(0.3) %
0.3 %
3,614
8,698
13,308
0.8 %
(12,580)
(0.7) %
4,610
1,621
0.1 %
(14,201)
(876.1)
20.3
100.0
(89.4)
188.7
Net income
$
728
— % $
6,231
0.4 %
(5,503)
(88.3)
See Segment Results, below, for a discussion of Revenue and Gross profit.
Revenue. Revenue increased by 20.1%, or $293.1 million, during the year ended December 31, 2020 as compared to 2019.
36
Gross profit. Gross profit increased by 20.2%, or $31.7 million, during the year ended December 31, 2020 as compared to
2019.
Selling, general and administrative expenses. Selling, general and administrative expenses decreased by 5.8%, or $6.9
million, during the year ended December 31, 2020 as compared to 2019. Selling, general and administrative expenses were
6.5% of revenue for the year ended December 31, 2020, compared to 8.2% for 2019. The decrease in selling, general and
administrative expenses was primarily driven by cost decreases in 2020 compared to 2019 for:
•
•
•
Acquisitions costs of $8.9 million were incurred in 2019 related to our purchase of CCS and William Charles,
Staff related benefit costs decreased $2.7 million, and
Business travel costs of $2.1 million decreased in 2020 due to Company mandate to adhere to state and
national COVID-19 protocols.
The reductions above were partially offset by expense increases for:
•
•
Outside service fees increased $4.6 million in 2020 due to an increase in legal fees and consulting fees related
to equity transactions, and
Information technology expenses increased $2.6 million in 2020 due to an increase of field employees and
mobile field sites, as well as work from home setups for office employees.
Interest expense, net. Interest expense increased by 20.3%, or $10.4 million, during the year ended December 31, 2020 as
compared to 2019. This increase was driven by an increase in Series B Preferred Stock dividends of $25.4 million partially
offset by a reduction of interest expense related to the Company's credit facility of $14.0 million.
Contingent consideration fair value adjustment. The Merger agreement required the Company to issue additional shares of
our Common Stock to the Seller if certain financial targets for 2019 were achieved. The financial targets were not achieved.
Therefore, the Company recorded a fair value adjustment of $23.1 million at the end of 2019, to remove the remaining liability
for the contingent consideration.
Other expense. Other expense decreased by 89.4%, or $3.6 million, during the year ended December 31, 2020 as compared to
2019, primarily related to the fair value adjustment on the anti-dilution warrants related to the potential issue of common stock
for the conversion of the Series A Preferred shares.
(Provision) benefit for income taxes. Income tax expense increased by 876.1%, or $14.2 million, during the year ended
December 31, 2020, compared to 2019. The effective tax rates for the years ended December 31, 2020 and 2019 were 94.5%
and 35.2%, respectively. The higher effective tax rate in 2020 was primarily attributable to dividends on the Series B Preferred
Stock, which are treated as interest expense but not deductible for taxes.
Segment Results
The 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
respective markets that each segment serves. 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.
37
The following table sets forth segment revenues and gross profit for the years indicated, as well as the dollar and
percentage change from the prior year:
(in thousands)
Segment
Renewables
Specialty Civil
Total revenue
(in thousands)
Segment
Renewables
Specialty Civil
Total gross profit
Year Ended December 31,
2020
2019
Change
% of
Total
Revenue
Revenue
% of
Total
Revenue
Revenue
$
$ 1,142,842
65.2 % $
834,029
57.1 %
308,813
610,063
34.8 %
625,734
42.9 %
(15,671)
$ 1,752,905
100.0 % $ 1,459,763
100.0 % $ 293,142
%
37.0 %
(2.5) %
20.1 %
Years ended December 31,
2020
2019
Change
Gross
Profit
Margin
Gross Profit
Gross
Profit
Margin
$
%
Gross Profit
126,919
$
11.1 % $
61,773
10.1 %
88,309
68,708
10.6 %
11.0 %
38,610
43.7 %
(6,935)
(10.1) %
$
188,692
10.8 % $
157,017
10.8 % $
31,675
20.2 %
Renewables Segment Results
Revenue. Renewables revenue was $1,142.8 million for the year ended December 31, 2020 as compared to $834.0 million for
2019, an increase of 37.0%, or $308.8 million. The increase in revenue was primarily due to an increase in customer demand
from the extension of the PTC credit, which increased the number of wind projects in construction during the year, coupled
with further increased growth in the Solar market during 2020:
•
•
•
The increased customer demand allowed the company to construct 28 projects of greater than $5.0 million of
revenue in 2020 compared to only 23 projects during 2019,
The average value of the 28 projects was $40.1 million in 2020 compared to $37.1 million related to the 23
projects during 2019, and
Solar revenue increased $106.3 million for the year ended December 31, 2020 when compared to 2019.
Gross profit. Renewables gross profit was $126.9 million for the year ended December 31, 2020 as compared to $88.3 million
for 2019, an increase of 43.7%, or $38.6 million. As a percentage of revenue, gross profit was 11.1% in 2020, as compared to
10.6% in 2019. The increase was primarily attributable to the following:
•
•
Projects generated greater gross margins due to more favorable weather conditions which led to less project
delays.
The year ended December 31, 2019, also had lower gross margins related to completing construction on
projects that were significantly impacted by weather in 2018.
Specialty Civil Segment Results
Revenue. Specialty Civil revenue was $610.1 million for the year ended December 31, 2020 as compared to $625.7 million for
2019, a decrease of 2.5%, or $15.7 million. The decrease in revenue was primarily due to the delay of certain projects in the rail
and environmental remediation end markets, offset by higher revenue from our construction project mix in the heavy civil
market as compared to 2019:
•
•
Rail and environmental remediation markets experienced a decrease in revenue primarily due to delay in
project starts for utilities and railroads coupled with delays in obtaining environmental permit approvals,
Offsetting the decrease in revenue was a slight increase in our heavy civil construction mix of projects.
38
Gross profit. Specialty Civil gross profit was $61.8 million for the year ended December 31, 2020 as compared to $68.7 million
for 2019, a decrease of (10.1)%, or $6.9 million. As a percentage of revenue, gross profit was 10.1% in 2020, as compared to
11.0% in 2019. The decrease was primarily attributable to the mix of our projects in 2020 compared to 2019. In 2020, the
Company had lower gross margin due to the mix of the projects as there were more heavy civil construction projects which
typically generate lower gross margins then our rail and environmental remediation markets.
Liquidity and Capital Resources
Liquidity is provided by available cash balances, cash generated from operations, availability under our credit facility
and access to capital markets. We have a committed line of credit totaling $75.0 million, which may be used for revolving
loans, letters of credit and/or general purposes. We believe the cash generated from operations, along with our unused credit
capacity of $67.2 million and available cash balances as of December 31, 2020, will be sufficient to fund any working capital
needs for the next 12 months and beyond.
To the extent that cash from operations and borrowings under our revolving credit facility are not sufficient to meet
our liquidity needs in the next twelve months, we expect to access other sources of liquidity through alternative sources such as
issuance of debt and equity securities, expansions of our credit facility or other sources. There can be no assurance that any
such sources will be available or if they are available that we can obtain capital from such sources on commercially reasonable
terms.
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.
Working 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.
Sources and Uses of Cash
Sources and uses of cash are summarized below for the periods indicated:
(in thousands)
Net cash provided by operating activities
Net cash provided by (used in) investing activities
Net cash (used in) financing activities
Year Ended December 31,
2020
2019
$ 57,745
$ 79,812
(3,113)
(37,850)
610
(4,474)
Operating Activities. Net cash provided by operating activities for the year ended December 31, 2020 was $57.7
million as compared to $79.8 million for 2019. The $22.1 million decrease in operating cash flow for the year ended December
31, 2020 as compared to 2019 was attributable to the timing of receipts from customers and payments to vendors in the ordinary
course of business. The decrease is primarily attributable to $183.6 million more cash collected for accounts receivable and
contract assets, offset by $239.9 million more cash paid for accounts payable and contract liabilities.
Investing Activities. Net cash used in investing activities for the year ended December 31, 2020 was $3.1 million as
compared to net cash provided by investing activities of $0.6 million for 2019. The primary increase of net cash used in
investing activities was mainly due to $9.7 million of purchases of property, plant and equipment in 2020 compared to $6.8
million spent in 2019.
Financing Activities. Net cash used by financing activities for the year ended December 31, 2020 was $37.9 million
as compared to $4.5 million for 2019. The $33.4 million decrease in cash for financing activities in 2020 compared to 2019 was
primarily attributable to a reduction of proceeds from net debt and Series B Preferred Stock of $11.5 million for 2020 compared
to $8.8 million in 2019, coupled with a reduction of proceeds from sale leaseback transactions of $24.3 million that occurred in
2019.
39
Capital Expenditures
For the year ended December 31, 2020, we incurred $26.2 million in finance lease principal payments and an
additional $9.7 million in cash purchases. We estimate that we will spend approximately two percent of revenue for capital
expenditures in 2020. 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.
Debt
Third A&R Credit Agreement
On May 20, 2019, the Third A&R Credit Agreement (the “Third A&R Credit Agreement”) became effective. The
Third A&R Credit Agreement bifurcated the remaining principal amount of the initial term loan facility of $300.0 million (the
“Initial Term Loan”). The Third A&R Credit Agreements leaves in place the revolving credit facility of $50.0 million (the
“Initial Revolving Facility”), which provides for swing line loans of up to $20.0 million (“Swing Line Loans”) and standby and
commercial letters of credit. Obligations under the Third A&R Credit Agreement are guaranteed by all of the present and future
assets, and those of Intermediate Holdings (as defined therein) and the Subsidiary Guarantors (as defined therein), subject to
customary carve-outs.
Interest on the term loan tranche accrues at a per annum rate of, at the Company's option, (x) LIBOR plus a margin of
8.25% or (y) an alternate base rate plus a margin of 7.25%; provided, however, that upon achieving a First Lien Net Leverage
Ratio (as defined below) of no greater than 2.67:1.00, the margin shall permanently step down to (y) for LIBOR loans, 6.75%
and (x) for alternative base rate loans, 5.75%. Interest on Initial Revolving Facility borrowings and Swing Line Loans accrues
at a rate of, at the Company's option, (x) LIBOR plus a margin of 4.25% or (y) the applicable base rate plus a margin of 3.25%.
Default interest will accrue on the obligations at the otherwise applicable rate plus 3%.
The Initial Revolving Facility is required to be repaid and terminated on September 25, 2023. Borrowings under the
Initial Revolving Facility may be paid and reborrowed. The Initial Term Loan matures on September 25, 2024. Borrowings
under the Initial Term Loan are required to be repaid on the last business day of each March, June, September and December,
continuing with the first fiscal quarter following the effective date of the Third A&R Credit Agreement, in an amount equal to
2.5% of the initial balance of the Initial Term Loan and may not be reborrowed.
Beginning with 2020, an additional annual payment of a percentage of Excess Cash Flow (as defined in the Third
A&R Credit Agreement) over the prior year is required on the Initial Term Loan depending upon the First Lien Net Leverage
Ratio as of the last day of such year. The First Lien Net Leverage Ratio is defined as the ratio of: (A) the excess of (i)
consolidated total debt that, as of such date, is secured by a lien on any of our asset or property or of any restricted subsidiary
that is not expressly subordinated to the lien securing the obligations under the Third A&R Credit Agreement, over (ii) certain
net cash as of such date not to exceed $50,000,000, to (B) consolidated EBITDA, calculated on a pro forma basis for the most
recently completed measurement period. The required payment percentage of Excess Cash Flow depending upon the First Lien
Net Leverage Ratio will be as follows:
Required Payment Amount
100% of Excess Cash Flow
75% of Excess Cash Flow
50% of Excess Cash Flow
25% of Excess Cash Flow
0% of Excess Cash Flow
Ratio
Greater than 5.00 : 1.00
Less than or equal to 5.00 : 1.00 but greater than 1.76 : 1.00
Less than or equal to 1.76 : 1.00 but greater than 1.26 : 1.00
Less than or equal to 1.26 : 1.00 but greater than 0.76 : 1.00
Less than or equal to 0.76 : 1.00
Under the Third A&R Credit Agreement, the Company is required to not permit the First Lien Net Leverage Ratio, as
of the last day of any consecutive four fiscal quarter period to be greater than:
40
Measurement Period
From and after fiscal quarter ending March 31, 2019 through December 31, 2019
From and after fiscal quarter ending March 31, 2020 through December 31, 2020
From and after fiscal quarter ending March 31, 2021 through December 31, 2021
From and after the fiscal quarter ending March 31, 2022
Amendment to Third A&R Credit Agreement
Ratio
4.75 : 1.00
3.50 : 1.00
2.75 : 1.00
2.25 : 1.00
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 to $75.0
million.
In addition, the Amendment provides that after October 30, 2020 and until delivery of the financial statements for the
fiscal quarter ended December 31, 2020, 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
Less than 1.00:1.00
Less than 2.00:1.00 but greater than or equal to 1.00:1.00
Less than 3.00:1.00 but greater than or equal to 2.00:1.00
Less than 3.50:1.00 but greater than or equal to 3.00:1.00
Greater than or equal to 3.50:1.00
LIBOR Loans
Base Rate Loans
2.50%
2.75%
3.00%
3.25%
3.50%
1.50%
1.75%
2.00%
2.25%
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
Less than 2.00:1.00 but greater than or equal to 1.00:1.0
Less than 3.00:1.00 but greater than or equal to 2.00:1.00
Greater than or equal to 3.00:1.00
0.35%
0.40%
0.45%
0.50%
We were in compliance with the provisions and covenants contained in our outstanding debt instruments as of
December 31, 2020.
Series A Preferred Stock
As of December 31, 2020, 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 and only as, if and when declared by our 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.
The Company did not pay any dividends in cash for any quarter in 2020, on the Series A Preferred Stock and therefore
dividends accrued on the stated value and increased 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.
41
As of December 31, 2020, the Company has accrued a cumulative of $4.4 million in dividends to holders of Series A
Preferred Stock as a reduction to additional paid-in capital.
Series B Preferred Stock
In 2019, the Company entered into three equity agreements 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 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 is February 15, 2025.
As of December 31, 2020, we had 199,474 shares of Series B Preferred Stock outstanding, with each share having an
initial stated value of $1,000 plus accumulated but unpaid dividends. Our Common Stock and Series A Preferred Stock are
junior to the Series B Preferred Stock. Dividends are paid on the Series B Preferred Stock only as, if and when declared by our
Board.
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 a 13.5% rate if the ratio if greater. The Series B Preferred Stock agreements allow the
Company to accrue, but not pay, the dividends at a 15.0% annual rate. Accrued dividends increase the amount of Series B
Preferred Stock. Accrued dividends were $18.3 million at December 31, 2020. Prior to June 30, 2020, the Company accrued
its Series B Preferred Stock payments; the June 30, September 30, and December 31, 2020 payments were made in cash.
Dividend payments are not deductible in calculating the Company’s federal and state income taxes.
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
The new NOL carryforward and interest expense deduction rules are favorable for the Company and will help defer
future cash tax liabilities. The Company has filed an election to refund $0.5 million AMT credit in April 2020 that was received
in the third quarter.
The Company has also made use of the payroll deferral provision to defer the 6.2% social security tax, which is
approximately $13.6 million through December 31, 2020. This amount is required to be paid at 50% on each of December 31,
2021 and December 31, 2022.
42
Contractual Obligations
The following table sets forth our contractual obligations and commitments for the periods indicated as of December
31, 2020:
(in thousands)
Debt (principal)(1)
Debt (interest)(2)
Debt - Series B Preferred
Stock(3)
Dividends - Series B
Preferred Stock(4)
Finance leases(5)
Operating leases(6)
Total
Payments due by period
Total
$ 178,927
41,248
2021
$
2,506
12,365
$
2022
16,938
12,109
$
2023
29,986
10,361
2024
$ 129,368
6,409
$
2025
129
4
Thereafter
—
$
—
199,474
—
—
—
—
199,474
—
125,853
60,806
51,666
$ 657,974
26,113
27,391
11,162
79,537
26,113
22,161
9,372
86,693
$
26,113
6,946
7,022
80,428
26,113
2,847
3,461
$ 168,198
21,401
1,461
1,751
$ 224,220
$
$
—
18,898
18,898
$
(1) Represents the contractual principal payment due dates on our outstanding debt.
(2) Includes variable rate interest using December 31, 2020 rates.
(3) Represents the mandatorily redeemable debt - Series B Preferred with expected redemption date of February 15, 2025.
(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, including associated interest, recognized under various finance leases for equipment totaling $60.8
million at December 31, 2020. Net amounts recognized within property, plant and equipment, net in the condensed
consolidated balance sheet under these financed lease agreements at December 31, 2020 totaled $72.9 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.
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 and liabilities associated with certain indemnification and guarantee arrangements.
Letters of Credit and Surety Bonds
In the ordinary course of business, we may be 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,
we would be required to reimburse the issuer, which, depending upon the circumstances, could result in a charge to earnings.
As of December 31, 2020 and 2019, we were contingently liable under letters of credit issued under our respective revolving
lines of credit in the amount of $7.8 million and $21.0 million, respectively, related to projects. In addition, as of December 31,
2020 and 2019, we had outstanding surety bonds on projects of $2.8 billion and $2.4 billion. We anticipate that our current
bonding capacity will be sufficient for the next twelve months based on current backlog and available capacity.
See Note 9. Commitments and Contingencies to our consolidated financial statements for further discussion pertaining
to certain of our off-balance sheet arrangements.
Critical Accounting Policies and Estimates
This management’s discussion and analysis of our financial condition and results of operations is based upon IEA’s
consolidated financial statements included in Item 8, which have been prepared in accordance with GAAP. The preparation of
these consolidated financial statements requires the use of estimates and assumptions that affect the amounts reported in our
consolidated financial statements and the accompanying notes. We base our estimates on historical experience and on various
other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis of making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Given that
43
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.
For discussion of all of our significant accounting policies, see Note 1. Business, Basis of Presentation and Significant
Accounting Policies to our consolidated financial statements.
We believe that the accounting policies described below are the most critical in the preparation of our consolidated
financial statements as they are important to the portrayal of our financial condition and require significant or complex
judgment and estimates on the part of management.
Revenue Recognition for Projects
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.
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.
Contracts contain multiple pricing options, such as fixed price, time and materials, or unit price. Generally, renewable energy
projects are performed for private customers while Specialty Civil projects are performed for various governmental entities.
Revenue from construction contracts is recognized over time using the cost-to-cost measure of progress. For these
contracts, the cost-to-cost measure of progress best depicts the continuous transfer of control of goods or services to the
customer. Such contracts provide that the customer accept completion of progress to date and compensate the Company for
services rendered.
Construction contract revenue is recognized over time using the cost-to-cost measure of progress for fixed price
contracts. The 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 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 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 to transfer a distinct good or service to the customer and is the unit
of account under Topic 606. The transaction price of a contract is allocated to distinct performance obligations and recognized
as revenue when or as the performance obligations 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.
44
Remaining performance obligations represent the amount of unearned transaction prices for fixed price contracts and
open purchase orders for which work is wholly or partially unperformed. As of December 31, 2020, the amount of the
Company’s remaining performance obligations was $1,328.0 million. The Company expects to recognize approximately 83.1%
of its remaining performance obligations as revenue in 2020, with the remainder recognized primarily in 2021. Revenue
recognized from performance obligations satisfied in previous periods was $(10.0) million and $11.3 million for the years
ended December 31, 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
past practices with the customer, specific discussions, correspondence or preliminary negotiations with the customer, legal
evaluations 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 December 31, 2020 and 2019 , the Company included approximately $52.6 million and $73.3 million,
respectively, on 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 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.
Goodwill
We have goodwill that has been recorded in connection with our businesses. For the year ended December 31, 2020,
management performed a qualitative assessment for its Renewable Segment goodwill by examining relevant events and
circumstances that could have an effect on its fair value, such as macroeconomic conditions, industry and market conditions,
entity-specific events, financial performance and other relevant factors or events that could affect earnings and cash flows.
Based on evaluation of these qualitative assessments, it was determined that there was no goodwill impairment for these years.
In our Specialty Civil segment, we valued these reporting units using a weighted combination of the income and
market approaches. The critical assumptions that factored into the valuations are the projected future revenues and profitability
of the reporting units, their long-term growth rates, the discount rate used to present value the future cash flows and the
valuation multiples derived from a set of guideline public companies. The test determined that goodwill was not impaired since
the estimated fair value of each reporting unit exceeded its net book value. There can be no assurance that a future goodwill
impairment doesn't exist if future events are less favorable than what we assumed or estimated in our impairment analysis.
Impairment of Property, Plant and Equipment and Intangibles
We review long-lived assets that are held and used for impairment whenever events or changes in circumstances
indicate that their carrying amounts may not be recoverable. If an evaluation is required, the estimated future undiscounted cash
flows associated with the asset are compared with the asset’s carrying amount to determine if there has been an impairment,
which is calculated as the difference between the fair value of an asset and its carrying value. Estimates of future undiscounted
cash flows are based on expected growth rates for the business, anticipated future economic conditions and estimates of residual
values. Fair values take into consideration management’s estimates of risk-adjusted discount rates, which are believed to be
consistent with assumptions that market participants would use in their estimates of fair value. There were no impairments of
property, plant and equipment or intangible assets recognized during the years ended December 31, 2020, 2019 and 2018.
45
“Emerging Growth Company” Status
As of December 31, 2019, the Company's total annual gross revenues exceed $1.07 billion and we are no longer an
“emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). See Note 1. Business,
Basis of Presentation and Significant Accounting Policies to our consolidated financial statements for more information.
Recently Issued Accounting Pronouncements
See Note 1. Business, Basis of Presentation and Significant Accounting Policies to our consolidated financial
statements included in this Annual Report on 10-K for disclosures concerning recently issued accounting standards. These
disclosures are incorporated herein by reference.
Quarterly Financial Information (Unaudited)
Summarized quarterly results of operations for the year ended December 31, 2020 were as follows:
($ in thousands, except per share data)
Revenue
Gross profit
(Loss) income from operations
Net (loss) income
Less: Convertible preferred share dividends
Less: Net income allocated to participating securities
Net income (loss) available to common stockholders
Net (loss) income per common share - basic
Net (loss) income per common share - diluted
First Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$
358,163
$
480,604
$
522,232
$
391,906
33,041
3,557
(12,743)
(766)
—
(13,509) $
54,241
26,167
3,597
(606)
(802)
2,189
(0.66) $
(0.66) $
0.11
0.09
$
$
$
58,889
29,233
11,266
(619)
(2,854)
7,793
0.37
0.32
$
$
$
42,521
16,469
(1,392)
(637)
—
(2,029)
(0.10)
(0.10)
$
$
$
Weighted average common shares outstanding - basic
20,522,216
20,751,673
20,968,271
20,992,062
Weighted average common shares outstanding - diluted
20,522,216
39,978,382
35,336,064
20,992,062
Summarized quarterly results of operations for the year ended December 31, 2019 were as follows:
($ in thousands, except per share data)
Revenue
Gross profit
(Loss) Income from operations
Net (loss) income
Less: Convertible preferred share dividends
Less: Contingent consideration fair value adjustment
Net income (loss) available to common stockholders
Net income per common share - basic
Net income per common share - diluted
First Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$
189,781
$
327,961
$
422,022
$
519,999
5,744
(22,010)
(23,639)
(525)
31,422
5,544
6,208
(918)
—
(24,164) $
(18,835)
(13,545) $
52,870
21,557
12,609
(759)
(4,247)
7,603
(1.09) $
(1.09)
(0.61) $
(0.61)
0.37
0.24
$
$
66,981
31,740
11,053
(673)
—
10,380
0.51
0.31
$
$
Weighted average common shares outstanding - basic
22,188,757
22,252,489
20,446,811
20,446,811
Weighted average common shares outstanding - diluted
22,188,757
22,252,489
35,419,432
35,711,512
Certain transactions affecting comparisons of the Company's quarterly results, which may not represent the amounts recognized
for the full year for such transactions, include the following:
•
Beginning in the third quarter of 2019, there is an adjustment to shares outstanding for removal of 1.8 million unvested
shares. The number of outstanding shares of Common Stock for voting purposes remains at 22.3 million shares, as the
46
aforementioned 1.8 million shares are entitled to vote those shares during the vesting period. See Note 10. Earnings
(Loss) Per Share in the notes to the audited consolidated financial statements included in Item 8.
•
Typically, our revenue in our Renewables segment is lowest in the first quarter of the year because cold, snowy or wet
conditions experienced in the northern climates are not conducive to efficient or safe construction practices. Revenue
in the second quarter is typically higher than in the first quarter, as some projects begin, but continued cold and wet
weather and effects from thawing ground conditions can often impact second quarter productivity. The third and fourth
quarters are typically the most productive quarters of the year as a greater number of projects are underway and
weather is normally more accommodating to construction projects. In the fourth quarter, many projects tend to be
completed by customers seeking to spend their capital budgets before the end of the year, which generally has a
positive impact on our revenue. Nevertheless, the holiday season and inclement weather can 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 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 impacted 2020 quarterly revenues, which shifted
revenue from the fourth quarter into the second and third quarter of 2020.
47
ITEM 7A. 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 estimated earnings in excess of billings 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 high creditworthiness and diversity of our customers.
Interest Rate Risk
Borrowings under our new credit facility are at variable rates of interest and expose us to interest rate risk. As of
December 31, 2019, we had not entered into any derivative financial instruments to manage this 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. Our outstanding principal on debt as of December 31, 2020 was $178.9 million. A one hundred basis
point change in the LIBOR rate would increase or decrease interest expense by $1.8 million.
48
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firms
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders' Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Page
50
53
54
55
56
58
49
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Infrastructure and Energy Alternatives, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Infrastructure and Energy Alternatives, Inc. (the
“Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, stockholders’ equity
(deficit), and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively
referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally
accepted in the United States of America.
Change in Accounting Principles
As discussed in Note 1 to the financial statements, the Company changed its method of accounting for revenue recognition in
fiscal year 2019, due to the adoption of Accounting Standards Update No. 2014-9, Revenue from Contracts with Customers
(Topic 606), under the modified retrospective method. Additionally, the Company changed its method of accounting for leases
in fiscal year 2019, due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842), under the modified
retrospective method.
Basis for Opinions
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in
accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting,
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on
the accounts or disclosures to which they relate.
Revenue Recognition for Unapproved Change Orders—Refer to Note 1 to the financial statements
Critical Audit Matter Description
Revenue from construction contracts is recognized over time using the cost-to-cost measure of progress. 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.
Transaction pricing for the Company’s contracts may include variable consideration, including items such as change orders.
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
50
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 the transaction price are based on past practices with the customer, specific
discussions, correspondence or preliminary negotiations with the customer, legal evaluations, and all other relevant information
that is reasonably available.
To the extent unapproved change orders are not resolved in the Company’s favor, there could be reductions in, or reversals of,
previously recognized revenue. As of December 31, 2020, the Company included approximately $52.6 million of unapproved
change orders 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.
We identified revenue recognized related to unapproved change orders as a critical audit matter because of the judgments
necessary for management to determine the variable consideration related to unapproved change orders and the extent of audit
effort and degree of auditor judgment when performing procedures to audit management’s estimates of revenue related to
unapproved change orders.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s estimates of variable consideration related to unapproved change orders used in
the transaction price to recognize revenue on construction contracts included the following, among others:
• We tested the effectiveness of controls over the Company’s unapproved change orders and estimates of variable
consideration.
• We tested the mathematical accuracy of management’s calculation of revenue recognized from unapproved change
orders.
• We compared historical estimates of variable consideration to actual results to evaluate management’s estimates.
•
For a selection of contracts identified with significant unapproved change orders, we performed the following:
–
–
Evaluated the Company’s variable consideration against the contract provisions.
Evaluated details of the underlying costs included in the unapproved change orders.
– Obtained available correspondence with customers.
–
Performed inquiries with project managers and executive management, including those independent of
accounting.
– Obtained a legal evaluation of the contractual provisions from internal counsel.
Goodwill for CCS Reporting Unit—Refer to Notes 1 and 5 to the financial statements
Critical Audit Matter Description
Goodwill represents the excess purchase price paid over the fair value of acquired intangible and tangible assets. Goodwill is
assessed annually for impairment on October 1st and tested for impairment more frequently if events and circumstances
indicate that the asset might be impaired. The goodwill recorded in the Specialty Civil segment is a result of two business
acquisitions in 2018. The Company estimated the fair value of the Consolidated Construction Solutions I LLC (CCS) reporting
unit using a combination of income and market approaches weighted equally. It was determined that goodwill was not impaired
as of the measurement date for 2020, since the estimated value fair value of the reporting unit exceeded its net book value by
18.3 percent.
Assumptions that factor into the valuation of goodwill for the CCS reporting unit are projected future cash flows, estimated
using projected revenues and profitability of the reporting unit, selected long-term growth rates, as well as the discount rate.
The determination and extent of audit procedures related to these assumptions required a high degree of auditor judgment and
an increased extent of effort, including the need to involve fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the assumptions used by management within the discounted cash flow model for CCS included
the following, among others:
• We evaluated management’s ability to accurately forecast projected revenues and profitability by comparing actual
results to management’s historical forecasts.
51
• We evaluated the reasonableness of management’s estimates of projected revenues and profitability by comparing the
projections to:
– Historical revenues and profitability.
– Backlog information for awarded projects.
–
–
Publicly available information about the industry.
Evidence obtained in other areas of the audit.
• With the assistance of fair value specialists, we evaluated the reasonableness of the Company’s calculation of fair
value by:
– Assessing the appropriateness of the valuation methodology used to determine the company-specific risk
premiums in calculating the discount rate.
–
–
Testing the source information underlying the determination of the discount rate and the mathematical
accuracy of the calculation.
Evaluating the reasonableness of the long-term growth rates through comparison to industry reports and peer
companies.
/s/ Deloitte & Touche LLP
Indianapolis, Indiana
March 8, 2021
We have served as the Company’s auditor since 2018.
52
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Consolidated Balance Sheets
($ in thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net
Contract assets
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment, net
Operating lease asset
Intangible assets, net
Goodwill
Company-owned life insurance
Deferred income taxes
Other assets
Total assets
Liabilities, Preferred Stock and Stockholders' Deficit
Current liabilities:
Accounts payable
Accrued liabilities
Contract liabilities
Current portion of finance lease obligations
Current portion of operating lease obligations
Current portion of long-term debt
Total current liabilities
Finance lease obligations, less current portion
Operating lease obligations, less current portion
Long-term debt, less current portion
Debt - Series B Preferred Stock
Series B Preferred Stock - warrant obligations
Deferred compensation
Total liabilities
Commitments and contingencies:
$
$
$
December 31,
2020
2019
$
$
$
164,041
163,793
145,183
19,352
492,369
130,746
36,461
25,434
37,373
4,250
2,069
438
729,140
104,960
129,594
118,235
25,423
8,835
2,506
389,553
32,146
29,154
159,225
173,868
9,200
8,672
801,818
147,259
203,645
179,303
16,855
547,062
140,488
43,431
37,272
37,373
4,752
12,992
1,551
824,921
177,783
158,103
115,634
23,183
9,628
1,946
486,277
41,055
34,572
162,901
166,141
17,591
8,004
916,541
Preferred stock, $0.0001 par value per share; 1,000,000 shares authorized; 17,483 and 17,483 shares
issued and outstanding at December 31, 2020 and December 31, 2019, respectively
17,483
17,483
Stockholders' equity (deficit):
Common stock, $0.0001 par value per share; 150,000,000 and 100,000,000 shares authorized;
21,008,745 and 20,460,533 shares issued and 21,008,745 and 20,446,811 outstanding at December
31, 2020 and December 31, 2019, respectively
Treasury stock, 13,722 shares at cost at December 31, 2019
Additional paid-in capital
Accumulated deficit
Total stockholders' deficit
Total liabilities, preferred stock and stockholders' deficit
2
—
35,305
(125,468)
(90,161)
729,140
$
2
(76)
17,167
(126,196)
(109,103)
824,921
$
See accompanying notes to consolidated financial statements.
53
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Consolidated Statements of Operations
($ in thousands, except per share data)
Revenue
Cost of revenue
Gross profit
Selling, general and administrative expenses
Income (loss) from operations
Other income (expense), net:
Interest expense, net
Contingent consideration fair value adjustment
Other expense
Income (loss) before (provision) benefit for income taxes
Year Ended December 31,
2020
2019
2018
$ 1,752,905
$ 1,459,763
$
779,343
1,564,213
1,302,746
188,692
157,017
113,266
75,426
120,186
36,831
747,817
31,526
72,262
(40,736)
(61,689)
(51,260)
(12,080)
—
(429)
13,308
23,082
(4,043)
4,610
46,291
(2,173)
(8,698)
(Provision) benefit for income taxes
(12,580)
1,621
12,942
Net income
Less: Convertible Preferred Stock dividends
Less: Contingent consideration fair value adjustment
Net income (loss) available for common stockholders
Net (loss) income per common share - basic and diluted
$
$
$
728
$
6,231
$
4,244
(2,628)
—
(2,875)
(23,082)
(1,597)
(46,291)
(1,900) $
(19,726) $
(43,644)
(0.09) $
(0.97) $
(2.01)
Weighted average common shares outstanding - basic and diluted
20,809,493
20,431,096
21,665,965
See accompanying notes to consolidated financial statements.
54
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Consolidated Statements of Stockholders' Equity (Deficit)
(In thousands)
Common Stock
Treasury Stock
Par
Value
Additional
Paid-in
Capital
Accumulated
Deficit
Shares
Par
Value
Accumulated
Other
Comprehensive
Income
Balance, January 1, 2018
Net income
Equity plan compensation
Issuance of common stock
Issuance of preferred stock
Contingent consideration
Merger recapitalization transaction
Preferred dividends
Shares
21,578
—
—
577
—
—
—
—
2
—
—
—
—
—
—
—
—
—
1,072
5,276
—
—
—
(10,021)
4,244
—
—
(34,965)
(69,373)
(25,816)
(1,597)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Balance, December 31, 2018
22,155
$
2
$
4,751 $
(135,931)
— $ — $
Net income
—
Removal of Earnout Shares (See Note
10)
(1,805)
Share-based compensation
Equity plan compensation
Rights offering deemed dividend (See
Note 7)
Series B Preferred Stock - Warrants at
close
Merger recapitalization transaction
Cumulative effect from adoption of new
accounting standard, net of tax
Preferred dividends
—
111
—
—
—
—
—
Balance, December 31, 2019
20,461
$
Net income
Share-based compensation
Equity plan compensation
Founder shares exercised
Retirement of treasury shares
Exercise of public warrants
Series B Preferred Stock - Warrants at
close
Preferred dividends
—
—
725
2
(181)
2
—
—
—
—
—
—
—
—
—
—
—
2
—
—
—
—
—
—
—
—
—
—
4,016
235
6,231
—
—
—
—
—
—
—
—
—
(14)
(76)
(1,383)
—
12,423
—
—
—
(2,875)
2,754
750
—
—
—
—
—
—
—
—
—
—
—
$
17,167 $
(126,196)
(14) $
(76) $
—
4,409
1,121
—
(395)
—
15,631
(2,628)
728
—
—
—
—
—
—
—
—
—
—
—
(167)
(319)
—
181
—
—
—
—
395
—
—
—
Balance, December 31, 2020
21,009
$
2
$
35,305 $
(125,468)
— $ — $
See accompanying notes to consolidated financial statements.
55
Total
Equity
(Deficit)
(10,019)
4,244
1,072
5,276
(34,965)
(69,373)
(25,816)
(1,597)
$ (131,178)
$
$
$
$
6,231
—
4,016
159
$
(1,383)
$ 12,423
$
$
$
2,754
750
(2,875)
$ (109,103)
$
$
$
$
$
$
728
4,409
802
—
—
—
$ 15,631
$
(2,628)
$ (90,161)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Consolidated Statements of Cash Flows
($ in thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Contingent consideration fair value adjustment
Warrant liability fair value adjustment
Amortization of debt discounts and issuance costs
Loss on extinguishment of debt
Share-based compensation expense
Deferred compensation
Allowance for doubtful accounts
Accrued dividends on Series B Preferred Stock
Deferred income taxes
Other, net
Changes in operating assets and liabilities:
Accounts receivable
Contract assets
Prepaid expenses and other assets
Accounts payable and accrued liabilities
Contract liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Company-owned life insurance
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisition of businesses, net of cash acquired
Net cash (used in) provided by investing activities
Cash flows from financing activities:
Proceeds from long-term debt and line of credit - short-term
Payments on long-term debt
Payments on line of credit - short-term
Extinguishment of debt
Debt financing fees
Payments on finance lease obligations
Sale-leaseback transaction
Preferred dividends
Proceeds from issuance of stock - Series B Preferred Stock
Proceeds from stock-based awards, net
Merger recapitalization transaction
Net cash (used in) provided by financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of the period
Cash and cash equivalents, end of the period
Year Ended December 31,
2020
2019
2018
$
728
$
6,231
$
4,244
47,682
—
828
12,871
—
4,409
668
(75)
7,959
11,136
1,564
39,927
34,120
(2,501)
(104,172)
2,601
57,745
502
(9,684)
6,069
—
(3,113)
72,000
(83,921)
—
—
(896)
(26,184)
—
—
350
801
—
(37,850)
16,782
147,259
48,220
(23,082)
16,699
(46,291)
2,262
5,435
—
4,016
1,847
33
10,389
(1,563)
1,623
(42,312)
(67,222)
(4,222)
84,689
53,468
79,812
(898)
(6,764)
8,272
—
610
50,400
(217,034)
—
—
(22,246)
(22,850)
24,343
—
180,000
159
2,754
(4,474)
75,948
71,311
—
1,321
1,836
1,072
(482)
(174)
—
(12,017)
1,034
(36,430)
(2,901)
(2,123)
95,398
25,832
47,018
396
(4,230)
690
(166,690)
(169,834)
497,272
(155,359)
(38,447)
(53,549)
(26,641)
(7,138)
—
(1,072)
—
—
(25,816)
189,250
66,434
4,877
$
164,041
$
147,259
$
71,311
See accompanying notes to consolidated financial statements.
56
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Consolidated Statements of Cash Flows
($ in thousands)
(Continued)
Supplemental disclosures:
Cash paid for interest
Cash paid (refund) for income taxes
Schedule of non-cash activities:
Acquisition of assets/liabilities through finance lease
Acquisition of assets/liabilities through operating lease
Acquisition of equipment through note payable
Series A Preferred Stock exchange for Series B Preferred Stock
Merger-related contingent consideration
Issuance of common stock
Issuance of preferred stock
Preferred dividends declared
Year Ended December 31,
2020
2019
2018
$
41,076
$
35,950
$
10,817
(1,001)
(173)
(962)
$
19,172
$
2,018
$
48,951
6,491
1,343
—
—
—
—
28,498
1,937
19,124
—
—
—
2,628
2,875
—
—
—
69,373
95,558
34,965
525
See accompanying notes to consolidated financial statements.
57
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Notes to Consolidated Financial Statements
Note 1. Business, Basis of Presentation and Significant Accounting Policies
Infrastructure and Energy Alternatives, Inc. (f/k/a M III Acquisition Corporation (“M III”)), a Delaware corporation, is
a holding company organized on August 4, 2015 (together with its wholly-owned subsidiaries, “IEA” or the “Company”).
The Company specializes in providing complete engineering, procurement and construction (“EPC”) services
throughout the United States (“U.S.”) for the renewable energy, traditional power and civil infrastructure industries. These
services include the design, site development, construction, installation and restoration of infrastructure. Although the Company
has historically focused on the wind industry, but has recently focused on further expansion into the solar market and with our
2018 acquisitions expanded its construction capabilities and geographic footprint in the areas of renewables, environmental
remediation, industrial maintenance, specialty paving, heavy civil and rail infrastructure construction, creating a diverse
national platform of specialty construction capabilities.
Reportable Segments
The Company has two reportable segments: the Renewables (“Renewables”) segment and the Heavy Civil and
Industrial (“Specialty Civil”) segment. See Note 14. Segments for a description of the reportable segments and their operations.
Operations prior to the Merger are the historical operations of IEA Services as discussed in Note 2. Merger and Acquisitions.
Acquisitions
On March 26, 2018 (the “Closing Date”), the Company completed a merger (the “Merger”) pursuant to an Agreement
and Plan of Merger, dated November 3, 2017 (as amended, the “Merger Agreement”), by and among M III, IEA Energy
Services, LLC (“IEA Services”), a Delaware limited liability company, Infrastructure and Energy Alternatives, LLC (the
“Seller”), a Delaware limited liability company and the parent of IEA Services immediately prior to such time, and the other
parties thereto, which provided for, among other things, the merger of IEA Services with and into a wholly-owned subsidiary of
M III. Following the Merger, M III Acquisition Corporation changed its name to Infrastructure and Energy Alternatives, Inc.
See Note 2. Merger and Acquisitions for more information about the Merger.
On September 25, 2018, IEA Services completed its acquisition of Consolidated Construction Solutions I LLC
(“CCS”), provide EPC services, through its wholly-owned subsidiaries, Saiia LLC (“Saiia”) and American Civil Constructors
LLC (the “ACC Companies”) for environmental, heavy civil and mining projects. On November 2, 2018, IEA Services
completed its acquisition of William Charles Construction Group, including its wholly-owned subsidiary Ragnar Benson
(“William Charles”), a provider of engineering and construction solutions for the rail infrastructure and heavy civil construction
industries. See Note 2. Merger and Acquisitions for further discussion of these acquisitions.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Infrastructure and Energy Alternatives,
Inc. and its wholly-owned direct and indirect domestic and foreign subsidiaries: IEA Intermediate Holdco, LLC (“Holdings”),
IEA Services, IEA Management Services, Inc., IEA Constructors, LLC (f/k/a IEA Renewable, Inc.), White Construction, LLC
(“White”), Bianci Electrical, LLC (f/k/a White Electrical Constructors, Inc.), IEA Equipment Management, Inc., White’s
wholly-owned subsidiary H.B. White Canada Corp. (“H.B. White”), and CCS and William Charles from their dates of
acquisition. All intercompany accounts and transactions are eliminated in consolidation.
Basis of Accounting and Use of Estimates
The accompanying consolidated financial statements have been prepared in accordance with generally accepted
accounting principles in the U.S. (“GAAP”). The preparation of the consolidated financial statements in conformity with GAAP
requires the use of estimates and assumptions that affect the amounts reported in the consolidated financial statements and the
accompanying notes. Key estimates include: the recognition of revenue and profit or loss from construction projects; fair value
estimates related to warrant liabilities; 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 consolidated financial position and results of operations, actual results could differ
materially from those estimates.
58
Cash and Cash Equivalents
The Company considers all unrestricted, highly liquid investments with a maturity of three months or less when
purchased to be cash and cash equivalents. The Company maintains cash balances in various United States (“US”)-backed
banks, which, at times, may exceed the amounts insured by the Federal Deposit Insurance Corporation.
Accounts Receivable
The Company does not charge interest to its customers and carries its customer receivables at their face amounts,
less an allowance for doubtful accounts. Accounts receivable and contract assets include amounts billed to customers under
the terms and provisions of the contracts. Most billings are determined based on contractual terms. As is common practice in
the industry, the Company classifies all accounts receivable and contract assets, including retainage, as current assets. The
contracting cycle for certain long-term contracts may extend beyond one year, and accordingly, collection of retainage on
those contracts may extend beyond one year. Contract assets include amounts billed to customers under retention provisions
in construction contracts. Such provisions are standard in the Company’s industry and usually allow for a portion of progress
billings on the contract price, typically 5-10%, to be withheld by the customer until after the Company has completed work
on the project. Billings for such retention balances at each balance sheet date are finalized and collected after project
completion. Generally, unbilled amounts will be billed and collected within one year. The Company determined that there
are no material amounts due past one year and no material amounts billed but not expected to be collected within one year.
The Company grants trade credit, on a non-collateralized basis, to its customers and is subject to potential credit
risk related to changes in business and overall economic activity. The Company analyzes specific accounts receivable and
contract assets balances, historical bad debts, customer credit-worthiness, current economic trends and changes in customer
payment terms when evaluating the adequacy of the allowance for doubtful accounts. In the event that a customer balance is
deemed to be uncollectible, the account balance is written off against the allowance for doubtful accounts.
Activity in the allowance for doubtful accounts for the periods indicated was as follows:
(in thousands)
Allowance for doubtful accounts at beginning of period
Plus: provision for (reduction in) allowance
Less: write-offs, net of recoveries
Allowance for doubtful accounts at period-end
Revenue Recognition
Year Ended December 31,
2020
2019
2018
$
$
75
$
(75)
—
—
$
42
33
—
75
$
$
216
(174)
—
42
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 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 among revenue, cost of revenue and income taxes, thereby
reducing income for the year ended December 31, 2019 and reducing the December 31, 2019 accumulated deficit. The
Company also adjusted the December 31, 2019, statement of cash flows to reflect the impact of 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 is based on costs for time and materials and other service contracts, consistent with the
Company’s previous revenue recognition practices.
The adoption of Topic 606 did not have a material effect on the Company's consolidated financial statements; related
to revenues, contract assets/liabilities, deferred taxes and net loss as compared with the Company’s previous revenue
recognition practices under ASC Topic 605.
59
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.
Contracts contain multiple pricing options, such as fixed price, time and materials, or unit price. Generally, renewable energy
projects are performed for private customers while Specialty Civil projects are performed for various governmental entities.
Revenue derived from projects billed on a fixed-price basis totaled 97.7%, 94.8% and 96.2% of consolidated revenue
from continuing operations for the years ended December 31, 2020, 2019 and 2018, 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 2.3%, 5.2% and 3.8% of consolidated revenue from continuing operations
for the years ended December 31, 2020, 2019 and 2018, respectively.
Construction contract revenue is recognized over time using the cost-to-cost measure of progress for fixed price
contracts. The 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 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 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 to transfer a distinct good or service to the customer and is the unit
of account under Topic 606. The transaction price of a contract is allocated to distinct performance obligations and recognized
as revenue when or as the performance obligations 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 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 fixed price contracts and
open purchase orders for which work is wholly or partially unperformed. As of December 31, 2020, the amount of the
Company’s remaining performance obligations was $1,328.0 million. The Company expects to recognize approximately 83.1%
of its remaining performance obligations as revenue in 2021, with the remainder recognized primarily in 2022. Revenue
recognized from performance obligations satisfied in previous periods was $(10.0) million and $11.3 million for the years
ended December 31, 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
past practices with the customer, specific discussions, correspondence or preliminary negotiations with the customer, legal
evaluations and all other relevant information that is reasonably available. The effect of a change in variable consideration on
60
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 December 31, 2020 and 2019, the Company included approximately $52.6 million and $73.3 million,
respectively, on 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 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 for the years ended:
(in thousands)
Renewables
Wind
Solar
Specialty Civil
Heavy civil
Rail
Environmental
Concentrations
December 31, 2020
December 31, 2019
1,033,204
109,638
$
1,142,842
$
356,616
166,948
86,499
$
610,063
$
830,653
3,376
834,029
351,476
174,332
99,926
625,734
The Company had the following approximate revenue and accounts receivable concentrations, net of allowances, for
the periods ended:
Company A (Renewables Segment)
Company B (Specialty Civil Segment)
———
* Amount was not above 10% threshold.
Self-Insurance
Revenue %
Accounts Receivable %
Year Ended December 31,
December 31,
2020
2019
2018
2020
2019
*
*
*
10.9
21.0
*
*
*
*
*
The Company is self-insured up to the amount of its deductible for its medical and workers’ compensation
insurance policies. For the years ended December 31, 2020, 2019 and 2018, the Company maintained insurance policies
subject to per claim deductibles of $0.5 million, for its workers' compensation policy. Liabilities under these insurance
programs are accrued based upon management’s estimates of the ultimate liability for claims reported and an estimate of
claims incurred but not reported with assistance from third-party actuaries. The Company’s recorded liability for employee
group medical claims is based on analysis of historical claims experience and specific knowledge of actual losses that have
occurred. The Company is also required to post letters of credit and provide cash collateral to certain of its insurance carriers
and to obtain surety bonds in certain states.
61
The Company’s self-insurance liability is reflected in the consolidated balance sheets within accrued liabilities.
The determination of such claims and expenses and the appropriateness of the related liability is reviewed and updated
quarterly, however, these insurance liabilities are difficult to assess and estimate due to unknown factors, including the
severity of an injury, the determination of the Company’s liability in proportion to other parties and the number of incidents
not reported. Accruals are based upon known facts and historical trends. Although management believes its accruals are
adequate, a change in experience or actuarial assumptions could materially affect the Company’s results of operations in a
particular period.
Company-Owned Life Insurance
The Company has life insurance policies on certain key executives. Company-owned life insurance is recorded at its
cash surrender value or the amount that can be realized.
As of December 31, 2020 and 2019, the Company had a long-term asset of $4.3 million and $4.8 million,
respectively, related to these policies. For the years ended December 31, 2020, 2019 and 2018, the Company recognized a
decrease of $502, an increase of $898 and a decrease of $396, respectively, in the cash surrender value of these policies.
Leases
In the ordinary course of business, the Company enters into agreements that provide financing for machinery and
equipment and for other of its facility, vehicle and equipment needs. The Company reviews all arrangements for potential
leases, 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. Leases with an initial lease term of twelve months or less are classified as short-term leases and are
not recognized in the 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 and are based on the facts and circumstances related to the 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.
Property, Plant and Equipment, Net
Property, plant and equipment is recorded at cost, or if acquired in a business combination, at the acquisition-date fair
value, less accumulated depreciation. Depreciation of property, plant and equipment, including property and equipment under
capital leases, is computed using the straight-line method over the estimated useful lives of the respective assets. Leasehold
improvements are depreciated over the shorter of the term of the lease or the estimated useful lives of the improvements.
Expenditures for repairs and maintenance are charged to expense as incurred, and expenditures for betterments and major
improvements are capitalized and depreciated over the remaining useful lives of the assets. The carrying amounts of assets sold
or retired and the related accumulated depreciation are eliminated in the year of disposal, with resulting gains or losses included
in cost of revenue.
The assets’ estimated lives used in computing depreciation for property, plant and equipment are as follows:
Buildings and leasehold improvements
Construction equipment
Office equipment, furniture and fixtures
Vehicles
Intangible Assets, Net
2 to 39 years
3 to 15 years
3 to 7 years
3 to 5 years
The Company's intangible assets represent finite-lived assets that were acquired in a business combination, consisting
of customer relationships, trade names and backlog, and are recorded at acquisition-date fair value, less accumulated
62
amortization. These assets are amortized over their estimated lives, which are generally based on contractual or legal rights.
Amortization of customer relationship and trade name intangibles is recorded within selling, general and administrative
expenses in the consolidated statements of operations, and amortization of backlog intangibles is recorded within cost of
revenue. The straight-line method of amortization is used because it best reflects the pattern in which the economic benefits of
the intangibles are consumed or otherwise used up. The amounts and useful lives assigned to intangible assets acquired impact
the amount and timing of future amortization.
Impairment of Property, Plant and Equipment and Intangibles
Management reviews long-lived assets that are held and used for impairment whenever events or changes in
circumstances indicate that their carrying amounts may not be recoverable. If an evaluation is required, the estimated future
undiscounted cash flows associated with the asset are compared with the asset’s carrying amount to determine if there has been
an impairment, which is calculated as the difference between the fair value of an asset and its carrying value. Estimates of
future undiscounted cash flows are based on expected growth rates for the business, anticipated future economic conditions and
estimates of residual values. Fair values take into consideration management’s estimates of risk-adjusted discount rates, which
are believed to be consistent with assumptions that marketplace participants would use in their estimates of fair value. There
were no impairments of property, plant and equipment or intangible assets recognized during the years ended December 31,
2020, 2019 and 2018.
Goodwill
Goodwill represents the excess purchase price paid over the fair value of acquired intangible and tangible assets.
Goodwill is assessed annually for impairment on October 1st and tested for impairment more frequently if events and
circumstances indicate that the asset might be impaired. The Company may assess its goodwill for impairment initially using a
qualitative approach to determine whether conditions exist to indicate that it is more likely than not that the fair value of a
reporting unit is less than its carrying value. If management concludes, based on its assessment of relevant events, facts and
circumstances, that it is more likely than not that a reporting unit’s carrying value is greater than its fair value, then a
quantitative analysis will be performed to determine if there is any impairment.
The quantitative assessment for goodwill requires us to estimate the fair value of each reporting unit carrying goodwill
using a weighted combination of the income and market approaches. The income approach uses a discounted cash flow model,
which involves significant estimates and assumptions including preparation of revenue and profitability forecasts, selection of a
discount rate and selection of a long-term growth rate. The market approach uses an analysis of stock prices and enterprise
values of a set of guideline public companies to arrive at a market multiple that is used to estimate fair value. If the fair value of
the respective reporting unit exceeds its carrying amount, goodwill is not considered to be impaired. If the carrying amount of a
reporting unit exceeds its fair value, the Company would record an impairment charge equal to the difference, not to exceed the
carrying amount of goodwill.
The Company estimated the fair value of the William Charles and CCS reporting units as of the measurement date
using a combination of income and market approaches weighted equally. The major assumptions that factored into the
valuations are the projected future cash flows, estimated using projected revenues and profitability of each reporting unit,
selected long-term growth rates, as well as the discount rate used to present value the future cash flows. The tests determined
that goodwill was not impaired as of the measurement date for 2020, since the estimated fair values of the reporting units
exceeded their net book values by over 100.0% and 18.3% for William Charles and CCS, respectively. There can be no
assurance that a future goodwill impairment doesn't exist if future events are less favorable than what we assumed or estimated
in our impairment analysis.
Contingent Consideration
As part of the Merger, the Company agreed to issue additional common shares to the Seller upon satisfaction of
financial targets for 2019 and 2018. This contingent liability, which was presented as contingent consideration in the
consolidated balance sheets, was measured at its estimated fair value as of the Closing Date using a Monte Carlo simulation
and subsequent changes in fair value were recorded within other (expense) income, net in the consolidated statement of
operations. See Note 7. Fair Value of Financial Instruments for further discussion.
63
Debt Issuance Costs
Financing costs incurred with securing a term loan or series B preferred stock are deferred and amortized to
interest expense, net over the maturity of the respective agreements using the effective interest method and are presented as
a direct deduction from the carrying amount of the related debt. Financing costs incurred with securing a revolving line of
credit are deferred and amortized to interest expense, net over the contractual term of the arrangement on a straight-line
basis and are presented as a direct deduction from the carrying amount of the related debt.
Stock-Based Compensation
The 2018 Equity Plan grants stock options (“Options”), restricted stock units (“RSUs”) and performance stock units
(“PSUs”) to certain key employees and members of the Board of Directors of the Company (the “Board”) for their services.
The Company recognizes compensation expense for these awards in accordance with the provisions of ASC 718, Stock
Compensation, which requires the recognition of expense related to the fair value of the awards in the Company’s
consolidated statement of operations.
The Company estimates the grant-date fair value of each award at issuance. For awards subject to service-based
vesting conditions, the Company recognizes compensation expense equal to the grant-date fair value on a straight-line basis
over the requisite service period, which is generally the vesting term. Forfeitures are accounted for when incurred. For
awards subject to both performance and service-based vesting conditions, the Company recognizes stock-based
compensation expense using the straight-line recognition method when it is probable that the performance condition will be
achieved.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Where
applicable, the Company records a valuation allowance to reduce any deferred tax assets that it determines will not be
realizable in the future.
The Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on income tax
returns it files if such tax position is more likely than not to be sustained on examination by the taxing authorities, based on
the technical merits of the position. These tax benefits are measured based on the largest benefit that has a greater than 50%
likelihood of being realized upon ultimate resolution.
Litigation and Contingencies
Accruals for litigation and contingencies are reflected in the consolidated financial statements based on
management’s assessment, including advice of legal counsel, of the expected outcome of litigation or other dispute
resolution proceedings and/or the expected resolution of contingencies. Liabilities for estimated losses are accrued if the
potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated.
Significant judgment is required in both the determination of probability of loss and the determination as to whether the
amount is reasonably estimable. Accruals are based on information available at the time of the assessment due to the
uncertain nature of such matters. As additional information becomes available, management reassesses potential liabilities
related to pending claims and litigation and may revise its previous estimates, which could materially affect the Company’s
results of operations in a given period.
Fair Value of Financial Instruments
The Company applies ASC 820, Fair Value Measurement, which establishes a framework for measuring fair value
and clarifies the definition of fair value within that framework. 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
64
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 to be 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.
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 Company has Series B Preferred Stock,
Warrants and the Rights Offering value in Level 3.
Fair values of financial instruments are estimated using public market prices, quotes from financial institutions
and other available information.
Segments
Operating segments are identified as components of an enterprise about which separate discrete financial
information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions
on how to allocate resources and assess performance. The Company’s chief operating decision makers are the chief
executive officer and chief financial officer. The Company reports its operations as two reportable segments.
Recently Adopted Accounting Standards - Guidance Adopted in 2020
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates certain disclosure requirements for
recurring and non-recurring fair value measurements, such as the amount of and reason for transfers between Level 1 and Level
2 of the fair value hierarchy, and adds new disclosure requirements for Level 3 measurements. This ASU is effective for all
entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early
adoption permitted for any eliminated or modified disclosures. Certain disclosures per ASU 2018-13 were applied on a
retrospective basis and others on a prospective basis. We adopted the standard on January 1, 2020, and it did not have an impact
on our disclosures for fair value measurements.
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 are 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 but don't expect it to have a material impact on our tax accounting.
65
Management has evaluated other recently issued accounting pronouncements and does not believe that they will have a
significant impact on the Company's consolidated financial statements and related disclosures.
COVID-19 Pandemic
During March 2020, the WHO declared a global pandemic related to the rapidly growing outbreak of a novel strain of
coronavirus. 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; new contract awards, 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 Company incurred $3.0 million of specific expenses related to the COVID-19 pandemic for the year ended
December 31, 2020. Most of the Company’s construction services are currently 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 teams 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.
The Company’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.
Note 2. Merger and Acquisitions
Merger and Recapitalization
The Merger, as described in Note 1. Business, Basis of Presentation and Significant Accounting Policies, has been
accounted for as a reverse recapitalization in accordance with GAAP. As such, IEA Services is treated as the continuing
company and M III is treated as the ‘‘acquired’’ company for financial reporting purposes. This determination was primarily
based on IEA Services’ operations comprising substantially all of the ongoing operations of the post-combination company, M
III directors not constituting a majority of the Board of the post-combination company, IEA Services’ senior management
comprising substantially all of the senior management of the post-combination company and the Seller holding a 48.3% voting
interest in the Company, while no single M III shareholder holds more than a 20% voting interest. Accordingly, for accounting
purposes, the Merger is treated as the equivalent of IEA Services issuing stock for the net assets of M III, accompanied by a
recapitalization. At the time of the Merger, the net assets of M III were stated at historical cost, with no goodwill or other
intangible assets recorded. Operations prior to the Merger are the historical operations of IEA Services.
The amount of merger consideration paid at the Closing Date to IEA (the “Merger Consideration”) was $81.4 million
in cash, and 10,428,500 shares of common stock and 34,965 shares of Series A convertible preferred stock with an aggregate
stated value of $126.3 million at the Closing Date. Immediately following the closing, the Seller owned approximately 48.3%
of the Company’s common stock and other stockholders owned approximately 51.7% of the Company’s outstanding common
stock. The Merger Consideration was subject to adjustment based on final determinations of IEA Services’ closing date
working capital and indebtedness, which determination was finalized approximately 45 days after the Closing Date with
minimal impact to the Merger Consideration as calculated on the Closing Date of the Merger.
Pursuant to the Merger Agreement, the Company was required to issue to the Seller up to an additional 9.0 million
common shares in the aggregate based upon satisfaction of financial targets for 2018 and 2019. The financial targets were not
achieved. For further discussion see Note 7. Fair Value of Financial Instruments for further discussion.
66
Acquisitions
CCS
On September 25, 2018, the Company acquired CCS for $106.6 million in cash. The Company financed this
acquisition through borrowings on its new credit facility as discussed in Note 8. Debt and Series B Preferred Stock.
The wholly-owned subsidiaries of CCS, Saiia and the ACC Companies, generally enter into long-term contracts with
both government and non-government customers to provide EPC services for environmental, heavy civil and mining projects.
This acquisition was accounted for as a business combination under the acquisition method of accounting.
William Charles
On November 2, 2018, IEA Services acquired William Charles for $77.7 million, consisting of $73.2 million in cash
and $4.5 million of the Company's common stock (477,621 common shares at $9.45 share price). The Company financed the
cash portion of this acquisition through borrowings on its credit facility as discussed in Note 8. Debt and Series B Preferred
Stock.
William Charles generally enters into long-term contracts with both government and non-government customers to
provide EPC services for rail civil infrastructure, environmental and heavy civil projects. This acquisition was accounted for as
a business combination under the acquisition method of accounting.
Acquisition Accounting
The following table summarizes the amounts recognized for assets acquired and liabilities assumed as of the respective
acquisition date at fair value for the business combinations described above. The values for CCS were finalized as of June 30,
2019 and finalized for William Charles as of September 30, 2019.
Identifiable assets acquired and liabilities assumed (in thousands)
CCS(1)
William
Charles(2)
Cash
Accounts receivable
Costs and estimated earnings in excess of billings on uncompleted contracts
Other current assets
Property, plant and equipment
Intangible assets:
Customer relationships(3)
Trade names(3)
Backlog(3)
Deferred income taxes(4)
Other non-current assets
Accounts payable and accrued liabilities
Billings in excess of costs and estimated earnings on uncompleted contracts
Debt, less current portion
Capital lease obligations, including current portion
Other non-current liabilities
Total identifiable net assets
Goodwill
Total purchase consideration
———
$
6,413
$
58,041
9,512
1,813
59,952
19,500
8,900
8,400
(2,361)
134
(25,219)
(14,194)
(52,257)
(1,124)
(704)
76,806
29,773
$
106,579
$
6,641
69,740
16,095
7,999
47,899
7,000
4,500
5,500
—
75
(60,962)
(14,810)
(15,672)
—
(907)
73,098
4,581
77,679
(1) The estimated acquisition-date fair values pertaining to CCS reflect the following significant changes from December 31, 2018: an
increase to property, plant and equipment of $2.5 million, an increase to deferred income taxes of $1.6 million, and a decrease to
goodwill of $4.1 million.
(2) The estimated acquisition-date fair values pertaining to William Charles reflect the following change from December 31, 2018; a
decrease to property, plant and equipment of $1.2 million and an increase to goodwill of $1.2 million.
67
(3) See Note 5. Goodwill and Intangible Assets, Net for disclosure of the weighted average amortization period for each major class of
acquired intangible asset.
(4) The Company's consolidated deferred income taxes are presented as a net deferred tax asset (long-term) in the consolidated balance
sheet as of December 31, 2019.
Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the
future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.
Specifically, the goodwill recorded as part of the acquisitions of CCS and William Charles is related to the expected, specific
other benefits that the Company believes will result from combining the operations of CCS and William Charles with the
operations of IEA. This goodwill is included in the Company's Specialty Civil segment and is deductible for income tax
purposes over a 15-year period, with the exception of $2.9 million for CCS that is not deductible.
Impact of Acquisitions
The following table summarizes the results of operations included in the Company's consolidated statement of
operations for CCS and William Charles from their respective date of acquisition.
(in thousands)
Revenue
Net (loss) income
Year Ended December 31, 2020 Year Ended December 31, 2019 Year Ended December 31, 2018
CCS
William
Charles
CCS
William
Charles
CCS
William
Charles
$
253,595
(136)
$
339,380 $
12,401
281,095
39
$
301,185
11,702
$
$
76,029
(613)
49,607
2,256
Acquisition-related expenses incurred by the Company for the acquisitions of CCS and William Charles were $6.6
million and $7.6 million, respectively, for the year ended December 31, 2018, and are included within selling, general and
administrative expenses in the consolidated statement of operations. The expenses primarily consisted of professional services
and adviser fees. There were no acquisition-related expenses incurred for the years ended December 31, 2020 and 2019.
Supplemental Pro Forma Results
The following table provides the pro forma results of the Company had the acquisition date of CCS and William
Charles been the first day of IEA's fiscal year 2018 statement of operation results.
(in thousands, except per share data)
Revenue
Net (loss) income
Net (loss) income per common share - basic and diluted
Year Ended December 31, 2018
$
1,257,616
(840)
(2.25)
The amounts in the supplemental unaudited pro forma results apply the Company's accounting policies and reflect
certain adjustments to, among other things, (i) exclude the impact of transaction costs incurred in connection with the
acquisitions, (ii) include additional depreciation and amortization that would have been charged assuming the same fair value
adjustments to property, plant and equipment and acquired intangibles had been applied on January 1, 2018 and (iii) include
additional interest expense that would have been charged assuming the incremental borrowings the Company incurred to
finance the acquisitions had been outstanding on January 1, 2018. Accordingly, these supplemental unaudited pro forma results
have been prepared for comparative purposes only and are not intended to be indicative of the results of operations that would
have occurred had the acquisitions actually occurred in the prior year period or indicative of the results of operations for any
future period.
Note 3. Contract Assets and Liabilities
We bill our customers based on contractual terms, including, milestone billings based on the completion of certain
phases of the work. Sometimes, billing occurs after revenue recognition, resulting in unbilled revenue, which is accounted for
as a contract asset. Sometimes we receive advance mobilization payments from our customers before revenue is recognized,
resulting in deferred revenue, which is accounted for as a contract liability.
68
Contract assets in the Consolidated Balance Sheets represents 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 earned 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 consist of the following:
(in thousands)
Costs and estimated earnings in excess of billings on uncompleted contracts
Retainage receivable
Contract liabilities consist of the following:
(in thousands)
December 31,
2020
2019
$
51,367
$
93,816
91,543
87,760
$
145,183
$
179,303
December 31,
2020
2019
Billings in excess of costs and estimated earnings on uncompleted contracts
$
117,641
$
115,570
Loss provision for contracts in progress
594
64
$
118,235
$
115,634
The contract receivables amount as of December 31, 2019, include unapproved change orders of approximately $9.2
million for which the Company was pursuing settlement through dispute resolution. The Company agreed to settle the
unapproved change order dispute in the second quarter of 2020.
Revenue recognized for the year ended December 31, 2020, that was included in the contract liability balance at
December 31, 2019 was approximately $114.7 million.
Note 4. Property, Plant and Equipment, Net
Property, plant and equipment consisted of the following as of the dates indicated:
(in thousands)
Buildings and leasehold improvements
Land
Construction equipment
Office equipment, furniture and fixtures
Vehicles
Total property, plant and equipment
Accumulated depreciation
Property, plant and equipment, net
December 31,
2020
2019
$
4,402
$
17,600
192,402
3,620
7,326
225,350
(94,604)
2,919
17,600
173,434
3,487
6,087
203,527
(63,039)
$
130,746
$
140,488
Depreciation expense for property, plant and equipment was $35.9 million, $34.6 million and $13.7 million for the
years ended December 31, 2020, 2019 and 2018, respectively.
69
Note 5. Goodwill and Intangible Assets, Net
The following table provides the changes in the carrying amount of goodwill for 2020 and 2019:
(in thousands)
January 1, 2019
Acquisition adjustments
December 31, 2019
Acquisition adjustments
December 31, 2020
Renewables
Specialty Civil
Total
$
3,020
$
37,237
$
—
3,020
—
3,020
$
(2,884)
34,353
—
40,257
(2,884)
37,373
—
34,353
$
37,373
Intangible assets consisted of the following as of the dates indicated:
December 31, 2020
December 31, 2019
Gross
Carrying
Amount
Accumulated
Amortization
Net Book
Value
Weighted
Average
Remaining
Life
Gross
Carrying
Amount
Accumulated
Amortization
Net Book
Value
Weighted
Average
Remaining
Life
($ in thousands)
Customer relationships
$ 26,500 $
(8,481) $ 18,019
5 years
$ 26,500 $
(4,695) $ 21,805
6 years
Trade names
Backlog
13,400
13,900
(5,985)
7,415
3 years
(13,900)
—
0 years
13,400
13,900
(3,305)
10,095
4 years
(8,528)
5,372
1 year
$ 53,800 $
(28,366) $ 25,434
$ 53,800 $
(16,528) $ 37,272
Amortization expense associated with intangible assets for the years ended December 31, 2020, 2019 and 2018 totaled
$11.8 million, $13.6 million and $3.0 million, respectively.
The following table provides the expected annual intangible amortization expense:
(in thousands)
Amortization expense
Note 6. Accrued Liabilities
2021
2022
2023
2024
2025
$
6,466
$
6,466
$
5,841
$
3,786
$
2,875
Accrued liabilities consisted of the following as of the dates indicated:
(in thousands)
Accrued project costs
Accrued compensation and related expenses
Other accrued expenses
December 31,
2020
2019
$
63,486
$
120,755
42,672
23,436
26,367
10,981
$
129,594
$
158,103
70
Note 7. Fair Value of Financial Instruments
The following table presents the Company's financial instruments measured at fair value on a recurring basis,
classified in the fair value hierarchy (Level 1, 2 or 3) based on the inputs used for valuation in the consolidated balance sheets:
(in thousands)
Liabilities
December 31, 2020
December 31, 2019
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Series B Preferred Stock -
Anti-dilution warrants
Series B-1 Preferred Stock -
Performance warrants
Series B-3 Preferred -
Closing Warrants
Rights offering
Total liabilities
—
—
—
—
—
8,800
8,800
—
—
—
400
400
—
—
—
—
—
—
—
—
—
4,317
4,317
—
—
—
400
400
11,491
11,491
1,383
1,383
$ —
$ —
$ 9,200
$ 9,200
$ —
$ —
$ 17,591
$ 17,591
The following table reconciles the beginning and ending balances of recurring fair value measurements using Level 3
inputs for the years ended December 31, 2020, 2019 and 2018.
(in thousands)
Series B
Preferred
Stock -
Anti-
dilution
warrants
Series B-1
Preferred
Stock -
Performance
warrants
Series B-3
Preferred -
Closing
Warrants
Rights
Offering
Contingent
Consideration
Beginning Balance, January 1, 2018
$
— $
Contingent consideration issued during Merger
Fair value adjustment - (gain) loss recognized in other
income
69,373
(46,291)
Beginning Balance, December 31, 2018
$
23,082 $
— $
—
—
— $
— $
—
—
— $
— $
—
—
— $
—
—
—
—
Preferred Series B Stock - initial fair value
Fair value adjustment - (gain) loss recognized in other
income
Ending Balance, December 31, 2019
Fair value adjustment - (gain) loss recognized in other
income
—
5,646
400
7,900
1,383
(23,082)
(1,329)
—
3,591
—
$
— $
4,317 $
400 $
11,491 $
1,383
—
(491)
—
1,677
(1,383)
Transfer to non-recurring fair value instrument (liability)
—
7,400
—
—
Transfer to non-recurring fair value instrument (equity)
—
(2,426)
—
(13,168)
Ending Balance, December 31, 2020
$
— $
8,800 $
400 $
— $
—
—
—
71
In 2019, the Company entered into three equity agreements and issued Series B Preferred Stock as discussed in Note 8.
Debt and Series B Preferred Stock. The agreements require that on the conversion of any of the Convertible Series A Preferred
Stock to common shares, the Series B Preferred Stock will receive additional warrants (Anti-dilution Warrants) to purchase
common shares at a price of $0.0001 per share. The agreements also require that if the Company fails to meet a certain
Adjusted EBITDA (as that term is defined in the agreements) threshold on a trailing twelve-month basis from May 31, 2020
through April 30, 2021, the Series B Preferred Stock will receive additional warrants (Performance Warrants) to purchase
common shares at $0.0001 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 at any point
in time.
The information below describes the balance sheet classification and the recurring fair value measurement for these
requirements:
Contingent Consideration
Pursuant to the Merger Agreement, the Company was required to issue up to an additional 9,000,000 shares of
common stock, if the 2018 and 2019 adjusted EBITDA targets were achieved. The Company did not achieve the Adjusted
EBITDA targets which resulted in fair value adjustments to the contingent liability.
Series B Preferred Stock - Anti-dilution Warrants
The number of common shares attributable to the warrants issued to Series B Preferred Stockholders upon conversion
by Series A Preferred Stockholders is determined on a 30-day trading volume weighted average price. The Anti-dilution
warrant liability was valued using the stock price at the end of the quarter and were recorded as a liability.
Series B-1 Preferred Stock - Performance Warrants
The warrant liability was recorded at fair value as 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.
Series B-3 Preferred - Closing Warrants
See further discussion on Series B-3 Preferred - Closing Warrants in Note 8. Debt and Series B Preferred Stock.
Rights Offering
The Company conducted a rights offering in connection with the offering of the Series B Preferred Stock. The rights
offering fair value was recorded as a liability and was a deemed dividend to common stockholders. On March 4, 2020 we
completed the rights offering and removed the liability associated with the fair value.
The following table sets forth information regarding the Company's equity and liabilities measured at fair value on a
non-recurring basis at December 31, 2019. There was no such assets or liabilities at December 31, 2020:
(in thousands)
Liabilities:
December 31, 2019
Level 1
Level 2
Level 3
Total
Series B Preferred Stock
$ —
$ —
$ 153,400
$ 153,400
Equity:
Series B-1 and B-2 Preferred Stock - Warrants at closing
$ —
$ —
$
14,100
$
14,100
Other financial instruments of the Company not listed in the table above primarily consist of cash and cash
equivalents, accounts receivable, accounts payable and other current liabilities that approximate their fair values, based on the
nature and short maturity of these instruments, and they are presented in the Company's consolidated balance sheets at carrying
cost. Additionally, management believes that the carrying value of the Company's outstanding debt balances, further discussed
in Note 8. Debt and Series B Preferred Stock, approximate fair value due to their floating interest rates.
72
Note 8. Debt and Series B Preferred Stock
Debt consists of the following obligations as of:
(in thousands)
Term loan
Commercial equipment notes
Total principal due for long-term debt
Unamortized debt discount and issuance costs
Less: Current portion of long-term debt
Long-term debt, less current portion
Debt - Series B Preferred Stock
Unamortized debt discount and issuance costs
Long-term Series B Preferred Stock
Third Amended and Restated Credit Agreement
December 31,
2020
2019
$
173,345
$
182,687
5,582
178,927
(17,196)
(2,506)
4,456
187,143
(22,296)
(1,946)
$
159,225
$
162,901
$
185,396
$
180,444
(11,528)
(14,303)
$
173,868
$
166,141
On May 20, 2019, the Third Amended and Restated Credit and Guarantee Agreement (the “Third A&R Credit
Agreement”) became effective.
The Third A&R Credit Agreement provides for a term loan facility of $300.0 million and a revolving line of credit of
$50.0 million, which is available for revolving loans and letters of credit. Availability on the line of credit is subject to
customary borrowing base calculations.
Term loan borrowings mature on September 25, 2024 and the Company is required to pay amortization payments
every quarter beginning in the third quarter of 2022, in an amount equal to 2.5% of the aggregate principal amount of such
loans. Beginning with 2020, an additional annual payment is required equal to 75% of Excess Cash Flow (as defined in the
“Third A&R Credit Agreement”) for the preceding fiscal year if such Excess Cash Flow is greater than $2.5 million, with the
percentage of Excess Cash Flow subject to reduction based upon the Company’s consolidated leverage ratio.
Borrowings under the term loan are required to be repaid on the last business day of each March, June, September and
December, continuing with the first fiscal quarter following the effective date of the Third A&R Credit Agreement, in an
amount equal to 2.5% of the initial balance of the initial term loan and will not be able to be reborrowed. Borrowings under the
revolving line of credit mature on September 25, 2023.
Interest on the consenting lender term loan tranche accrues at a per annum interest rate of, at the Company's option, (x)
LIBOR plus a margin of 8.25% or (y) an alternate base rate plus a margin of 7.25%; provided however, that upon achieving a
First Lien Net Leverage Ratio (as defined below) of no greater than 2.67:1.00, the margin shall permanently step down to (y)
for LIBOR loans, 6.75% and (y) for alternative base rate loans, 5.75%. Interest on initial revolving facility borrowings and
swing line loans accrues at a rate of, at the Company's option, (x) LIBOR plus a margin of 4.25% or (y) the applicable base rate
plus a margin of 3.25%. The weighted average interest rate on borrowings under this credit facility as of December 31, 2020
and 2019, was 7.00% and 10.35%, respectively.
Under the Third A&R Credit Agreement the Company may at times prepay the outstanding debt balance but is subject
to a Make-Whole Premium, as defined by the agreement until May 2021.
First 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.
73
In addition, the Amendment provides that after October 30, 2020 and until delivery of the financial statements for the
fiscal quarter ended December 31, 2020, 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 plus a marign
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.
The Amendment also further specifies the unused commitment fee rate. After October 30, 2020, 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 First Lien Net Leverage
Ratio.
Debt Covenants
The terms of the Third A&R Credit Agreement include customary affirmative and negative covenants and provide for
customary events of default, which include, among others, nonpayment of principal or interest and failure to timely deliver
financial statements. Under the Third A&R Credit Agreement, the financial covenant to which the Credit Parties as defined
therein are subject provides that the First Lien Net Leverage Ratio (as defined therein) may not exceed (i) prior to the fiscal
quarter ending December 31, 2019, 4.75:1.0, (ii) from and after the fiscal quarter ending December 31, 2020, 3.50:1.0, (iii)
from an prior to the fiscal quarter ending December 31, 2021, 2.75:1.0, and (iv) from and after March 31, 2022, 2.25:1.0.
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.
Debt - Series B Preferred Stock
In 2019, the Company entered into three equity agreements 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 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 is February 15, 2025 and if paid before the redemption date, the Company is subject to a
Make-Whole payment of 1.5 times the stated value less any cash paid dividends.
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 a 13.5% rate if the ratio if greater. The Series B Preferred Stock agreements allow the
Company to accrue, but not pay, the dividends at a 15.0% annual rate. Accrued dividends increase the amount of Series B
Preferred Stock. Accrued dividends were $18.3 million and $10.4 million at December 31, 2020 and 2019, respectively. Prior
to June 30, 2020, the Company accrued its Series B Preferred Stock payments; the June 30, September 30, and December 31,
2020 payments were made in cash. Dividend payments are not deductible in calculating the Company’s federal and state
income taxes.
In connection with each of the Series B Preferred Stock transactions, the Company provided warrants with an exercise
price of $0.0001 as follows:
•
On May 20, 2019, the Company received $50.0 million at the closing of the Series B-1 Preferred Stock and
issued 2,545,934 warrants which was an amount equal to 10% of the issued and outstanding common stock of the
Company based on the Company's fully diluted share count. The warrants were valued at the closing stock price of
$4.21 and were recorded as additional paid in capital.
•
On August 30, 2019, the Company received $50.0 million at the closing of the Series B-2 Preferred Stock and
issued 900,000 warrants. The warrants were valued at the closing stock price of $3.75 and recorded as additional paid
in capital.
74
•
On November 14, 2019, the Company received $80.0 million and issued 3,568,750 warrants which were
preliminarily valued at the closing stock price of $2.20 and were recorded as a liability. On January 21, 2020 the
Company received shareholder approval for the issuance of the warrants and the liability was marked to market at a
price of $3.69 and recorded as additional paid in capital.
•
On November 14, 2019, the holders of Series A Preferred Stock converted 50% of their shares to Series B
Preferred Stock thereby reducing the potential dilution of converted shares. The holders of Series A Preferred Stock
were issued 657,383 warrants which were preliminarily valued at the closing stock price of $2.20 and were recorded as
a liability. On January 21, 2020, the Company received shareholder approval for the issuance of the warrants and the
liability was marked to market at a price of $3.69 and recorded as additional paid in capital.
•
As a part of the Series B-3 Preferred Stock transactions, the Company conducted a rights offering which
provided common shareholders a right to purchase Series B Preferred Stock and warrants. The offering was
preliminarily valued using a Black-Scholes model and was recorded as a liability. On March 4, 2020, the rights
offering was completed. The Company received $350 and issued 12,029 warrants valued at a closing price of $3.08.
The liability was transferred to additional paid in capital.
•
The Series B-3 Preferred Stock agreement also required that the Company issue additional Series B Preferred
Stock of approximately $15.0 million in 2019 (the 2019 Commitment) and $15.0 million (the 2020 Commitment) if
the Company did not attain specified debt and liquidity levels. The Company met the 2019 Commitments, and the
2019 Commitment was cancelled. On July 22, 2020, the Company and Series B Preferred Stockholders entered into
an agreement which terminated the 2020 Commitment and the Company paid $1,322 (recorded as interest expense) in
full satisfaction of the 2019 Commitment and 2020 Commitment Fees and reimbursed certain expenses in the amount
of $344 (recorded as selling, general and administrative expenses).
See Note 16. Subsequent Events for further discussion of Series B Preferred Stock transactions.
Contractual Maturities
Contractual maturities of the Company's outstanding principal on debt obligations as of December 31, 2020 are as
follows:
(in thousands)
2021
2022
2023
2024
2025
Thereafter
Total
Maturities
$
$
2,506
16,938
29,986
129,368
129
—
178,927
Note 9. Commitments and Contingencies
In the ordinary course of business, the Company enters into agreements that provide financing for machinery and
equipment and for other of its facility, vehicle and equipment needs. The Company reviews all arrangements for potential
leases, 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 ASC 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 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, and are based on the facts and circumstances related to the 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
75
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, recognized under various finance leases for equipment
totaling $57.6 million and $64.2 million at December 31, 2020 and 2019, respectively. Gross amounts recognized within
property, plant and equipment in the consolidated balance sheets under these finance lease agreements at December 31, 2020
and 2019 totaled $128.0 million and $116.1 million, less accumulated depreciation of $55.1 million and $34.0 million,
respectively, for net balances of $72.9 million and $82.1 million, respectively. Depreciation of assets held under the finance
leases is included within cost of revenue in the consolidated statements of operations.
The future minimum payments of finance lease obligations are as follows:
(in thousands)
2021
2022
2023
2024
2025
Thereafter
Future minimum lease payments
Less: Amount representing interest
Present value of minimum lease payments
Less: Current portion of finance lease obligations
Finance lease obligations, less current portion
Operating Leases
$
$
27,391
22,161
6,946
2,847
1,461
—
60,806
3,237
57,569
25,423
32,146
In the ordinary course of business, the Company enters into non-cancelable operating leases for certain of its facility,
vehicle and equipment needs. Rent and related expense for operating leases that have non-cancelable terms totaled
approximately $13.4 million, $9.9 million and $6.1 million for the years ended December 31, 2020, 2019 and 2018,
respectively. When operating lease expense is related to projects it is charged to that specific project and included in cost of
revenue. In addition, the Company has short-term equipment rentals, which are less than a year in duration and expense as
incurred.
Included in non-cancelable operating lease expense above, 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 in the following table as variable lease costs.
76
The future minimum payments under non-cancelable operating leases are as follows:
(in thousands)
2021
2022
2023
2024
2025
Thereafter
Future minimum lease payments
Less: Amount representing interest
Present value of minimum lease payments
Less: Current portion of operating lease obligations
Operating lease obligations, less current portion
Lease Information
(in thousands)
Finance Lease cost:
Amortization of right-of-use assets
Interest on lease liabilities
Operating lease cost
Short-term lease cost
Variable lease cost
Sublease Income
Total lease cost
Other information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases
Operating cash flows from operating leases
Financing cash flows from finance leases
Right-of-use assets obtained in exchange for new finance lease liabilities
Right-of-use assets obtained in exchange for new operating lease liabilities
Weighted-average remaining lease term - finance leases
Weighted-average remaining lease term - operating leases
Weighted-average discount rate - finance leases
Weighted-average discount rate - operating leases
Letters of Credit and Surety Bonds
$
11,162
9,372
7,022
3,461
1,751
18,898
51,666
13,677
37,989
8,835
29,154
$
For the year ended
December 31, 2020
December 31, 2019
23,289
4,007
13,449
158,403
3,836
(132)
202,852
$
$
$
$
$
$
4,007
13,167
26,184
19,172
6,491
2.51 years
8.19 years
6.19 %
7.04 %
22,609
5,480
9,871
46,540
4,361
(103)
88,758
5,480
17,061
22,850
2,018
28,498
2.85 years
8.24 years
6.60 %
6.93 %
$
$
$
$
$
$
In the ordinary course of business, the Company may be 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 December 31, 2020 and 2019, the Company was contingently liable under letters of credit issued
77
under its respective revolving lines of credit in the amount of $7.8 million and $21.0 million, respectively, related to
construction projects. In addition, as of December 31, 2020 and 2019, the Company had outstanding surety bonds on projects of
$2.8 billion and $2.4 billion, respectively.
Deferred Compensation
The Company has two deferred compensation plans. The first plan is a supplemental executive retirement plan
established in 1993 that covers four specific employees or former employees, whose deferred compensation is determined by
the number of service years. Payment of the benefits is to be made for 20 years after employment ends. Two former employees
are currently receiving benefits, and two participants are still employees of the Company. The two current employees have both
reached the full benefit level, and as a result, the present value of the liability is estimated using the normal retirement method.
Payments under this plan for 2020 were $0.1 million. Maximum aggregate payments per year if all participants were retired
would be $0.3 million. As of December 31, 2020 and 2019, the Company had a long-term liability of $3.5 million and $4.3
million, respectively, for the supplemental executive retirement plan.
The Company offers a non-qualified deferred compensation plan which is made up of an executive excess plan and an
incentive bonus plan. This plan was designed and implemented to enhance employee savings and retirement accumulation on a
tax-advantaged basis, beyond the limits of traditional qualified retirement plans. This plan allows employees to: (i) defer annual
compensation from multiple sources; (ii) create wealth through tax-deferred investments; (iii) save and invest on a pretax basis
to meet accumulation and retirement planning needs; and (iv) utilize a diverse choice of investment options to maximize
returns. Executive awards are expensed when vested. Project Management Incentive Payments are expensed when awarded as
they are earned through the course of the performance of the project to which they are related. Other incentive payments are
expensed when vested as they are considered to be earned by retention. Unrecognized compensation expense for the non-
qualified deferred compensation plan at December 31, 2020, 2019 and 2018 was $1.7 million, $1.5 million and $2.2 million,
respectively. As of December 31, 2020 and 2019, the Company had a long-term liability of $4.2 million and $3.7 million,
respectively, for deferred compensation to certain current and former employees.
Legal Proceedings
The Company is a nominal defendant to a lawsuit, instituted in December 2019 in the Delaware Chancery Court by a
purported stockholder of the Company, against the Company’s Board of Directors, Oaktree, and Ares. The complaint asserts a
variety of claims arising out of the sale of Series B Preferred Stock and warrants to Ares and Oaktree in May 2019. The
complaint alleges claims for breach of fiduciary duty directly on behalf of putative class of stockholders and derivatively on
behalf of the Company, aiding and abetting breach of fiduciary duty both derivatively and directly, and unjust enrichment
derivatively on behalf of the Company. The plaintiff is seeking rescission of the transaction, unspecified monetary damages,
and fees. The Company’s director and officer liability insurance carriers have accepted coverage for this matter subject to a
$1.5 million deductible, which we expect will be spent on legal fees. Pursuant to agreements entered into in connection with the
sale of Series B Preferred Stock, the Company is obligated to indemnify Oaktree and Ares for their legal fees and any damages
incurred by either of them in connection with this matter.
The Company is involved in a variety of other legal cases, claims and other disputes that arise from time to time in the
ordinary course of its business. While the Company believes it has good defense against these cases and intends to defend them
vigorously, it cannot provide assurance that it will be successful in recovering all or any of the potential damages it has claimed
or in defending claims against the Company. While the lawsuits and claims are asserted for amounts that may be material,
should an unfavorable outcome occur, management does not currently expect that any currently pending matters will have a
material adverse effect on the Company’s financial position, results of operations or cash flows. However, an unfavorable
resolution of one or more of such matters could have a material adverse effect on the Company's business, financial condition,
results of operations and cash flows.
Note 10. Earnings (Loss) Per Share
The Company calculates basic earnings (loss) per share (“EPS”) by dividing income (loss) available to common
stockholders by the weighted average number of common shares outstanding during the period.
Subsequent to the issuance of the Company's condensed consolidated financial statements for the three and six months
ended June 30, 2019, the Company identified a computational error related to the number of outstanding common shares
included in its earnings (loss) per share calculations during 2018 and 2019. Management has concluded that the impact of this
error on all historical periods is immaterial and therefore has not adjusted the earnings (loss) per share amounts for any periods
prior to September 30, 2019. Rather, the adjustment to remove 1.8 million unvested shares has been made beginning with the
78
three- and nine-months ended September 30, 2019. The number of outstanding shares of Common Stock for voting purposes
remains at 22.3 million shares, as the aforementioned 1.8 million shares are entitled to vote those shares during the vesting
period.
Income (loss) available to common stockholders is computed by deducting the dividends accumulated for the period
on cumulative preferred stock from net income. If there is a net loss, the amount of the loss is increased by those preferred
dividends. The contingent consideration fair value adjustment is a mark-to-market adjustment based on the Company not
reaching the required financial targets for 2018 and 2019. See Note. 7 Fair Value of Financial Instruments for further
discussion. The Company is required to reverse the mark-to-market adjustment from the numerator as shown below.
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, and (iii) the assumed exercise of in-the-money stock options and
warrants and the assumed vesting of outstanding 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 in the same manner as basic EPS.
The calculations of basic and diluted EPS, are as follows:
($ in thousands, except per share data)
Numerator:
Net income from continuing operations
Less: Convertible preferred stock dividends
Less: Contingent consideration fair value adjustment
Year Ended December 31,
2020
2019
2018
$
728
$
6,231
$
4,244
(2,628)
—
(2,875)
(23,082)
(1,597)
(46,291)
Net (loss) income available to common stockholders
$
(1,900) $
(19,726) $
(43,644)
Denominator:
Weighted average common shares outstanding - basic and diluted(1)
20,809,493
20,431,096
21,665,965
Anti-dilutive:(2)
Convertible preferred shares
Series B Preferred Stock - Warrants at Closing
RSUs(3)
5,819,882
7,681,738
1,846,683
8,816,119
—
904,608
3,100,085
—
59,445
Net (loss) income per common share - basic and diluted
$
(0.09) $
(0.97) $
(2.01)
———
(1) The contingent earn-out shares were not included at December 31, 2019 and 2018. See Note 7. Fair Value of Financial of Financial
Instruments for discussion regarding the Company's contingently issuable earn-out shares that were not potentially dilutive.
(2) As of December 31, 2020, 2019 and 2018, there were public warrants to purchase 8,477,600, 8,480,000 and 8,480,000 shares of
common stock at $11.50 per share were not potentially dilutive as the warrants’ exercise price was greater than the average market
price of the common stock during the period.
(3) As of December 31, 2020, 2019 and 2018, there were 480,800, 646,405 and 713,260, of unvested or anti-dilutive options and
604,850, 817,817 and 187,026 of unvested performance RSUs were also not potentially dilutive as the respective exercise price or
average stock price required for vesting of such award was greater than the average market price of the common stock during the
period.
Series B Preferred Stock Anti-dilution Warrants
The Company also had the following potential outstanding anti-dilution warrants related to the Series B Preferred
stock issuance.
79
•
At December 31, 2020, a total of 528,307 warrants calculated on an if-converted method for the conversion
of shares related to the outstanding Series A Preferred Stock. As discussed in Note 7. Fair Value of Financial
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 December 31, 2020.
•
The second set of warrants would be issued after the exercise of any public warrants with an exercise price of
$11.50 or higher.
•
The final set of warrants would be issued on 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 December 31, 2020, there were 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 accrue on the stated value and will increase the stated value 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 December 31, 2020, the Company has accrued a cumulative liability of $4.4 million in dividends to holders of
Series A Preferred Stock as a reduction to additional paid-in capital.
Note 11. Stock-Based Compensation
In March 2018, the Company adopted the 2018 IEA Equity Incentive Plan (the “2018 Equity Plan”), which provided
for 2,157,765 shares to be available for granting to certain officers, directors and employees under the plan. The plan allows for
the granting of both RSUs and Options. In June 2019, the Company's shareholders approved an increase of 2,000,000 shares
under the 2018 Equity Plan.
Stock-based compensation cost is measured at the date of grant based on the calculated fair value of the stock-based
award and is recognized as an expense using the straight-line method over the employee’s requisite service period (generally
the vesting period of the award) within selling, general and administrative expenses. The following table provides the
components of stock-based compensation expense under the 2018 Equity Plan and the associated tax benefit recognized for the
year ended December 31, 2020, 2019 and 2018.
(in thousands)
Options
RSUs
Directors' compensation
Stock-based compensation expense
Tax benefit for stock-based compensation expense
Stock-based compensation expense, net of tax
2020
2019
2018
$
$
944
2,881
584
4,409
—
4,409
$
$
825
2,193
998
4,016
—
4,016
$
$
487
585
—
1,072
—
1,072
80
Employee Options
In 2018, the Board's Compensation Committee granted both time based vesting and stock price based performance
vesting options. The options are granted with exercise prices equal to market prices on the date of grant and expire 10 years
from the date of grant.
The following table summarizes all option activity:
Number of
Options
Weighted
Average
Exercise Price
Aggregate
Intrinsic Value
(in thousands)
Weighted
Average
Remaining
Contractual
Term (in years)
Outstanding at January 1, 2018
Granted
Exercised
Forfeited
—
713,260
—
—
Outstanding at December 31, 2018
713,260
$
Granted
Exercised
Forfeited
Outstanding at December 31, 2019
Granted
Exercised
Forfeited
Outstanding at December 31, 2020
Vested or expected to vest at December 31, 2020
Exercisable at December 31, 2020
—
—
(66,855)
646,405
$
—
(8,022)
(157,583)
480,800
480,800
120,978
$
$
$
—
10.37
—
—
—
—
—
10.37
10.37
—
10.37
10.37
10.37
10.37
10.37
—
—
—
—
—
7.70
—
7.70
—
7.70
The Company plans to issue new common shares to satisfy the exercise of Options. As of December 31, 2020, there
was $0.4 million of unrecognized stock-based compensation expense for unvested Options, and the expected remaining expense
period was 1.25 years.
The weighted average grant-date fair value per share of Options granted in 2018 was $10.37. The Company estimated
the fair value of Options issued using the Black-Scholes option pricing model. Expected volatilities were based on the historical
volatility of the Company’s stock, peer group and other factors. The Company used historical data to estimate Option exercises
and employee terminations within the valuation model. Dividends were based on an estimated dividend yield. The risk-free
interest rates used for the periods within the contractual life of the Options were based on the U.S. Treasury rates in effect at the
time of the grant. Option valuation models require the input of subjective assumptions including the expected volatility and
lives.
The following assumptions were used to value Option grants during 2018:
Expected dividend yield
Expected volatility
Risk-free interest rate
Expected life (in years)
2018
— %
35.00 %
2.63 %
4.0
81
Employee RSUs
RSUs are awarded to select employees and, when vested, RSUs entitle the holder to receive a specified number of
shares of the Company's common stock. The value of RSU grants was measured as of the grant date using the closing price of
IEA's common stock.
The following table summarizes all activity for RSUs awarded during 2020:
Unvested at January 1, 2018
Granted (1)
Vested
Forfeited
Unvested at December 31, 2018
Granted (2)
Vested (3)
Forfeited
Unvested at December 31, 2019
Granted
Vested
Forfeited
Number of
RSUs
Weighted
Average Grant-
Date Fair Value
Per Share
—
$
449,050
—
—
449,050
1,720,396
(42,378)
(47,060)
2,080,008
1,138,209
(627,650)
(372,813)
$
$
$
$
—
10.37
—
—
10.37
2.96
10.37
8.44
4.27
2.25
4.39
4.06
Unvested at December 31, 2020
3.12
(1) Included 125,804 shares related to performance stock units, where 50% vest upon reaching a stock price of $12.00 and the remaining vest
on $14.00.
(2) Included 479,048 shares related to performance stock units that vest upon reaching 2019 Adjusted EBITDA targets and vest ratable over a
three year period.
(3) The tax benefit related to vestings that occurred during 2019 was $0.1 million. There was no tax benefit during 2018.
2,217,754
$
As of December 31, 2020, there was $6.2 million of unrecognized stock-based compensation expense for unvested
RSUs awarded to employees, and the expected remaining expense period was 2.75 years.
Non-employee Director RSUs
For service in 2020, the non-employee directors of the Board were granted 261,660 RSUs on March 26, 2020, valued
at $0.6 million. These RSUs will vest on March 26, 2021. Using the closing price of the Company's common stock at the grant
date. As of December 31, 2020, there was $0.2 million of unrecognized stock-based compensation expense for unvested non-
employee director RSUs, and the expected remaining expense period was 3 months.
82
Note 12. Income Taxes
The Company is a corporation that is subject to U.S. federal income tax, various state income taxes, Canadian
federal taxes and provincial taxes.
(Loss) income before income taxes and the related tax (benefit) provision are as follows:
(in thousands)
(Loss) income before income taxes:
U.S operations
Non-U.S. operations
Total (loss) income before taxes
Current (benefit) provision:
Federal
State
Total current (benefit) provision
Deferred (benefit) provision:
Federal
State
Total deferred (benefit) provision
Year ended December 31,
2020
2019
2018
$
$
$
$
$
$
14,763
(1,455)
13,308
—
1,444
1,444
10,119
1,017
11,136
6,374
(1,764)
4,610
$
$
(7,955)
(743)
(8,698)
(148) $
90
(58)
(23)
(902)
(925)
(1,146)
(417)
(1,563)
(10,399)
(1,618)
(12,017)
Total (benefit) provision for income taxes
$
12,580
$
(1,621) $
(12,942)
A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate from continuing operations
is as follows:
Federal statutory rate
State and local income taxes, net of federal benefits
Permanent items
Other
Effective tax rate
Year ended December 31,
2020
2019
2018
21.0 %
18.5
55.8
(0.8)
94.5 %
21.0 %
(7.2)
(51.2)
2.2
(35.2) %
21.0 %
26.5
101.1
0.2
148.8 %
The permanent differences for the year ended December 31, 2020 primarily relate to non-deductible interest expenses
on the Series B Preferred Stock. The most significant difference between the years ended December 31, 2020 and 2019 relate to
these permanent items and state taxes. The differences in the effective tax rate between the years ended December 31, 2019 and
2018 related to non- deductible interest expenses on the Series B Preferred Stock, permanent items pertaining to contingent
consideration, the Merger, the acquisitions made in 2018, and state taxes. As of December 31, 2020 and 2019, the Company
had not identified any uncertain tax positions for which recognition was required.
83
Deferred taxes reflect the tax effects of the differences between the amounts recorded as assets and liabilities for
financial statement purposes and the comparable amounts recorded for income tax purposes. Significant components of the
deferred tax assets (liabilities) as of December 31, 2020 and 2019, are as follows:
(in thousands)
Deferred tax assets:
Allowance for doubtful accounts
Accrued liabilities and deferred compensation
Alternative minimum tax credit carryforwards
Net operating loss carryforwards
Transaction costs
R&D Credit Usage
Section 163(j) interest limitation
Other reserves and accruals
Intangible amortization
Operating lease right of use asset
Less: valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Property, plant and equipment
Equipment under finance lease
Operating lease liability
Intangibles
Goodwill
Other
Total deferred tax liabilities
Net deferred tax asset
December 31,
2020
2019
$
$
—
6,932
—
30,131
1,695
215
—
2,236
2,374
10,554
(24,360)
29,777
(15,702)
(353)
(10,124)
—
(1,529)
—
(27,708)
2,069
$
$
19
2,891
—
10,097
1,767
—
6,770
1,289
864
11,284
—
34,981
(9,373)
(577)
(11,126)
—
(913)
—
(21,989)
12,992
The Company assesses the realizability of the deferred tax assets at each balance sheet date based on actual and
forecasted operating results in order to determine the proper amount, if any, required for a valuation allowance. As of December
31, 2020, the Company has a Canadian net operating loss carryover of $91.9 million and net operating loss carryovers which
will begin to expire in 2035. Since the Canadian operations are in a cumulative loss position and the operations have ceased, the
Company has recorded a full valuation allowance related to the Canadian net operating losses. During 2020, the Company
identified adjustments related to the disclosure of the Canadian net operating losses and the Company increased both the tax
effected NOL deferred tax asset and the related valuation allowance by $24.0 million.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax
liabilities (including the impact of available carryback and carryforward periods), projected future taxable income and tax-
planning strategies in making this assessment. The Company believes ownership changes have occurred in the past. This may
impact the Company's ability to utilize portions of its net operating losses and interest carry forward in future periods.
However, it is management’s belief that it is more likely than not that the net deferred tax assets related to the Company will be
utilized prior to expiration.
As of December 31, 2020, the Company has a federal net operating loss carryover of $16.0 million and net
operating loss carryovers in certain state tax jurisdictions of approximately $47.4 million. The federal net operating loss was
incurred in 2018 and 2019 and can be carried forward indefinitely. The state net operating loss carryovers will begin to
expire in 2025. The pre-2018 net operating losses and interest will be fully used in 2020.
The Company files income tax returns in U.S. federal, state and certain international jurisdictions. For federal and
certain state income tax purposes, the Company's tax years 2017 through 2020 remain open for examination by the tax
authorities under the normal statute of limitations. For certain international income tax purposes, the Company’s tax years
2015 through 2020 remain open for examination by the tax authorities under the normal statute of limitations.
84
The Company classifies interest expense and penalties related to unrecognized tax benefits as components of the
income tax provision. There were no such interest or penalties recognized in the consolidated statements of operations for
the years ended December 31, 2020, 2019 and 2018, and there were no corresponding accruals as of December 31, 2020 and
2019.
Deferred Taxes - COVID-19
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted by
the U.S. Government in response to the COVID-19 pandemic to provide employment retention incentives. The CARES Act
includes many measures to assist companies, including temporary changes to income and non-income-based tax laws. We
do not believe that these relief measures materially affect the consolidated financial statements for the year ended December
31, 2020 but 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 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.
The new NOL carryforward and interest expense deduction rules are favorable for IEA and will help defer future cash
tax liabilities. IEA filed an election to refund $0.5 million AMT credit which was received in the third quarter.
IEA has also made use of the payroll deferral provision to defer the 6.2% social security tax, which is approximately
$13.6 million through December 31, 2020. This amount is required to be paid at 50% on each of December 31, 2021 and
December 31, 2022.
Note 13. Employee Benefit Plans
The Company participates in numerous multi-employer pension plans (“MEPPs”) that provide retirement benefits
to certain union employees in accordance with various collective bargaining agreements (“CBAs”). As of December 31,
2020, 2019 and 2018, 24%, 27% and 26%, respectively, of the Company’s employees were members of CBA. As one of
many participating employers in these MEPPs, the Company is responsible, with the other participating employers, for any
plan underfunding. Contributions to a particular MEPP are established by the applicable CBA; however, required
contributions may increase based on the funded status of a MEPP and legal requirements of the Pension Protection Act of
2006, which requires substantially underfunded MEPPs to implement a funding improvement plan (“FIP”) or a
rehabilitation plan (“RP”) to improve their funded status. Factors that could impact the funded status of a MEPP include
investment performance, changes in the participant demographics, change in the number of contributing employers,
changes in actuarial assumptions and the utilization of extended amortization provisions. If a contributing employer stops
contributing to a MEPP, the unfunded obligations of the MEPP may be borne by the remaining contributing employers.
Assets contributed to an individual MEPP are pooled with contributions made by other contributing employers; the pooled
assets will be used to provide benefits to the Company’s employees and the employees of the other contributing employers.
An FIP or RP requires a particular MEPP to adopt measures to correct its underfunding status. These measures may
include, but are not limited to: (a) an increase in the contribution rate as a signatory to the applicable collective bargaining
agreement, (b) a reallocation of the contributions already being made by participating employers for various benefits to
individuals participating in the MEPP and/or (c) a reduction in the benefits to be paid to future and/or current retirees. In
addition, the Pension Protection Act of 2006 requires that a 5% surcharge be levied on employer contributions for the first year
commencing shortly after the date the employer receives notice that the MEPP is in critical status and a 10% surcharge on each
succeeding year until a CBA is in place with terms and conditions consistent with the RP. The zone status included in the table
85
below is based on information that the Company received from the plan and is certified by the plan’s actuary. Among other
factors, plans in the red zone are generally less than 65% funded, plans in the yellow zone are greater than 65% and less than
80% funded, and plans in the green zone are at least 80% funded.
The Company could also be obligated to make payments to MEPPs if the Company either ceases to have an
obligation to contribute to the MEPP or significantly reduces its contributions to the MEPP because of a reduction in the
number of employees who are covered by the relevant MEPP for various reasons. Due to uncertainty regarding future
factors that could trigger a withdrawal liability, as well as the absence of specific information regarding the MEPP’s current
financial situation, the Company is unable to determine (a) the amount and timing of any future withdrawal liability, if any,
and (b) whether participation in these MEPPs could have a material adverse impact on the Company’s financial condition,
results of operations or cash flows.
The nature and diversity of the Company’s business may result in volatility of the amount of contributions to a
particular MEPP for any given period. In any given market, the Company could be working on a significant project and/or
projects, which could result in an increase in its direct labor force and a corresponding increase in its contributions to the
MEPP(s) dictated by the applicable CBA. When the particular project(s) finishes and is not replaced, the level of direct
labor of contributions to a particular MEPP could also be affected by the terms of the applicable CBA, which could require
at a particular time, an increase in the contribution rate and/or surcharges.
The following tables list the MEPPs the Company considered individually significant in 2020, 2019 and 2018. The
Company considers individually significant to include any plan over 5% of its total contributions to all MEPPs for that year.
For the years ended December 31, 2020, 2019 and 2018, these plans represented 50%, 51% and 63% of total dollars
contributed by the Company, respectively, and three of 58, three of 56 and six of 55 total plans contributed to by the
Company, respectively. All of the Company's contributions were less than 5% of the total plan contributions from all
participating employers. This information was obtained from the respective plans’ Form 5500 for the most current available
filing. The Form 5500 dates may not correspond with the Company’s calendar year contributions.
For the year ended December 31, 2020:
MEPP
Federal ID#
PPA Zone
Status
FIP/RP
Status
2020
Contributions
Surcharge
Plan Year
Central Pension Fund of the IUOE &
Participating Employers
Midwest Operating Engineers Pension
Trust Fund
36-6052390
Green
36-6140097
Green
No
No
Central Laborers' Pension Fund
37-6052379
Yellow
Implemented
Other funds
Total Multiemployer pension plan
contributions
For the year ended December 31, 2019:
No
No
No
$
4,301
2,526
2,500
9,362
$
18,689
MEPP
Federal ID#
PPA Zone
Status
FIP/RP
Status
2019
Contributions
Surcharge
Plan Year
Expiration
of CBA
May 2021,
March 2023,
April 2022
January 2020
March 2020
May 2022
December 2019
April 2021
Expiration
of CBA
March 2023,
March 2020,
May 2020,
January 2019
April 2019
May 2022
December 2018
April 2021
Central Pension Fund of the IUOE &
Participating Employers
Midwest Operating Engineers Pension
Trust Fund
36-6052390
Green
36-6140097
Green
No
No
Central Laborers' Pension Fund
37-6052379
Yellow
Implemented
Other funds
Total Multiemployer pension plan
contributions
No
No
No
$
3,679
2,673
2,489
8,643
$
17,484
86
For the year ended December 31, 2018:
MEPP
Federal ID#
PPA Zone
Status
FIP/RP
Status
2018
Contributions
Surcharge
Plan Year
36-6052390
Green
No
$
2,906
January 2018
Central Pension Fund of the IUOE &
Participating Employers
Upstate New York Engineers Pension
Fund
15-0614642
Red
Implemented
Central Laborers' Pension Fund
37-6052379
Yellow
Implemented
Iron Workers Local Union No. 25 Pension
Plan
Operating Engineers' Local 324 Pension
Fund
Laborers National Pension Fund
Other funds
Total Multiemployer pension plan
contributions
38-6056780
38-1900637
75-1280827
Red
Red
Red
Implemented
Implemented
Implemented
1,100
1,330
998
840
744
4,748
$
12,666
Expiration
of CBA
April 2019,
March 2023,
March 2020,
May 2020
March 2017
June 2019
January 2018
April 2021
April 2018
May 2019
April 2018
April 2018
2018
March 2019
No
No
No
No
No
No
The zone status above represents the most recent available information for the respective MEPP, which is 2019 for the
plan year ended in 2020, 2018 for the plan year ended in 2019 and 2017 for the plan year ended in 2018.
Note 14. Segments
The Company operated as one reportable segment for 2018 and evaluated the business as a renewable construction
company. In late 2018, the Company completed two significant acquisitions that construct projects outside of the renewable
market and established two reportable segments: the Renewables segment and the Specialty Civil segment. The 2018 segment
presentation has been recast to be consistent with the 2020 and 2019 segmentation.
Each of our reportable segments is comprised of similar business units that specialize in services unique to the
respective markets that each segment serves. 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 U.S. and specializes in a range of services that includes full EPC
project delivery, design, site development, construction, installation and maintenance of infrastructure services for the wind and
solar industries.
We have maintained a heavy focus on construction of renewable power production capacity as renewable energy,
particularly from wind and solar, which has become widely accepted within the electric utility industry and has become a
cost-effective solution for the creation of new generating capacity.
Specialty Civil Segment
The Specialty Civil segment operates throughout the U.S. and specializes in a range of services that include:
87
•
•
•
Environmental remediation services such as site development, environmental site closure, outsourced contract
mining and coal ash management services.
Rail infrastructure services such as planning, design, procurement, construction and maintenance of
infrastructure projects for major railway and intermodal facilities.
Heavy civil construction services such as road and bridge construction, specialty paving, industrial
maintenance and other local, state and government projects.
Segment Revenue
Revenue by segment was as follows:
(in thousands)
2020
2019
2018
For the years ended December 31,
Revenue
$
1,142,842
610,063
% of Total
Revenue
Revenue
% of Total
Revenue
Revenue
% of Total
Revenue
$
1,752,905
100.0 % $
1,459,763
100.0 % $
65.2 % $
34.8 %
834,029
625,734
57.1 % $
42.9 %
621,628
157,715
779,343
79.8 %
20.2 %
100.0 %
Segment
Renewables
Specialty Civil
Total revenue
Segment Gross Profit
Gross profit by segment was as follows:
For the years ended December 31,
(in thousands)
2020
2019
2018
Segment
Renewables
Specialty Civil
Total gross profit
Gross Profit
$
$
126,919
61,773
188,692
Gross Profit
Margin
Gross Profit
Gross Profit
Margin
Gross Profit
Gross Profit
Margin
11.1 % $
10.1 %
88,309
68,708
10.8 % $
157,017
10.6 % $
11.0 %
10.8 % $
16,030
15,496
31,526
2.6 %
9.8 %
4.0 %
Note 15. Related Parties
Credit Support Fees
The Company had debt facilities and other obligations under surety bonds and stand-by letters of credit under a credit
facility that were guaranteed by the two funds that had majority ownership in the Seller. The Company paid a fee for those
guarantees based on the total amount outstanding. The Company expensed $0.2 million related to these fees during the year
ended December 31, 2018. There was no expenses for credit support fees during the years ended December 31, 2020 and 2019.
Clinton Lease Agreement
In 2017, the ownership of a building and land was transferred from White to Clinton RE Holdings, LLC (Cayman)
(“Cayman Holdings”), a directly owned subsidiary of the Seller. White entered into a lease with Cayman Holdings for use of
the building and land. This lease has been classified as an operating lease with monthly payments through 2038. The
Company's rent expense related to the lease was $0.7 million for the years ended December 31, 2019 and 2018, respectively.
On October 30, 2019, Cayman Holdings sold the building to a third party that assumed the future payments and terms
of the existing lease. The Company will continue to have rent expense related to the lease but it will no longer be with a related
party.
88
Related Party Shareholders
Type of Equity
Holder
Ownership Percentage
Series A Preferred, Series A Conversion Warrants and
Exchange Warrants, Series B-3 Preferred Stock (exchange
agreement)
Series B-1 Preferred Stock, Series A Conversion Warrants,
Additional 6% Warrants, Warrants at closing
Infrastructure and Energy
Alternatives, LLC
Ares
Oaktree Power Opportunities
Fund III Delaware, L.P.
Series B-2 and B-3 Preferred Stock, Warrants at Closing
Ares
Note 16. Subsequent Event
Offering of Common Stock by Infrastructure and Energy Alternatives, LLC
100 %
60 %
40 %
100 %
On February 8, 2021, Infrastructure and Energy Alternatives, LLC, the Company's former Parent, see Note 1.
Business, Basis of Presentation and Significant Accounting Policies, sold 8,853,283 shares of Common Stock in an
underwritten public offering. Infrastructure and Energy Alternatives, LLC received total gross proceeds of approximately
$148.3 million, before deducting underwriting discounts and commissions.
Sale of Series A Preferred Stock and Series B Preferred Stock
On February 9, 2021, Ares and the Ares Parties purchased 17,483 shares of Series A Preferred Stock, 20,000 shares of
Series B-1 Preferred Stock and 19,124 shares of Series B-3 Preferred Stock from the Oaktree Parties.
Immediately following the completion of the transactions, our related party shareholders were as follows:
Related Party Shareholders
Type of Equity
Holder
Ownership Percentage
Series A Preferred Stock and Series A Conversion Warrants
Series B-1 Preferred Stock, Additional 6% Warrants, Warrants
at Closing (initial amount issued)
Ares
Ares
Series B-2 and B-3 Preferred Stock, Warrants at Closing
Series B-1 Warrants at Closing (initial amount issued),
Exchange Warrants
Ares
Oaktree Power Opportunities
Fund III Delaware, L.P.
100 %
100 %
100 %
100 %
89
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be
disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s
management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure.
As of December 31, 2020, an evaluation was performed under the supervision and with the participation of the
Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design
and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management,
including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and
procedures were effective as of December 31, 2020.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP and includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being
made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets
that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Management has assessed the effectiveness of the Company’s internal control over financial reporting as
of December 31, 2020, utilizing the criteria in the Committee of Sponsoring Organizations of the Treadway
Commission’s Internal Control-Integrated Framework (2013). Based on its assessment, our management concluded the
Company’s internal control over financial reporting was effective as of December 31, 2020.
90
ITEM 9B. OTHER INFORMATION
Offering of Common Stock by Infrastructure and Energy Alternatives, LLC
On February 8, 2021, Infrastructure and Energy Alternatives, LLC sold 8,853,283 shares of Common Stock in an
unwritten public offering. The number of shares sold includes 853,283 shares of Common Stock following the exercise in full
of the underwriters’ option to purchase additional shares of Common Stock from Infrastructure and Energy Alternatives, LLC.
Infrastructure and Energy Alternatives, LLC received total gross proceeds of approximately $148.3 million, before deducting
underwriting discounts and commissions.
We did not sell any shares of Common Stock and did not receive any proceeds from the offering. Peter Jonna’s
resignation from our Board became effective upon the closing of the offering.
Sale of Series A Preferred Stock and Series B Preferred Stock
On February 3, 2021, the Ares Parties, Infrastructure and Energy Alternatives, LLC and OT POF IEA Preferred B
Aggregator, L.P. (collectively, the “Oaktree Parties”) and Oaktree Power Opportunities Fund III, L.P., entered into a securities
purchase agreement (the “Securities Purchase Agreement”), pursuant to which the Ares Parties agreed to purchase all of the
Series A Preferred Stock, Series B-1 Preferred Stock and Series B-3 Preferred Stock held by the Oaktree Parties. The
transactions under the Securities Purchase Agreement were completed on February 9, 2021, and the Ares Parties purchased
17,482.50 shares of Series A Preferred Stock, 20,000 shares of Series B-1 Preferred Stock and 19,123.87 shares of Series B-3
Preferred Stock from the Oaktree Parties.
Immediately following the completion of the transactions under the Securities Purchase Agreement, the Ares Parties
own:
•
•
•
•
17,482.50 shares of our Series A Preferred Stock (constituting all of the issued and outstanding Series A
Preferred Stock);
50,000 shares Series B-1 Preferred Stock (constituting all of the issued and outstanding Series B-1 Preferred
Stock);
50,000 shares of Series B-2 Preferred Stock (constituting all of the issued and outstanding Series B-2
Preferred Stock);
99,123.87 shares of Series B-3 Preferred Stock (constituting 99.6% of the 99,473.87 issued and outstanding
Series B-3 Preferred Stock); and
• Warrants to purchase 5,996,310 shares of Common Stock.
Immediately following the completion of the transactions under the Securities Purchase Agreement and giving effect
to the offering of Common Stock by Infrastructure and Energy Alternatives, LLC, the Oaktree Parties and their affiliates own
1,992,121 shares of Common Stock and warrants to purchase 1,675,757 shares of Common Stock. Subject to the terms of a
lock-up agreement entered into in connection with the underwritten offering, Infrastructure and Energy Alternatives, LLC has
informed us it intends to distribute to its members, pro rata in accordance with such member’s ownership interest in the
Infrastructure and Energy Alternatives, LLC and the governing documents of Infrastructure and Energy Alternatives, LLC, a
combination of (i) the proceeds from the transactions governed by the Securities Purchase Agreement, (ii) the cash proceeds
from the offering and (iii) our securities (which may include Common Stock and warrants exercisable for Common Stock) held
by Infrastructure and Energy Alternatives, LLC.
91
PART III
Certain information required by Part III is omitted from this Annual Report on Form 10-K because the registrant will
file with the U.S. Securities and Exchange Commission a definitive proxy statement pursuant to Regulation 14A in connection
with the solicitation of proxies for the Company's annual meeting of shareholders (the “2021 Proxy Statement”) within 120
days after the end of the fiscal year covered by this Annual Report, and certain information included therein is incorporated
herein by reference.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required under this Item 10 is incorporated by reference to our 2021 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required under this Item 11 is incorporated by reference to our 2021 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
The information required under this Item 12 is incorporated by reference to our 2021 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required under this Item 13 is incorporated by reference to our 2021 Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required under this Item 14 is incorporated by reference to our 2021 Proxy Statement.
92
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
(A)
The Company has filed the following documents as part of this Annual Report on Form 10-K:
1. Financial Statements - the Company's consolidated financial statements, notes to those consolidated financial
statements and the report of the Company's independent registered public accounting firm related to the consolidated
financial statements are set forth under Item 8. Financial Statements and Supplementary Data.
2. Financial Statement Schedules - All schedules are omitted because they are not applicable, not required, or the
information is included in the consolidated financial statements.
3. Exhibits - see below.
The following is a complete list of exhibits filed as part of this Annual Report, some of which are incorporated herein
by reference from certain other of the Company's reports, registration statements and other filings with the SEC, as referenced
below:
Exhibit Number
Description
2.1#
2.2
2.3
2.4
2.5
2.6
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).
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).
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).
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).
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).
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).
93
2.7
2.8#
2.9
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
4.1
4.2
4.3
4.4
4.5
4.6
Purchase and Sale Agreement, dated August 9, 2018, by and among IEA Energy Services LLC,
Consolidated Construction Solutions I LLC and Consolidated Construction Investment Holdings LLC
(incorporated by reference to Exhibit 2.1 to the Company’s Amendment to the Current Report on
Form 8-K/A (File No. 001-37796) filed August 14, 2018).
Equity Purchase Agreement, dated October 12, 2018, by and among IEA Energy Services LLC,
William Charles Construction Group and the owners thereof (incorporated by reference to Exhibit 2.1
to the Company’s Amendment to the Current Report on Form 8-K/A (File No. 001-37796) filed
October 15, 2018).
Amendment No. 1 to Equity Purchase Agreement, dated October 31, 2018, by and among IEA Energy
Services LLC, William Charles Construction Group and the owners thereof (incorporated by reference
to Exhibit 2.2 to the Company’s Current Report on Form 8-K (File No. 001-37796) filed November 2,
2018).
Second Amended and Restated Certificate of Incorporation of Infrastructure and Energy Alternatives,
Inc., as amended through May 29, 2020.
Amended and Restated Bylaws of Infrastructure and Energy Alternatives, Inc. (incorporated by
reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K (File No. 001-37796) filed
with the Securities Exchange Commission on March 29, 2018).
Certificate of Designations of Series A Preferred Stock of Infrastructure and Energy Alternatives, Inc.
(incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed March
29, 2018).
Amended and Restated Certificate of Designations of Series A Preferred Stock of Infrastructure and
Energy Alternatives, Inc. (incorporated by reference to Exhibit 3.2 of the Company's Current Report
on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on May 22, 2019).
Certificate of Designations of Series B Preferred Stock of Infrastructure and Energy Alternatives, Inc.
(incorporated by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K (File No.
001-37796) filed May 22, 2019).
Amended and Restated Certificate of Designation of Series B-1 Preferred Stock of Infrastructure and
Energy Alternatives, Inc. (incorporated by reference to Exhibit 3.1 of the Company's Current Report
on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on August 30,
2019).
Amended and Restated Certificate of Designation of Series B-2 Preferred Stock of Infrastructure and
Energy Alternatives, Inc. (incorporated by reference to Exhibit 3.2 of the Company's Current Report
on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on August 30,
2019).
Certificate of Designations of Series B-3 Preferred Stock of Infrastructure and Energy Alternatives,
Inc. (incorporated by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K (File No.
001-37796) filed with the Securities Exchange Commission on November 14, 2019).
Second Amended and Restated Certificate of Designations of Series B-1 Preferred Stock of
Infrastructure and Energy Alternatives, Inc. (incorporated by reference to Exhibit 3.2 of the Company's
Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on
November 14, 2019).
Amended and Restated Certificate of Designations of Series B-2 Preferred Stock of Infrastructure and
Energy Alternatives, Inc. (incorporated by reference to Exhibit 3.3 of the Company's Current Report
on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on November 14,
2019).
Description of Securities Registered under Section 12
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Company’s
Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on
March 29, 2018).
Specimen Preferred Stock Certificate (incorporated by reference to Exhibit 4.2 of the Company’s
Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on
March 29, 2018).
Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 of the Company’s Current
Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on March
29, 2018).
Warrant Certificate, dated August 30, 2019, by and among Infrastructure and Energy Alternatives, Inc.
and Ares Special Situations Fund IV, L.P. (incorporated by reference to Exhibit 10.2 of the Company's
Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on
August 30, 2019).
Warrant Certificate, dated August 30, 2019, by and among Infrastructure and Energy Alternatives, Inc.
and ASOF Holdings I, L.P. (incorporated by reference to Exhibit 10.3 of the Company's Current
Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on August
30, 2019).
94
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
10.1
10.2
10.3
10.4
10.5
10.6
Warrant Agreement, dated July 7, 2016, between the Company and Continental Stock Transfer &
Trust Company (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-
K (File No. 001-37796) filed with the Securities Exchange Commission on July 13, 2016).
Amended and Restated Warrant Agreement, dated as of March 26, 2018, by and between the
Company and Continental Stock Transfer & Trust Company, as Warrant Agent. (incorporated by
reference to Exhibit 4.4 of the Company’s Current Report on Form 8-K (File No. 001-37796) filed
with the Securities Exchange Commission on March 29, 2018).
Warrant Agreement, dated May 20, 2019, by and among Infrastructure and Energy Alternatives, Inc.
and Ares Special Situations Fund IV, L.P. (incorporated by reference to Exhibit 10.6 of the Company's
Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on
May 22, 2019).
Warrant Agreement, dated May 20, 2019, by and among Infrastructure and Energy Alternatives, Inc.
and OT POF IEA Preferred B Aggregator, L.P. (incorporated by reference to Exhibit 10.7 of the
Company's Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange
Commission on May 22, 2019).
Warrant Certificate, dated November 14, 2019, by and among Infrastructure and Energy Alternatives,
Inc. and Ares Special Situations Fund IV, L.P. (incorporated by reference to Exhibit 10.2 of the
Company's Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange
Commission on November 15, 2019).
Warrant Certificate, dated November 14, 2019, by and among Infrastructure and Energy Alternatives,
Inc. and ASOF Holdings I, L.P. (incorporated by reference to Exhibit 10.3 of the Company's Current
Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on
November 15, 2019).
Warrant Certificate, dated November 14, 2019, by and among Infrastructure and Energy Alternatives,
Inc. and Infrastructure and Energy Alternatives, LLC (incorporated by reference to Exhibit 10.4 of the
Company's Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange
Commission on November 15, 2019).
Form of Warrant Certificate (incorporated by reference to Exhibit A to Exhibit 4.1 to the Company’s
Current Report on Form 8-K (File No. 001-37796) filed March 4, 2020).
Warrant Agreement, dated as of March 3, 2020, by and between Infrastructure and Energy
Alternatives, Inc. and Continental Stock Transfer & Trust Company (incorporated by reference to
Exhibit 4.1 of the Company’s Current Report on Form 8-K (File No. 001-37796) filed March 4, 2020).
Form of Indenture for Senior Debt Securities (incorporated by reference to Exhibit 4.20 of the
Company's Current Report on Form S-3 (File No. 001-37796) filed December 4, 2020).
Form of Indenture for Subordinated Debt Securities (incorporated by reference to Exhibit 4.22 of the
Company's Current Report on Form S-3 (File No. 001-37796) filed December 4, 2020).
Letter Agreement, by and among the Company and certain security holders, officers and directors of
the Company (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-
K (File No. 001-37796) filed with the Securities Exchange Commission on July 13, 2016).
Subscription and Backstop Agreement, dated March 7, 2018, by and among the Company, the
Sponsors and certain subscribers identified therein (incorporated by reference to Exhibit 10.1 of the
Company’s Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange
Commission on March 8, 2018).
Forfeiture Agreement, dated March 7, 2018, between the Sponsors and the Company (incorporated by
reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K (File No. 001-37796) filed
with the Securities Exchange Commission on March 8, 2018).
Waiver, Consent and Agreement to Forfeit Founder Shares, dated as of March 20, 2018, by and among
IEA Energy Services LLC, Infrastructure and Energy Alternatives, LLC, Oaktree Power Opportunities
Fund III Delaware, L.P., M III Acquisition Corp., Wind Merger Sub I, Inc., Wind Merger Sub II, LLC,
M III Sponsor I LLC and M III Sponsor I LP (incorporated by reference to Exhibit 10.1 of the
Company’s Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange
Commission on March 20, 2018).
Registration Rights Agreement dated as of March 26, 2018 by and among Infrastructure and Energy
Alternatives, Inc., IEA Parent, M III Sponsor I LLC and M III Sponsor I LP, Cantor Fitzgerald & Co.,
Mr. Osbert Hood and Mr. Philip Marber (incorporated by reference to Exhibit 10.2 of the Company’s
Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on
March 29, 2018).
First Amendment to Amended and Restated Registration Rights Agreement, dated as of June 6, 2018,
by and between the Company and IEA LLC (incorporated by reference to Exhibit 10.1 of the
Company’s Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange
Commission on June 7, 2018).
95
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
Second Amendment to Amended and Restated Registration Rights Agreement, dated as of May 20,
2019, by and among Infrastructure and Energy Alternatives, Inc., Infrastructure and Energy
Alternatives, LLC, Ares Special Situations Fund IV, L.P., OT POF IEA Preferred B Aggregator, L.P.
(incorporated by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K (File No.
001-37796) filed with the Securities Exchange Commission on May 22, 2019).
Third Amendment to Amended and Restated Registration Rights Agreement, dated as of August 30,
2019, by and among Infrastructure and Energy Alternatives, Inc., Infrastructure and Energy
Alternatives, LLC, Ares Special Situations Fund IV, L.P. and ASOF Holdings I, L.P. (incorporated by
reference to Exhibit 10.4 of the Company's Current Report on Form 8-K (File No. 001-37796) filed
with the Securities Exchange Commission on August 30, 2019).
Investor Rights Agreement, dated as of March 26, 2018, (i) by and among Infrastructure and Energy
Alternatives, Inc., M III Sponsor I LLC and any other Sponsor Affiliated Transferees who become a
party to the agreement; and (ii) Infrastructure and Energy Alternatives, LLC, any other Seller
Affiliated Transferees who become a party to the agreement and Oaktree Power Opportunities Fund III
Delaware, L.P., in its capacity as the representatives of the Selling Stockholders (incorporated by
reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K (File No. 001-37796) filed
with the Securities Exchange Commission on March 29, 2018).
Second Amended and Restated Investor Rights Agreement, dated as of August 30, 2019, by and
among Infrastructure and Energy Alternatives, Inc., M III Sponsor I LLC, Infrastructure and Energy
Alternatives, LLC and Oaktree Power Opportunities Fund III Delaware, L.P. (incorporated by
reference to Exhibit 10.5 of the Company's Current Report on Form 8-K (File No. 001-37796) filed
with the Securities Exchange Commission on August 30, 2019).
Amended and Restated Investor Rights Agreement, dated as of May 20, 2019, by and among
Infrastructure and Energy Alternatives, Inc., M III Sponsor I LLC, Infrastructure and Energy
Alternatives, LLC and Oaktree Power Opportunities Fund III Delaware, L.P. (incorporated by
reference to Exhibit 10.4 of the Company's Current Report on Form 8-K (File No. 001-37796) filed
with the Securities Exchange Commission on May 22, 2019).
Founder Shares Amendment Agreement, dated as of March 26, 2018, by and among M III Sponsor I
LLC, M III Sponsor I LP, M III Acquisition Corp. and Infrastructure and Energy Alternatives, LLC
(incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K (File No.
001-37796) filed with the Securities Exchange Commission on March 29, 2018).
Amended and Restated Founder Shares Amendment Agreement, dated as of June 6, 2018, by and
among the Company, Sponsor I LLC, Sponsor I LP, IEA LLC and Messrs. Hood and Marber
(incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K (File No.
001-37796) filed with the Securities Exchange Commission on June 7, 2018).
Lease Agreement between White Construction, Inc. and Clinton RE Holdings (Delaware) LLC, dated
as of October 20, 2017 (incorporated by reference to Exhibit 10.8 of the Company’s Current Report on
Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on March 29, 2018).
Credit Agreement, dated as of March 26, 2018 among Wind Merger Sub I, Inc., as the Initial
Borrower, IEA Energy Services LLC, as the Borrower, the Guarantors party thereto, Bank of America,
N.A., as Administrative Agent, Swingline Lender and L/C Issuer, and the other Lenders party thereto
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No.
001-37796) filed with the Securities Exchange Commission on March 29, 2018).
Credit Agreement, dated as of September 25, 2018 among Infrastructure and Energy Alternatives, Inc.,
as a Guarantor thereunder, IEA Intermediate Holdco, LLC as Guarantor thereunder, IEA Energy
Services LLC, as the Borrower, the subsidiary guarantors party thereto, Jefferies Finance LLC, as
Administrative Agent and Collateral Agent, and KeyBank National Association, as Revolving Agent
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K (File No.
001-37796) filed with the Securities Exchange Commission on September 26, 2018).
Third Amendment to Second Amended and Restated Credit and Guarantee Agreement, dated May 15,
2019, by and among Infrastructure and Energy Alternatives, Inc., IEA Intermediate Holdco, LLC, IEA
Energy Services LLC, the subsidiary guarantors party thereto, Jefferies Finance LLC, as
Administrative Agent and Collateral Agent, and the lenders party thereto (incorporated by reference to
Exhibit 10.8 of the Company's Current Report on Form 8-K (File No. 001-37796) filed with the
Securities Exchange Commission on May 22, 2019).
Lender Support Agreement, dated May 15, 2019, by and among Infrastructure and Energy
Alternatives, Inc., IEA Intermediate Holdco, LLC, IEA Energy Services LLC, the subsidiary
guarantors party thereto, Jefferies Finance LLC, as Administrative Agent, Collateral Agent and
Revolving Agent, and the lenders party thereto (incorporated by reference to Exhibit 10.9 of the
Company's Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange
Commission on May 22, 2019).
96
10.19#
10.20#
10.21#
10.22
10.23†^
10.24
10.25†
10.26†
10.27†
10.28†
10.29†
10.30†
10.31
10.32
10.33
Amendment and Restatement Agreement, dated as of November 2, 2018, by and among Infrastructure
and Energy Alternatives, Inc., as a Guarantor thereunder, IEA Intermediate Holdco, LLC as Guarantor
thereunder, IEA Energy Services LLC, as the Borrower, the subsidiary guarantors party thereto,
Jefferies Finance LLC, as Administrative Agent and Collateral Agent, and KeyBank National
Association, as Revolving Agent (incorporated by reference to Exhibit 10.2 of the Company’s
Quarterly Report on Form 10-Q (File No. 001-37796) filed with the Securities Exchange Commission
on November 8, 2018).
Second Amendment and Restatement Agreement, dated as of November 16, 2018, by and among
Infrastructure and Energy Alternatives, Inc., as a Guarantor thereunder, IEA Intermediate Holdco,
LLC as a Guarantor thereunder, IEA Energy Services LLC, as the Borrower, the subsidiary guarantors
party thereto and Jefferies Finance LLC, as Administrative Agent and Collateral Agent (incorporated
by reference to Exhibit 10.1 of the Company’s Current on Form 8-K (File No. 001-37796) filed with
the Securities Exchange Commission on November 23, 2018).
Third Amendment and Restatement Agreement, dated as of May 20, 2019, by and among
Infrastructure and Energy Alternatives, Inc., IEA Intermediated Holdco, LLC, IEA Energy Services
LLC, the subsidiary guarantors party thereto, the administrative agent, the revolving agent and issuing
bank, the collateral agent and the lenders party thereto (incorporated by reference to Exhibit 10.2 of
the Company's Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange
Commission on May 22, 2019).
First Amendment to the Third Amended and Restated Credit and Guarantee Agreement, dated as of
October 30, 2020, by and among the Company, IEA Intermediate Holdco, LLC, IEA Energy Services
LLC, the Subsidiary Guarantors party thereto, Jefferies Finance LLC, as administrative agent and as
collateral agent, KeyBank National Association, as the revolving agent, an issuing bank and a
revolving lender, the other revolving lenders and the financial institutions party thereto, as incremental
lenders (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K (File
No. 001-37796) filed with the Securities Exchange Commission on November 4, 2020).
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.15 of the Company’s
Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on
March 29, 2018).
Indemnification Letter Agreement, dated as of October 29, 2019, by and among Infrastructure and
Energy Alternatives, Inc., Oaktree Power Opportunities Fund III Delaware, L.P., Infrastructure and
Energy Alternatives, LLC, and OT POF IEA Preferred B Aggregator, L.P. (incorporated by reference
to Exhibit 10.5 of the Company's Current Report on Form 8-K (File No. 001-37796) filed with the
Securities Exchange Commission on October 30, 2019).
Infrastructure and Energy Alternatives, Inc. 2018 Equity Incentive Plan (incorporated by reference to
Exhibit 10.5 of the Company’s Current Report on Form 8-K (File No. 001-37796) filed with the
Securities Exchange Commission on March 29, 2018).
Infrastructure and Energy Alternatives, Inc. 2018 Equity Incentive Plan Form of Restricted Stock Unit
Award Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on
Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on September 19,
2018).
Infrastructure and Energy Alternatives, Inc. 2018 Equity Incentive Plan Form of Nonqualified Option
Award Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on
Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on September 19,
2018).
Infrastructure and Energy Alternatives, Inc. 2018 Equity Incentive Plan, as amended and restated
(incorporated by reference to Exhibit 10.4 of the Company's Current Report on Form 8-K (File No.
001-37796) filed with the Securities Exchange Commission on June 3, 2019).
Form of Time Based Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit
10.13 of the Company's Quarterly Report on Form 10-Q (File No. 001-37796) filed with the Securities
Exchange Commission on August 14, 2019).
Form of Performance Based Restricted Stock Unit Award Agreement (incorporated by reference to
Exhibit 10.15 of the Company's Quarterly Report on Form 10-Q (File No. 001-37796) filed with the
Securities Exchange Commission on August 14, 2019).
Form of Amended and Restated Performance Based Restricted Stock Unit Award Agreement (2020
Grants) (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K (File
No. 001-37796) filed with the Securities Exchange Commission on May 19, 2020).
Annual Incentive Compensation Program (incorporated by reference to Exhibit 10.14 of the
Company's Quarterly Report on Form 10-Q (File No. 001-37796) filed with the Securities Exchange
Commission on August 14, 2019).
Amended and Restated Annual Incentive Compensation Program (incorporated by reference to Exhibit
10.2 of the Company's Quarterly Report on Form 10-Q (File No. 001-37796) filed with the Securities
Exchange Commission on May 7, 2020).
97
10.34†
10.35†
10.36†
10.37†
10.38*†
10.39*†
10.40†
10.41†
10.42
10.43
10.44
10.45
10.46
10.47
Employment Agreement dated as of January 25, 2018, between IEA Energy Services LLC, a Delaware
limited liability company, and John Paul Roehm (incorporated by reference to Exhibit 10.6 of the
Company’s Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange
Commission on March 29, 2018).
Amended and Restated Employment Agreement, dated as of November 5, 2020, between IEA Energy
Services LLC and J.P. Roehm (incorporated by reference to Exhibit 10.2 of the Company's Quarterly
Report on Form 10-Q (File No. 001-37796) filed with the Securities Exchange Commission on
November 9, 2020.
Employment Agreement dated as of January 25, 2018, between IEA Energy Services LLC, a Delaware
limited liability company, and Andrew D. Layman (incorporated by reference to Exhibit 10.7 of the
Company’s Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange
Commission on March 29, 2018).
Employment Agreement, dated as of July 17, 2018, between IEA Energy Services, LLC and Bharat
Shah (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q
(File No. 001-37796) filed with the Securities Exchange Commission on November 8, 2018).
Employment Agreement, dated as of January 7, 2019, between IEA Energy Services, LLC and Gil
Melman (incorporated by reference to Exhibit 10.22 of the Company’s Annual Report on Form 10-K
(File No. 001-37796) filed with the Securities Exchange Commission on March 14, 2019).
Amended and Restated Employment Agreement, dated as of November 5, 2020, between IEA Energy
Services LLC and Gil Melman (incorporated by reference to Exhibit 10.4 of the Company's Quarterly
Report on Form 10-Q (File No. 001-37796) filed with the Securities Exchange Commission on
November 9, 2020.
Employment Agreement, dated as of August 8, 2019, between IEA Energy Services, LLC and Michael
Stoecker (incorporated by reference to Exhibit 10.16 of the Company's Quarterly Report on Form 10-
Q (File No. 001-37796) filed with the Securities Exchange Commission on August 14, 2019).
Amended and Restated Employment Agreement, dated as of November 5, 2020, between IEA Energy
Services LLC and Michael Stoecker (incorporated by reference to Exhibit 10.3 of the Company's
Quarterly Report on Form 10-Q (File No. 001-37796) filed with the Securities Exchange Commission
on November 9, 2020.
Equity Commitment Agreement, by and among Infrastructure and Energy Alternatives, Inc. and the
Commitment Parties thereto, dated as of May 14, 2019 (incorporated by reference to Exhibit 10.2 of
the Company's Quarterly Report on Form 10-Q (File No. 001-37796) filed with the Securities
Exchange Commission on May 15, 2019).
Equity Commitment Agreement, dated August 13, 2019, by and among Infrastructure and Energy
Alternatives, Inc., the Commitment Parties thereto and Oaktree Power Opportunities Fund III
Delaware, L.P. (incorporated by reference to Exhibit 10.1 of the Company's Quarterly Report on Form
10-Q (File No. 001-37796) filed with the Securities Exchange Commission on August 14, 2019).
Amendment to the Equity Commitment Agreement, dated August 30, 2019, by and among
Infrastructure and Energy Alternatives, Inc., Ares Special Situations Fund IV, L.P., ASOF Holdings I,
L.P., Infrastructure and Energy Alternatives, LLC, OT POF IEA Preferred B Aggregator, L.P.,
Oaktree Power Opportunities Fund III Delaware, L.P. (incorporated by reference to Exhibit 10.1 of the
Company's Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange
Commission on August 30, 2019).
Amended and Restated Equity Commitment Agreement, dated May 20, 2019, by and among
Infrastructure and Energy Alternatives, Inc. and the commitment parties thereto (incorporated by
reference to Exhibit 10.1 of the Company's Current Report on Form 8-K (File No. 001-37796) filed
with the Securities Exchange Commission on May 22, 2019).
Equity Commitment Agreement, dated October 29, 2019, by and among Infrastructure and Energy
Alternatives, Inc., the Commitment Parties party thereto, Oaktree Power Opportunities Fund III
Delaware, L.P., Infrastructure and Energy Alternatives, LLC, and OT POF IEA Preferred B
Aggregator, L.P. (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form
8-K (File No. 001-37796) filed with the Securities Exchange Commission on October 30, 2019).
Amendment to the Equity Commitment Agreement, dated as of May 6, 2020, 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, LLC, and OT POF IEA
Preferred B Aggregators, L.P. (incorporated by reference to Exhibit 10.1 of the Company's Quarterly
Report on Form 10-Q (File No. 001-37796) filed with the Securities Exchange Commission on May 7,
2020).
98
10.48
10.49
10.50
10.51
10.52
10.53
10.54
10.55
10.56
10.57
10.58
10.59*†
10.60*†
Second Amendment to the Equity Commitment Agreement, dated as of July 22, 2020, by and among
the Company, Ares Special Situations Fund IV, L.P., ASOF Holdings I, L.P., Infrastructure and
Energy Alternatives, LLC, Oaktree Power Opportunities Fund III Delaware, L.P., and OT POF IEA
Preferred B Aggregator, L.P. (incorporated by reference to Exhibit 10.1 of the Company's Current
Reprot on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on July 24,
2020.
Voting Agreement, dated as of May 20, 2019, by and between Infrastructure and Energy Alternatives,
Inc. and M III Sponsor I LLC (incorporated by reference to Exhibit 10.5 of the Company's Current
Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on May 22,
2019).
Voting Agreement, dated as of October 29, 2019, by and among Infrastructure and Energy
Alternatives, Inc., IEA LLC, OT POF IEA Preferred B Aggregator, L.P., M III Sponsor, Mohsin Y.
Meghji, Mohsin Meghji 2016 Gift Trust and Charles Garner and M III Sponsor I LLC (incorporated
by reference to Exhibit 10.4 of the Company's Current Report on Form 8-K (File No. 001-37796) filed
with the Securities Exchange Commission on October 30, 2019).
Preferred Stock Exchange Agreement, dated October 29, 2019, by and among the Infrastructure and
Energy Alternatives, Inc., IEA, Ares Special Situations Fund IV, L.P. and ASOF Holdings I, L.P.,
Oaktree Power Opportunities Fund III Delaware, L.P., and OT POF IEA Preferred B Aggregator, L.P.
(incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K (File No.
001-37796) filed with the Securities Exchange Commission on October 30, 2019).
Rights Offering Agreement, dated October 29, 2019, by and among the Infrastructure and Energy
Alternatives, Inc., IEA, Ares Special Situations Fund IV, L.P. and ASOF Holdings I, L.P., Oaktree
Power Opportunities Fund III Delaware, L.P., and OT POF IEA Preferred B Aggregator, L.P.
(incorporated by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K (File No.
001-37796) filed with the Securities Exchange Commission on October 30, 2019).
Investor Rights Agreement, dated November 14, 2019, by and among the Company, Ares Special
Situations Fund IV, L.P., ASOF Holdings I, L.P., Infrastructure and Energy Alternatives, LLC and OT
POF IEA Preferred B Aggregator, L.P. (incorporated by reference to Exhibit 10.1 of the Company's
Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on
November 15, 2019).
Fourth Amendment to Amended and Restated Registration Rights Agreement, dated as of November
14, 2019, by and among 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 10.5 of the Company's Current
Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange Commission on
November 15, 2019).
Vice Chairman Letter Agreement with Derek Glanvill (incorporated by reference to Exhibit 10.49 of
the Company's Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-235280)
filed with the Securities Exchange Commission on January 29, 2020).
Third Amended and Restated Investors Rights Agreement, dated as of January 23, 2020, by and
among Infrastructure and Energy Alternatives, Inc., M III Sponsor I LLC, Infrastructure and Energy
Alternatives, LLC and Oaktree Power Opportunities Fund III Delaware, L.P. (incorporated by
reference to Exhibit 10.1 of the Company's Current Report on Form 8-K (File No. 001-37796) filed
with the Securities Exchange Commission on January 27, 2020).
Waiver Agreement, dated as of January 23, 2020, by and among Ares Management, LLC (on behalf of
its affiliated funds, investment vehicles and/or managed accounts) and Infrastructure and Energy
Alternatives, Inc. (incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form
8-K (File No. 001-37796) filed with the Securities Exchange Commission on January 27, 2020).
First Amendment to Rights Offering Agreement, dated as of January 27, 2020, by and among
Infrastructure and Energy Alternatives, Inc., Ares Special Situations Fund IV, L.P., ASOF Holdings I,
L.P., Oaktree Power Opportunities Fund III Delaware, L.P., Infrastructure and Energy Alternatives,
LLC and OT POF IEA Preferred B Aggregator, L.P. (incorporated by reference to Exhibit 10.3 of the
Company's Current Report on Form 8-K (File No. 001-37796) filed with the Securities Exchange
Commission on January 27, 2020).
Letter Agreement, dated March 5, 2020, by and between Infrastructure and Energy Alternatives, Inc.
and Pete Moerbeek (incorporated by reference to Exhibit 10.51 of the Company's Annual Report on
Form 10-K (File No. 001-37796) filed with eh Securities Exchange Commission on March 12, 2020).
Employment Agreement, dated as of August 6, 2020, between IEA Energy Services, LLC and Peter
Moerbeek (incorporated by reference to Exhibit 10.3 of the Company's Quarterly Report on Form 10-
Q (File No. 001-37796) filed with the Securities Exchange Commission on August 10, 2020).
99
10.61*†
21.1*
23.1*
31.1*
31.2*
32.1**
32.2**
101.INS*
101.SCH*
101.CAL*
101.DEF*
101.LAB*
101.PRE*
104
Separation Agreement and General Release, dated March 11, 2020, by and between Infrastructure and
Energy Alternatives, Inc. and Andrew Layman (incorporated by reference to Exhibit 10.52 of the
Company's Annual Report on Form 10-K (File No. 001-37796) filed with the Securities and Exchange
Commission on March 12, 2020).
List of Subsidiaries of the Registrant.
Consent of Deloitte & Touche LLP
Certification of the Principal Executive Officer required by Rule 13a-14(a) and Rule 15d-14(a) under
the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes
Oxley Act of 2002
Certification of the Principal Financial Officer required by Rule 13a-14(a) and Rule 15d-14(a) under
the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes
Oxley Act of 2002
Certification of the Principal Executive Officer required by 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
Certification of the Principal Financial Officer required by 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
XBRL Instance Document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Extension Definition Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.INS)
*Filed herewith.
**Furnished herewith
# Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. We will furnish the omitted schedules to the
Securities and Exchange Commission upon request by the Commission.
† Indicates a management contract or compensatory plan or arrangement.
^ We have entered into Indemnification Agreements with all of our executive officers and directors.
ITEM 16. FORM 10-K SUMMARY
Not applicable.
100
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Dated: March 8, 2021
INFRASTRUCTURE AND ENERGY
ALTERNATIVES, INC. (Registrant)
By:
/s/ Peter J. Moerbeek
Name: Peter J. Moerbeek
Title: Executive Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ JP Roehm
By:
Name: JP Roehm
By:
/s/ Peter J. Moerbeek
Name: Peter J. Moerbeek
/s/ Derek Glanvill
By:
Name: Derek Glanvill
/s/ Charles Garner
By:
Name: Charles Garner
/s/ Terence Montgomery
By:
Name: Terence Montgomery
/s/ Matthew Underwood
By:
Name: Matthew Underwood
/s/ John Eber
By:
Name: John Eber
/s/ Michael Della Rocca
By:
Name: Michael Della Rocca
/s/ Laurene Mahon
By:
Name: Laurene Mahon
President, Chief Executive Officer and
Director
(Principal executive officer)
Executive Vice President, Chief
Financial Officer
(Principal financial and accounting
officer)
March 8, 2021
March 8, 2021
Director and Chairman
March 8, 2021
March 8, 2021
March 8, 2021
March 8, 2021
March 8, 2021
March 8, 2021
March 8, 2021
Director
Director
Director
Director
Director
Director
101
Corporate Information
Directors
Committees
Derek Glanvill
Terence Montgomery
John Paul Roehm
Matthew Underwood
John Eber
Charles Garner
Michael Della Rocca
Laurene B. Mahon
Chairman of Board, Governance and Nominating, Bid Review
Audit, Bid Review
Audit, Compensation, Governance and Nominating
Audit, Bid Review
Audit, Bid Review
Compensation, Bid Review
Audit
Executive Officers
Position/Title
John Paul Roehm
Peter J. Moerbeek
Michael Stoecker
Gil Melman
Chris Hanson
Brian Hummer
President and Chief Executive Officer
Executive Vice President and Chief Financial Officer
Executive Vice President and Chief Operating Officer
Executive Vice President, General Counsel, Corporate Secretary, and Chief
Compliance Officer
Executive Vice President of Wind Operations
Executive Vice President, Operations
Continental Stock Transfer & Trust
Transfer Agent
1 State Street, 30th Floor
New York, NY 10004
Auditors
Deloitte & Touche LLP
111 Monument Circle #4200
Indianapolis, IN 46204
Investor Relations
ADDO Investor Relations
Kimberly Esterkin, Managing Director
iea@addoir.com
310.829.5400
Ticker Symbol
IEA
Infrastructure and Energy Alternatives, Inc.
6325 Digital Way, Suite 460
Indianapolis, Indiana 46278