00016523622020FalseQ212/3100016523622020-01-012020-06-300001652362us-gaap:CommonStockMember2020-01-012020-06-300001652362us-gaap:WarrantMember2020-01-012020-06-30xbrli:shares00016523622020-08-10iso4217:USD00016523622020-06-3000016523622019-12-31iso4217:USDxbrli:shares00016523622020-04-012020-06-3000016523622019-04-012019-06-3000016523622019-01-012019-06-300001652362us-gaap:CommonStockMember2018-12-310001652362us-gaap:AdditionalPaidInCapitalMember2018-12-310001652362us-gaap:TreasuryStockMember2018-12-310001652362us-gaap:RetainedEarningsMember2018-12-3100016523622018-12-310001652362us-gaap:RetainedEarningsMember2019-01-012019-03-3100016523622019-01-012019-03-310001652362us-gaap:AdditionalPaidInCapitalMember2019-01-012019-03-310001652362us-gaap:CommonStockMemberus-gaap:CommonStockMember2019-01-012019-03-310001652362us-gaap:CommonStockMember2019-01-012019-03-310001652362us-gaap:AdditionalPaidInCapitalMemberus-gaap:CommonStockMember2019-01-012019-03-310001652362us-gaap:TreasuryStockMemberus-gaap:TreasuryStockMember2019-01-012019-03-310001652362us-gaap:TreasuryStockMemberus-gaap:TreasuryStockMember2019-03-310001652362us-gaap:CommonStockMember2019-03-310001652362us-gaap:AdditionalPaidInCapitalMember2019-03-310001652362us-gaap:TreasuryStockMember2019-03-310001652362us-gaap:RetainedEarningsMember2019-03-3100016523622019-03-310001652362us-gaap:RetainedEarningsMember2019-04-012019-06-300001652362us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-300001652362us-gaap:CommonStockMember2019-06-300001652362us-gaap:AdditionalPaidInCapitalMember2019-06-300001652362us-gaap:TreasuryStockMember2019-06-300001652362us-gaap:RetainedEarningsMember2019-06-3000016523622019-06-300001652362us-gaap:CommonStockMember2019-12-310001652362us-gaap:AdditionalPaidInCapitalMember2019-12-310001652362us-gaap:TreasuryStockMember2019-12-310001652362us-gaap:RetainedEarningsMember2019-12-310001652362us-gaap:RetainedEarningsMember2020-01-012020-03-3100016523622020-01-012020-03-310001652362us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001652362us-gaap:CommonStockMemberus-gaap:CommonStockMember2020-01-012020-03-310001652362us-gaap:CommonStockMember2020-01-012020-03-310001652362us-gaap:AdditionalPaidInCapitalMemberus-gaap:CommonStockMember2020-01-012020-03-310001652362us-gaap:TreasuryStockMemberus-gaap:TreasuryStockMember2020-01-012020-03-310001652362us-gaap:TreasuryStockMemberus-gaap:TreasuryStockMember2020-03-310001652362us-gaap:CommonStockMember2020-03-310001652362us-gaap:AdditionalPaidInCapitalMember2020-03-310001652362us-gaap:TreasuryStockMember2020-03-310001652362us-gaap:RetainedEarningsMember2020-03-3100016523622020-03-310001652362us-gaap:RetainedEarningsMember2020-04-012020-06-300001652362us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001652362us-gaap:CommonStockMemberus-gaap:CommonStockMember2020-04-012020-06-300001652362us-gaap:CommonStockMember2020-04-012020-06-300001652362us-gaap:AdditionalPaidInCapitalMemberus-gaap:CommonStockMember2020-04-012020-06-300001652362us-gaap:TreasuryStockMemberus-gaap:TreasuryStockMember2020-04-012020-06-300001652362us-gaap:TreasuryStockMemberus-gaap:TreasuryStockMember2020-06-300001652362us-gaap:CommonStockMember2020-06-300001652362us-gaap:AdditionalPaidInCapitalMember2020-06-300001652362us-gaap:TreasuryStockMember2020-06-300001652362us-gaap:RetainedEarningsMember2020-06-30xbrli:pure0001652362us-gaap:FixedPriceContractMemberus-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMember2020-04-012020-06-300001652362us-gaap:FixedPriceContractMemberus-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMember2019-04-012019-06-300001652362us-gaap:FixedPriceContractMemberus-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMember2020-01-012020-06-300001652362us-gaap:FixedPriceContractMemberus-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMember2019-01-012019-06-300001652362us-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMemberus-gaap:TimeAndMaterialsContractMember2020-04-012020-06-300001652362us-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMemberus-gaap:TimeAndMaterialsContractMember2019-04-012019-06-300001652362us-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMemberus-gaap:TimeAndMaterialsContractMember2020-01-012020-06-300001652362us-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMemberus-gaap:TimeAndMaterialsContractMember2019-01-012019-06-300001652362iea:WindRevenueMember2020-04-012020-06-300001652362iea:WindRevenueMember2019-04-012019-06-300001652362iea:WindRevenueMember2020-01-012020-06-300001652362iea:WindRevenueMember2019-01-012019-06-300001652362iea:SolarRevenueMember2020-04-012020-06-300001652362iea:SolarRevenueMember2019-04-012019-06-300001652362iea:SolarRevenueMember2020-01-012020-06-300001652362iea:SolarRevenueMember2019-01-012019-06-300001652362iea:RenewablesSegmentMember2020-04-012020-06-300001652362iea:RenewablesSegmentMember2019-04-012019-06-300001652362iea:RenewablesSegmentMember2020-01-012020-06-300001652362iea:RenewablesSegmentMember2019-01-012019-06-300001652362iea:HeavyCivilRevenueMember2020-04-012020-06-300001652362iea:HeavyCivilRevenueMember2019-04-012019-06-300001652362iea:HeavyCivilRevenueMember2020-01-012020-06-300001652362iea:HeavyCivilRevenueMember2019-01-012019-06-300001652362iea:RailConstructionRevenueMember2020-04-012020-06-300001652362iea:RailConstructionRevenueMember2019-04-012019-06-300001652362iea:RailConstructionRevenueMember2020-01-012020-06-300001652362iea:RailConstructionRevenueMember2019-01-012019-06-300001652362iea:EnvironmentalRevenueMember2020-04-012020-06-300001652362iea:EnvironmentalRevenueMember2019-04-012019-06-300001652362iea:EnvironmentalRevenueMember2020-01-012020-06-300001652362iea:EnvironmentalRevenueMember2019-01-012019-06-300001652362iea:SpecialtyCivilSegmentMember2020-04-012020-06-300001652362iea:SpecialtyCivilSegmentMember2019-04-012019-06-300001652362iea:SpecialtyCivilSegmentMember2020-01-012020-06-300001652362iea:SpecialtyCivilSegmentMember2019-01-012019-06-300001652362us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMemberiea:ConcentrationCompanyAMember2019-04-012019-06-300001652362us-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMemberiea:ConcentrationCompanyAMember2019-01-012019-06-300001652362iea:OneCustomerMember2019-12-310001652362iea:BuildingAndLeaseholdImprovementsMember2020-06-300001652362iea:BuildingAndLeaseholdImprovementsMember2019-12-310001652362us-gaap:LandMember2020-06-300001652362us-gaap:LandMember2019-12-310001652362us-gaap:EquipmentMember2020-06-300001652362us-gaap:EquipmentMember2019-12-310001652362iea:FurnitureAndFixturesAndEquipmentMember2020-06-300001652362iea:FurnitureAndFixturesAndEquipmentMember2019-12-310001652362us-gaap:VehiclesMember2020-06-300001652362us-gaap:VehiclesMember2019-12-310001652362iea:RenewablesSegmentMember2018-12-310001652362iea:SpecialtyCivilSegmentMember2018-12-310001652362iea:RenewablesSegmentMember2019-01-012019-12-310001652362iea:SpecialtyCivilSegmentMember2019-01-012019-12-3100016523622019-01-012019-12-310001652362iea:RenewablesSegmentMember2019-12-310001652362iea:SpecialtyCivilSegmentMember2019-12-310001652362iea:RenewablesSegmentMember2020-06-300001652362iea:SpecialtyCivilSegmentMember2020-06-300001652362us-gaap:CustomerRelationshipsMember2020-06-300001652362us-gaap:CustomerRelationshipsMember2020-01-012020-06-300001652362us-gaap:CustomerRelationshipsMember2019-12-310001652362us-gaap:CustomerRelationshipsMember2019-01-012019-06-300001652362us-gaap:TradeNamesMember2020-06-300001652362us-gaap:TradeNamesMember2020-01-012020-06-300001652362us-gaap:TradeNamesMember2019-12-310001652362us-gaap:TradeNamesMember2019-01-012019-06-300001652362us-gaap:OrderOrProductionBacklogMember2020-06-300001652362us-gaap:OrderOrProductionBacklogMember2020-01-012020-06-300001652362us-gaap:OrderOrProductionBacklogMember2019-12-310001652362us-gaap:OrderOrProductionBacklogMember2019-01-012019-06-300001652362us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberiea:SeriesBPreferredSeriesAConversionWarrantsMember2020-06-300001652362us-gaap:FairValueMeasurementsRecurringMemberiea:SeriesBPreferredSeriesAConversionWarrantsMemberus-gaap:FairValueInputsLevel2Member2020-06-300001652362us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberiea:SeriesBPreferredSeriesAConversionWarrantsMember2020-06-300001652362us-gaap:FairValueMeasurementsRecurringMemberiea:SeriesBPreferredSeriesAConversionWarrantsMember2020-06-300001652362us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberiea:SeriesBPreferredSeriesAConversionWarrantsMember2019-12-310001652362us-gaap:FairValueMeasurementsRecurringMemberiea:SeriesBPreferredSeriesAConversionWarrantsMemberus-gaap:FairValueInputsLevel2Member2019-12-310001652362us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberiea:SeriesBPreferredSeriesAConversionWarrantsMember2019-12-310001652362us-gaap:FairValueMeasurementsRecurringMemberiea:SeriesBPreferredSeriesAConversionWarrantsMember2019-12-310001652362iea:SeriesB1PreferredStock6WarrantsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-06-300001652362iea:SeriesB1PreferredStock6WarrantsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-06-300001652362iea:SeriesB1PreferredStock6WarrantsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-06-300001652362iea:SeriesB1PreferredStock6WarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2020-06-300001652362iea:SeriesB1PreferredStock6WarrantsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001652362iea:SeriesB1PreferredStock6WarrantsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-12-310001652362iea:SeriesB1PreferredStock6WarrantsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310001652362iea:SeriesB1PreferredStock6WarrantsMemberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001652362us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberiea:SeriesBPreferredStockWarrantsatclosingMemberMember2020-06-300001652362us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberiea:SeriesBPreferredStockWarrantsatclosingMemberMember2020-06-300001652362us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberiea:SeriesBPreferredStockWarrantsatclosingMemberMember2020-06-300001652362us-gaap:FairValueMeasurementsRecurringMemberiea:SeriesBPreferredStockWarrantsatclosingMemberMember2020-06-300001652362us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberiea:SeriesBPreferredStockWarrantsatclosingMemberMember2019-12-310001652362us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberiea:SeriesBPreferredStockWarrantsatclosingMemberMember2019-12-310001652362us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberiea:SeriesBPreferredStockWarrantsatclosingMemberMember2019-12-310001652362us-gaap:FairValueMeasurementsRecurringMemberiea:SeriesBPreferredStockWarrantsatclosingMemberMember2019-12-310001652362us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberiea:RightsOfferingFairValueMember2020-06-300001652362us-gaap:FairValueMeasurementsRecurringMemberiea:RightsOfferingFairValueMemberus-gaap:FairValueInputsLevel2Member2020-06-300001652362us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberiea:RightsOfferingFairValueMember2020-06-300001652362us-gaap:FairValueMeasurementsRecurringMemberiea:RightsOfferingFairValueMember2020-06-300001652362us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberiea:RightsOfferingFairValueMember2019-12-310001652362us-gaap:FairValueMeasurementsRecurringMemberiea:RightsOfferingFairValueMemberus-gaap:FairValueInputsLevel2Member2019-12-310001652362us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberiea:RightsOfferingFairValueMember2019-12-310001652362us-gaap:FairValueMeasurementsRecurringMemberiea:RightsOfferingFairValueMember2019-12-310001652362us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-06-300001652362us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-06-300001652362us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-06-300001652362us-gaap:FairValueMeasurementsRecurringMember2020-06-300001652362us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001652362us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-12-310001652362us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001652362us-gaap:FairValueMeasurementsRecurringMember2019-12-310001652362iea:SeriesBPreferredSeriesAConversionWarrantsMember2019-12-310001652362iea:SeriesB1PreferredStock6WarrantsMember2019-12-310001652362iea:SeriesBPreferredStockWarrantsatclosingMemberMember2019-12-310001652362iea:RightsOfferingFairValueMember2019-12-310001652362iea:SeriesBPreferredSeriesAConversionWarrantsMember2020-01-012020-06-300001652362iea:SeriesB1PreferredStock6WarrantsMember2020-01-012020-06-300001652362iea:SeriesBPreferredStockWarrantsatclosingMemberMember2020-01-012020-06-300001652362iea:RightsOfferingFairValueMember2020-01-012020-06-300001652362iea:SeriesBPreferredSeriesAConversionWarrantsMember2020-06-300001652362iea:SeriesB1PreferredStock6WarrantsMember2020-06-300001652362iea:SeriesBPreferredStockWarrantsatclosingMemberMember2020-06-300001652362iea:RightsOfferingFairValueMember2020-06-300001652362iea:SeriesBPreferredStockLiabilityMember2020-06-300001652362iea:SeriesBPreferredStockWarrantsatclosingMemberMember2019-05-200001652362iea:SeriesBPreferredStockWarrantsatclosingMemberMember2019-08-300001652362iea:SeriesBPreferredStockWarrantsatclosingMemberMember2019-11-140001652362iea:SeriesBPreferredStockWarrantsatclosingMemberMember2020-01-210001652362iea:SeriesB3ExchangeWarrantsMember2019-10-290001652362iea:SeriesB3ExchangeWarrantsMember2019-12-310001652362iea:SeriesB3ExchangeWarrantsMember2020-01-210001652362iea:SeriesBPreferredSeriesAConversionWarrantsMember2019-05-200001652362iea:SeriesB1PreferredStock6WarrantsMember2019-05-200001652362iea:SeriesBPreferredStockLiabilityMember2020-03-040001652362iea:RightsOfferingFairValueMember2020-03-040001652362iea:SeriesBPreferredStockWarrantsatclosingMemberMember2020-03-040001652362iea:A2020CommitmentMemberMember2019-11-140001652362iea:A2020CommitmentMemberMember2020-05-060001652362us-gaap:LongTermDebtMember2020-06-300001652362us-gaap:LongTermDebtMember2019-12-310001652362us-gaap:LoansPayableMember2020-06-300001652362us-gaap:LoansPayableMember2019-12-310001652362iea:SeriesBPreferredStockLiabilityMember2020-06-300001652362iea:SeriesBPreferredStockLiabilityMember2019-12-310001652362iea:ThirdARCreditAgreementMemberiea:DebtCovenantPeriodPeriodOneMember2020-01-012020-06-300001652362iea:DebtCovenantPeriodPeriodTwoMemberiea:ThirdARCreditAgreementMember2020-01-012020-06-300001652362iea:DebtCovenantPeriodPeriodThreeMemberMemberiea:ThirdARCreditAgreementMember2020-01-012020-06-300001652362iea:ThirdARCreditAgreementMemberiea:DebtCovenantPeriodPeriodFourMemberMember2020-01-012020-06-300001652362us-gaap:RedeemablePreferredStockMember2020-04-012020-06-300001652362us-gaap:RedeemablePreferredStockMember2019-04-012019-06-300001652362us-gaap:RedeemablePreferredStockMember2020-01-012020-06-300001652362us-gaap:RedeemablePreferredStockMember2019-01-012019-06-300001652362us-gaap:WarrantMember2020-04-012020-06-300001652362us-gaap:WarrantMember2019-04-012019-06-300001652362us-gaap:WarrantMember2020-01-012020-06-300001652362us-gaap:WarrantMember2019-01-012019-06-300001652362us-gaap:RestrictedStockUnitsRSUMember2020-04-012020-06-300001652362us-gaap:RestrictedStockUnitsRSUMember2019-04-012019-06-300001652362us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-06-300001652362us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-06-300001652362us-gaap:WarrantMember2020-06-300001652362us-gaap:EmployeeStockOptionMember2020-01-012020-06-300001652362us-gaap:EmployeeStockOptionMember2019-01-012019-06-300001652362us-gaap:SeriesAPreferredStockMember2020-06-300001652362us-gaap:SeriesBPreferredStockMember2020-06-3000016523622018-03-260001652362srt:MinimumMember2020-01-012020-06-300001652362srt:MaximumMember2020-01-012020-06-300001652362iea:InfrastructureAndEnergyAlternativesLLCMember2020-06-300001652362iea:AresMemberus-gaap:SeriesBPreferredStockMember2020-06-300001652362us-gaap:PrincipalOwnerMemberus-gaap:SeriesBPreferredStockMember2020-06-300001652362iea:AresMemberiea:SeriesB2PreferredStockMember2020-06-300001652362us-gaap:SubsequentEventMember2020-07-222020-07-22

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED June 30, 2020

OR

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 001-37796

Infrastructure & Energy Alternatives, Inc.
(Exact Name of Registrant as Specified in Charter)
 
Delaware     47-4787177
(State or Other Jurisdiction
of Incorporation)
    (IRS Employer
Identification No.)
 
6325 Digital Way
Suite 460
Indianapolis, Indiana
  46278
(Address of Principal Executive Offices)   (Zip Code)
 
Registrant’s telephone number, including area code: (765) 828-2580

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbols(s) Name of exchange on which registered
Common Stock, $0.0001 par value IEA The NASDAQ Stock Market LLC
Warrants for Common Stock IEAWW The NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past ninety days. 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). 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 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 is a shell company (as defined in Rule 12b-2 of the Act). Yes No

Number of shares of Common Stock outstanding as of the close of business on August 10, 2020: 22,947,871.







PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Balance Sheets
($ in thousands, except per share data)
(Unaudited)
June 30, 2020 December 31, 2019
Assets
Current assets:
Cash and cash equivalents $ 59,392    $ 147,259   
Accounts receivable, net 211,979    203,645   
Contract assets 220,868    179,303   
Prepaid expenses and other current assets 33,605    16,855   
        Total current assets 525,844    547,062   
Property, plant and equipment, net 133,428    140,488   
Operating lease asset 43,045    43,431   
Intangible assets, net 30,564    37,272   
Goodwill 37,373    37,373   
Company-owned life insurance 3,940    4,752   
Deferred income taxes 9,333    12,992   
Other assets 367    1,551   
        Total assets $ 783,894    $ 824,921   
Liabilities and Stockholder's Equity (Deficit)
Current liabilities:
Accounts payable $ 141,174    $ 177,783   
Accrued liabilities 153,988    158,103   
Contract liabilities 123,091    115,634   
Current portion of finance lease obligations 23,790    23,183   
Current portion of operating lease obligations 10,392    9,628   
Current portion of long-term debt 1,680    1,946   
          Total current liabilities 454,115    486,277   
Finance lease obligations, less current portion 35,615    41,055   
Operating lease obligations, less current portion 33,633    34,572   
Long-term debt, less current portion 156,546    162,901   
Debt - Series B Preferred Stock 176,800    166,141   
Series B Preferred Stock - warrant obligations 3,800    17,591   
Deferred compensation 7,174    8,004   
         Total liabilities $ 867,683    $ 916,541   
Commitments and contingencies:
Series A Preferred Stock, par value, $0.0001 per share; 1,000,000 shares authorized; 17,483 shares and 17,483 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively
17,483    17,483   
Stockholders' equity (deficit):
Common stock, par value, $0.0001 per share; 150,000,000 and 100,000,000 shares authorized; 21,142,193 and 20,460,533 shares issued and 20,960,862 and 20,446,811 outstanding at June 30, 2020 and December 31, 2019, respectively
   
Treasury stock, 181,331 and 13,722 shares at cost at June 30, 2020 and December 31, 2019, respectively.
(395)   (76)  
Additional paid in capital 34,463    17,167   
Accumulated deficit (135,342)   (126,196)  
           Total stockholders' equity (deficit) (101,272)   (109,103)  
           Total liabilities and stockholders' equity (deficit) $ 783,894    $ 824,921   
See accompanying notes to condensed consolidated financial statements.
1


INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Operations
($ in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2020 2019 2020 2019
Revenue $ 480,604    $ 327,961    $ 838,767    $ 517,742   
Cost of revenue 426,363    296,539    751,485    480,576   
Gross profit 54,241    31,422    87,282    37,166   
Selling, general and administrative expenses 28,074    25,878    57,558    53,632   
Income (loss) from operations 26,167    5,544    29,724    (16,466)  
Other income (expense), net:
Interest expense, net (16,200)   (11,496)   (32,265)   (21,863)  
Other income (expense) (1,631)   18,272    (2,733)   18,102   
Income (loss) before benefit for income taxes 8,336    12,320    (5,274)   (20,227)  
(Provision) benefit for income taxes (4,739)   (6,112)   (3,872)   2,796   
Net income (loss) $ 3,597    $ 6,208    $ (9,146)   $ (17,431)  
Less: Convertible Preferred Stock dividends (606)   (918)   (1,372)   (1,443)  
Less: Contingent consideration fair value adjustment —    (18,835)   —    (18,835)  
Less: Net income allocated to participating securities (802)   —    —    —   
Net income (loss) available for common stockholders $ 2,189    $ (13,545)   $ (10,518)   $ (37,709)  
Net income (loss) per common share - basic 0.11    (0.61)   (0.51)   (1.70)  
Net income (loss) per common share - diluted 0.09    (0.61)   (0.51)   (1.70)  
Weighted average shares - basic 20,751,673    22,252,489    20,636,944    22,220,799   
Weighted average shares - diluted 39,978,382    22,252,489    20,636,944    22,220,799   

See accompanying notes to condensed consolidated financial statements.

2


INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Stockholders' Equity (Deficit)
($ in thousands)
(Unaudited)
Common Stock Additional Paid-in Capital Treasury Stock Accumulated Deficit Total Equity (Deficit)
Shares Par Value Shares Cost
Balance at December 31, 2018 22,155      4,751    —    —    (135,931)   (131,178)  
Net loss —    —    —    —    —    (23,639)   (23,639)  
Share-based compensation —    —    1,040    —    —    —    1,040   
Share-based payment transaction 111    —    235    (14)   (76)   —    159   
Merger recapitalization transaction —    —    —    —    —    2,754    2,754   
Cumulative effect from adoption of new accounting standard, net of tax —    —    —    —    —    750    750   
Series A Preferred dividends —    —    (525)   —    —    —    (525)  
Balance at March 31, 2019 22,266    $   $ 5,501    (14)   $ (76)   $ (156,066)   $ (150,639)  
Net income —    —    —    —    —    6,208    6,208   
Share-based compensation —    —    720    —    —    —    720   
Series B Preferred Stock - Warrants at close —    —    9,422    —    —    —    9,422   
Series A Preferred dividends —    —    (918)   —    —    —    (918)  
Balance at June 30, 2019 22,266    $   $ 14,725    (14)   $ (76)   $ (149,858)   $ (135,207)  
Balance at December 31, 2019 20,461    $   $ 17,167    (14)   $ (76)   $ (126,196)   $ (109,103)  
Net loss —    —    —    —    —    (12,743)   (12,743)  
Share-based compensation —    —    1,113    —    —    —    1,113   
Share-based payment transactions 240    —    280    (38)   (84)   —    196   
Series B Preferred Stock - Warrants at close —    —    15,631    —    —    —    15,631   
Series A Preferred dividends —    —    (766)   —    —    —    (766)  
Balance at March 31, 2020 20,701    $   $ 33,425    (52)   $ (160)   $ (138,939)   $ (105,672)  
Net income —    —    —    —    —    3,597    3,597   
Share-based compensation —    —    844    —    —    —    844   
Share-based payment transactions 441    —    800    (129)   (235)   —    565   
Series A Preferred dividends —    —    (606)   —    —    —    (606)  
Balance at June 30, 2020 21,142    $   $ 34,463    (181)   $ (395)   $ (135,342)   $ (101,272)  

See accompanying notes to condensed consolidated financial statements.

3


INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
Six Months Ended June 30,
2020 2019
Cash flows from operating activities:
Net loss $ (9,146)   $ (17,431)  
Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation and amortization 24,001    23,801   
   Contingent consideration fair value adjustment —    (18,835)  
   Warrant liability fair value adjustment 2,828    —   
   Amortization of debt discounts and issuance costs 5,379    2,732   
   Share-based compensation expense 1,957    1,760   
   Loss on sale of equipment 574    762   
   Deferred compensation (830)   849   
   Accrued dividends on Series B Preferred Stock 7,959    1,025   
   Deferred income taxes 3,659    (2,517)  
   Other, net 227    60   
   Change in operating assets and liabilities:
       Accounts receivable (8,349)   (2,291)  
       Contract assets (41,565)   (28,471)  
       Prepaid expenses and other assets (16,685)   (7,353)  
       Accounts payable and accrued liabilities (42,097)   (33,012)  
       Contract liabilities 7,458    18,090   
       Net cash used in operating activities (64,630)   (60,831)  
Cash flow from investing activities:
   Company-owned life insurance 812    (296)  
   Purchases of property, plant and equipment (5,171)   (4,158)  
   Proceeds from sale of property, plant and equipment 2,837    6,555   
       Net cash (used in) provided by investing activities (1,522)   2,101   
Cash flows from financing activities:
   Proceeds from long-term debt 72,000    9,400   
   Payments on long-term debt (82,357)   (59,334)  
   Debt financing fees —    (9,473)  
   Payments on finance lease obligations (12,468)   (10,119)  
   Sale-leaseback transaction —    24,343   
   Proceeds from issuance of stock - Series B Preferred Stock 350    50,000   
   Proceeds from stock-based awards, net 760    159   
   Merger recapitalization transaction —    2,754   
       Net cash (used in) provided by financing activities (21,715)   7,730   
Net change in cash and cash equivalents (87,867)   (51,000)  
Cash and cash equivalents, beginning of the period 147,259    71,311   
Cash and cash equivalents, end of the period $ 59,392    $ 20,311   

See accompanying notes to condensed consolidated financial statements.
4



INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
(Continued)
Six Months Ended June 30,
2020 2019
Supplemental disclosures:
  Cash paid for interest 17,821    18,281   
  Cash paid (received) for income taxes (735)   227   
Schedule of non-cash activities:
   Acquisition of assets/liabilities through finance lease 7,635    —   
   Acquisition of assets/liabilities through operating lease 5,295    —   
   Series A Preferred dividends declared 1,372    1,443   

See accompanying notes to condensed consolidated financial statements.

5


INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Notes to the Condensed Consolidated Financial Statements
(unaudited)

Note 1. Business, Basis of Presentation and Significant Accounting Policies

Organization and Reportable Segments

        Infrastructure and Energy Alternatives, Inc., a Delaware corporation, is a holding company organized on August 4, 2015 (together with its wholly-owned subsidiaries, “IEA” or the “Company”). On March 26, 2018, we became a public company by consummating a merger (the “Merger”) pursuant to an Agreement and Plan of Merger, dated November 3, 2017, with M III Acquisition Corporation (“M III”).

        As of December 31, 2019, the Company's total annual gross revenues exceeded $1.07 billion and thus we are no longer an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”).

We segregate our business into two reportable segments: the Renewables segment and the Specialty Civil segment. See Note 10. Segments for a description of the reportable segments and their operations.

COVID-19 Pandemic

        During March 2020, the World Health Organization declared a global pandemic related to the rapidly growing outbreak of a novel strain of coronavirus (COVID-19). The COVID-19 pandemic has significantly affected economic conditions in the United States and internationally as national, state and local governments reacted to the public health crisis by requiring mitigation measures that have disrupted business activities for an uncertain period of time. The effects of the COVID-19 pandemic could affect the Company’s future business activities and financial results, including; 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 believes that the COVID-19 pandemic has not had a material adverse impact on the Company’s financial results for the period ended June 30, 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.

Management’s top priority has been to take appropriate actions to protect the health and safety of the Company's employees, customers and business partners, including adjusting the Company's standard operating procedures to respond to evolving health guidelines. Management believes that it is taking appropriate steps to mitigate any potential impact to the Company; however, given the uncertainty regarding the potential effects of the COVID-19 pandemic, any future impacts cannot be quantified or predicted with specificity.

Principles of Consolidation

        The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions for Quarterly Reports on Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in the annual audited consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Adjustments necessary to arrive at net income (loss) available for common stockholders, previously disclosed in Note 8, have been added to the prior period presentation of the consolidated statements of operations to be comparable with the current period presentation.
        The unaudited condensed consolidated financial statements include the accounts of IEA and its wholly-owned direct and indirect domestic and foreign subsidiaries and in the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) that are necessary to present fairly the results of operations for the interim periods presented. The results of operations for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These financial statements should be read in conjunction
6


with the Company’s audited consolidated financial statements for the year ended December 31, 2019 and notes thereto included in the Company’s 2019 Annual Report on Form 10-K.

Basis of Accounting and Use of Estimates
        
        The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of the condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Key estimates include: the recognition of revenue and project profit or loss; fair value estimates, including those related to Series B Preferred Stock; valuations of goodwill and intangible assets; asset lives used in computing depreciation and amortization; accrued self-insured claims; other reserves and accruals; accounting for income taxes; and the estimated impact of contingencies and ongoing litigation. While management believes that its estimates are reasonable when considered in conjunction with the Company’s consolidated financial position and results of operations, actual results could differ materially from those estimates.

Revenue Recognition

        The Company adopted the requirements of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which is also referred to as Accounting Standards Codification (“ASC”) Topic 606, under the modified retrospective transition approach effective January 1, 2019, with application to all existing contracts that were not substantially completed as of January 1, 2019. The Company adopted this standard for interim periods beginning after December 31, 2019, and recorded adjustments to the previously issued quarterly financial statements for the six months ended June 30, 2019. The impacts of adoption on the Company’s retained earnings on January 1, 2019 was primarily related to variable consideration on unapproved change orders. The cumulative impact of adopting Topic 606 required net adjustments of $750,000 to the statement of operations between revenue, cost of revenue and income taxes, thereby reducing income for the six months ended June 30, 2019 and reducing the December 31, 2019 accumulated deficit. The Company also adjusted the cashflow statement as of June 30, 2019, to reflect adoption.
        Under Topic 606, revenue is recognized when control of promised goods and services is transferred to customers, and the amount of revenue recognized reflects the consideration to which an entity expects to be entitled in exchange for the goods and services transferred. Revenue is recognized by the Company primarily over time utilizing the cost-to-cost measure of progress for fixed price contracts and are based on cost for time and materials and other service contracts, consistent with the Company’s previous revenue recognition practices.
Contracts
        The Company derives revenue primarily from construction projects performed under contracts for specific projects requiring the construction and installation of an entire infrastructure system or specified units within an infrastructure system. The contracts contain multiple pricing options, including fixed price, time and materials, or unit price. Renewable energy projects are performed for private customers while our Specialty Civil projects are performed for a mix of various governmental entities.
        Revenue derived from projects billed on a fixed-price basis totaled 98.0% and 90.7% of consolidated revenue from operations for the three months ended June 30, 2020 and 2019, respectively, and totaled 97.2% and 90.5% for the six months ended June 30, 2020 and 2019, 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 2.0% and 9.3% of consolidated revenue from operations for the three months ended June 30, 2020 and 2019, respectively, and totaled 2.8% and 9.5% for the six months ended June 30, 2020 and 2019, respectively.

        Revenue from construction contracts is recognized over time using the cost-to-cost measure of progress for fixed price construction contracts. For these 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
7


assessment of expected variable consideration are factors that influence estimates of the total contract transaction price, total costs to complete those contracts and profit recognition. Changes in these factors could result in revisions to revenue and costs of revenue in the period in which the revisions are determined on a prospective basis, which could materially affect the Company’s condensed consolidated results of operations for that period. Provisions for losses on uncompleted contracts are recorded in the period in which such losses are determined.
Performance Obligations
        A performance obligation is a promise in a contract 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 a distinct performance obligation and recognized as revenue when or as the performance obligation is 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 contracts, including approved and unapproved change orders. As of June 30, 2020, the amount of the Company’s remaining performance obligations was $1.1 billion. The Company expects to recognize approximately 72.3% of its remaining performance obligations as revenue during 2020. Revenue recognized from performance obligations satisfied in previous periods was $(1.6) million and $1.0 million for the three months ended June 30, 2020 and 2019, respectively, and $(3.6) million and $3.8 million for the six months ended June 30, 2020 and 2019, respectively.
Variable Consideration
        Transaction pricing for the Company’s contracts may include variable consideration, such as unapproved change orders, claims, incentives and liquidated damages. Management estimates variable consideration for a performance obligation utilizing estimation methods that best predict the amount of consideration to which the Company will be entitled. Variable consideration is included in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Management’s estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based on legal opinions, past practices with the customer, specific discussions, correspondence or preliminary negotiations with the customer and all other relevant information that is reasonably available. The effect of a change in variable consideration on the transaction price of a performance obligation is typically recognized as an adjustment to revenue on a cumulative catch-up basis. To the extent unapproved change orders, claims and liquidated damages reflected in transaction price are not resolved in the Company’s favor, or to the extent incentives reflected in transaction price are not earned, there could be reductions in, or reversals of, previously recognized revenue.
        As of June 30, 2020 and year ended December 31, 2019, the Company included approximately $63.5 million and $73.3 million, respectively, of unapproved change orders and/or claims in the transaction price for certain contracts that were in the process of being resolved in the normal course of business, including through negotiation, arbitration and other proceedings. These transaction price adjustments are included within Contract Assets or Contract Liabilities as appropriate. The Company actively engages with its customers to complete the final change order approval process, and generally expects these processes to be completed within one year. Amounts ultimately realized upon final acceptance by customers could be higher or lower than such estimated amounts.

8



Disaggregation of Revenue
        The following tables disaggregate revenue by customers and services performed, which the Company believes best depicts how the nature, amount, timing and uncertainty of its revenue:
(in thousands) Three Months Ended Six Months Ended
June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
Renewables Segment
   Wind $ 317,151    $ 179,069    565,688    $ 251,103   
   Solar 7,111    80    7,320    2,077   
$ 324,262    $ 179,149    $ 573,008    $ 253,180   
Specialty Civil Segment
   Heavy civil $ 103,721    $ 86,170    144,943    $ 136,285   
   Rail 32,321    37,780    79,378    80,389   
   Environmental 20,300    24,862    41,438    47,888   
$ 156,342    $ 148,812    $ 265,759    $ 264,562   
Concentrations
        The Company had the following approximate revenue and accounts receivable concentrations, net of allowances, for the periods ended:
Revenue % Revenue %
Three Months Ended Six Months Ended Accounts Receivable %
June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 June 30, 2020 December 31, 2019
Company A (Specialty Civil Segment) * 10.6  % * 14.4  % * *
* Amount was not above 10% threshold

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. ASU 2018-13 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 are required to be 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.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842), which is effective for annual reporting periods beginning after December 15, 2018. Under Topic 842, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Topic 842 requires entities to adopt the new lease standard using a modified retrospective method and initially apply the related guidance at the beginning of the earliest period presented in the financial statements. 

        The Company adopted Topic 842 using the modified retrospective method as of January 1, 2019 and for interim periods beginning after December 31, 2019, without adjusting comparative periods in the financial statements. The most significant effect of the new guidance was the recognition of operating lease right-of-use assets and a liability for operating leases as of December 31, 2019. The accounting for finance leases (capital leases) was substantially unchanged. The Company elected to utilize the package of practical expedients that allowed entities to: (1) not reassess whether any expired or existing
9


contracts were or contained leases; (2) retain the existing classification of lease contracts as of the date of adoption; (3) not reassess initial direct costs for any existing leases; and (4) not separate non-lease components for all classes of leased assets.
Recently Issued Accounting Standards Not Yet Adopted
        
        In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which introduced an expected credit loss methodology for the measurement and recognition of credit losses on most financial assets, including trade accounts receivables. The expected credit loss methodology under ASU 2016-13 is based on historical experience, current conditions and reasonable and supportable forecasts, and replaces the probable/incurred loss model for measuring and recognizing expected losses under current GAAP. The ASU also requires disclosure of information regarding how a company developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes. The ASU and its related clarifying updates are effective for smaller reporting companies for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. We 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.

Management has evaluated other recently issued accounting pronouncements and does not believe that they will have a significant impact on the financial statements and related disclosures.

Note 2. Contract Assets and Liabilities

        The timing of when we bill our customers is generally dependent upon agreed-upon contractual terms, milestone billings based on the completion of certain phases of the work, or when services are provided. Sometimes, billing occurs subsequent to revenue recognition, resulting in unbilled revenue, which is a contract asset. Also, we sometimes receive advance payments or deposits from our customers before revenue is recognized, resulting in deferred revenue, which is a contract liability.

        Contract assets in the Condensed Consolidated Balance Sheets represent the following:

costs and estimated earnings in excess of billings, which arise when revenue has been recorded but the amount has not been billed; and

retainage amounts for the portion of the contract price billed by us for work performed but held for payment by the customer as a form of security until we reach certain construction milestones or complete the project.

        Contract assets consist of the following:
(in thousands) June 30, 2020 December 31, 2019
Costs and estimated earnings in excess of billings on uncompleted contracts $ 105,737    $ 91,543   
Retainage receivable 115,131    87,760   
220,868    179,303   
        Contract liabilities consist of the following:
(in thousands) June 30, 2020 December 31, 2019
Billings in excess of costs and estimated earnings on uncompleted contracts $ 123,079    $ 115,570   
Loss on contracts in progress 12    64   
$ 123,091    $ 115,634   
        
10


The contract receivables amount as of December 31, 2019 included 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 current quarter.

        Revenue recognized for the three and six months ended June 30, 2020 included in the contract liability balance at December 31, 2019 was approximately $17.8 million and $108.7 million, respectively, and revenue recognized for the three and six months ended June 30, 2019 included in the contract liability balance at December 31, 2018 was approximately $18.2 million and $50.1 million, respectively.
        
        Activity in the allowance for doubtful accounts for the periods indicated is as follows:
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands) 2020 2019 2020 2019
Allowance for doubtful accounts at beginning of period $ 89    $ 72    $ 75    $ 42   
    Plus: provision for (reduction in) allowance —    30    14    60   
    Less: write-offs, net of recoveries —    —    —    —   
Allowance for doubtful accounts at period end $ 89    $ 102    $ 89    $ 102   

Note 3. Property, Plant and Equipment, Net

        Property, plant and equipment consisted of the following:
(in thousands) June 30, 2020 December 31, 2019
Buildings and leasehold improvements $ 3,385    $ 2,919   
Land 17,600    17,600   
Construction equipment 181,712    173,434   
Office equipment, furniture and fixtures 3,562    3,487   
Vehicles 5,566    6,087   
211,825    203,527   
Accumulated depreciation (78,397)   (63,039)  
    Property, plant and equipment, net $ 133,428    $ 140,488   

        Depreciation expense of property, plant and equipment was $8,777 and $8,430 for the three months ended June 30, 2020 and 2019, respectively, and was $17,293 and $16,906 for the six months ended June 30, 2020 and 2019, respectively.



Note 4. Goodwill and Intangible Assets, Net

        The following table provides the changes in the carrying amount of goodwill, by segment:
(in thousands) Renewables Specialty Civil Total
January 1, 2019 $ 3,020    $ 37,237    $ 40,257   
   Acquisition adjustments —    (2,884)   (2,884)  
December 31, 2019 $ 3,020    $ 34,353    $ 37,373   
   Adjustments —    —    —   
June 30, 2020 $ 3,020    $ 34,353    $ 37,373   

11


        
Intangible assets consisted of the following as of the dates indicated:
June 30, 2020 December 31, 2019
($ in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Life
Customer relationships $ 26,500    $ (6,588)   $ 19,912    5.5 years $ 26,500    $ (4,695)   $ 21,805    6 years
Trade name 13,400    (4,645)   8,755    3.5 years 13,400    (3,305)   10,095    4 years
Backlog 13,900    (12,003)   1,897    6 months 13,900    (8,528)   5,372    1 year
$ 53,800    $ (23,236)   $ 30,564    $ 53,800    $ (16,528)   $ 37,272   
        
Amortization expense associated with intangible assets for the three months ended June 30, 2020 and 2019, totaled $3.3 million and $3.4 million, respectively, and $6.7 million and $6.9 million for the six months ended June 30, 2020 and 2019, respectively.

        The following table provides the annual intangible amortization expense currently expected to be recognized for the years 2020 through 2024:
(in thousands) Remainder of 2020 2021 2022 2023 2024
Amortization expense $ 5,130    $ 6,466    $ 6,466    $ 5,841    $ 3,785   

Note 5. Fair Value of Financial Instruments

        The Company applies ASC 820, Fair Value Measurement, which establishes a framework for measuring fair value. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

        The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below:

Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.
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.

12



        The following table sets forth information regarding the Company's liabilities measured at fair value on a recurring basis: 
June 30, 2020 December 31, 2019
(in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Liabilities
Series B Preferred Stock - Series A Conversion Warrants and Exchange Warrants $ —    $ —    $ 3,400    $ 3,400    $ —    $ —    $ 4,317    $ 4,317   
Series B-1 Preferred Stock - Additional 6% Warrants —    —    400    400    —    —    400    400   
Series B-3 Preferred - Closing Warrants —    —    —    —    —    —    11,491    11,491   
Rights Offering —    —    —    —    —    —    1,383    1,383   
Total liabilities $ —    $ —    $ 3,800    $ 3,800    $ —    $ —    $ 17,591    $ 17,591   
        
The following is a reconciliation of the beginning and ending balances of recurring fair value measurements using Level 3 inputs:
(in thousands) Series B Preferred - Series A Conversion Warrants and Exchange Warrants Series B-1 Preferred Stock - Additional 6% Warrants Series B-3 Preferred - Closing Warrants Rights Offering
Beginning Balance, December 31, 2019 $ 4,317    $ 400    $ 11,491    $ 1,383   
Fair value adjustment - (gain) loss recognized in other income 1,509    —    1,677    (1,383)  
Transfer to non-recurring fair value instrument (equity) (2,426)   —    (13,168)   —   
Ending Balance, June 30, 2020
$ 3,400    $ 400    $ —    $ —   
        
The Company entered into three equity commitment agreements at various dates during 2019 with Ares Management, LLC, on behalf of its affiliated funds, investment vehicles and/or managed accounts (“Ares”) and funds managed by Oaktree Capital Management (“Oaktree”). These resulted in Series B-1 Preferred Stock (the “Series B-1 Preferred Stock”), Series B-2 Preferred Stock (the “Series B-2 Preferred Stock”) and Series B-3 Preferred Stock (the “Series B-3 Preferred Stock”) (collectively referred to as “Series B Preferred Stock”).

        The information below describes the balance sheet classification and the recurring/nonrecurring fair value measurement:

        Series B Preferred Stock (non-recurring) - The Series B Preferred Stock is a mandatorily redeemable financial instrument under ASC 480 and was recorded at relative fair value as debt which was estimated using a discounted cashflow model based on certain significant unobservable inputs, such as accumulated dividend rates, and projected Adjusted EBITDA for the life of the Series B Preferred Stock. The fair value of the liability for each of the transactions, was a combined $153.7 million and recorded on the balance sheet as debt as of June 30, 2020.

        Series B Preferred Stock - Warrants at closing (non-recurring) - The Warrants at closing, with an exercise price of $0.0001, represented (on an if-converted to common stock basis) 10% of the issued and outstanding common stock of the Company based on the Company’s fully diluted share count on May 20, 2019 (including the number of shares of common stock that may be issued pursuant to all restricted stock awards, restricted stock units, stock options and any other securities or rights (directly or indirectly) convertible into, exchangeable for or to subscribe for common stock that are outstanding on May 20, 2019 (excluding any shares of common stock issuable (a) pursuant to the merger agreement for our business combination, (b) upon conversion of shares of Series A Preferred Stock, (c) upon the exercise of any warrant with an exercise price of $11.50 or higher or (d) upon the exercise of any equity issued pursuant to the Company’s long term incentive plan or other equity plan with a strike price of $11.50 or higher). The 2,545,934 warrants at closing were valued at the closing stock price of $4.21 on May 20, 2019 which was recorded as additional paid in capital.

13


        On August 30, 2019, warrants for 900,000 shares of common stock were issued and were valued at the closing stock price of $3.75 which was recorded as additional paid in capital.

        On November 14, 2019, warrants for 3,568,750 shares of common stock were issued and were valued at the closing stock price of $2.20 and these were recorded as a liability (Series B-3 Preferred - Closing Warrants) and marked to market at December 31, 2019 at a price of $3.22. On January 21, 2020 the Company received shareholder approval for the warrants and the liability was marked to market at a price of $3.69. Upon shareholder approval, the warrants were moved from liability to equity at a fair value of $13,168 on a non-recurring basis.

        Series B-3 Exchange Warrants (non-recurring) - On November 14, 2019, the holders of Series A Preferred Stock converted 50% of their shares to Series B Preferred Stock and reduced the number of the potential additional warrants. In the exchange the holders of Series A Preferred Stock were issued warrants for 657,383 shares of common stock at the closing stock price of $2.20 and these were recorded as a liability and marked to market at December 31, 2019 at a price of $3.22. On January 21, 2020 the Company received shareholder approval for the warrants and the liability was marked to market at a price of $3.69. As of June 30, 2020, these warrants reside as part of equity at a fair value of $2,426 on a non-recurring basis.

        Series B-1 Preferred Stock - Series A Conversion Warrants (recurring) - 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. If converted, the holders of the Series B Preferred Stock would be entitled to additional warrants, with an exercise price of $0.0001. These warrants were fair valued using the closing stock price of $4.21 on May 20, 2019, at an estimated if-converted share count and recorded as a liability.

        Series B-1 Preferred Stock - Additional 6% Warrants (recurring) - The Additional 6% Warrants are issuable if the Company fails to meet certain Adjusted EBITDA thresholds on a trailing twelve-month basis from May 31, 2020 through April 30, 2021. The Company recorded the Additional 6% Warrants at fair value, which was estimated using a Monte Carlo Simulation based on certain significant unobservable inputs, such as a risk rate premium, Adjusted EBITDA volatility, stock price volatility and projected Adjusted EBITDA for the Company for 2019. The Additional 6% Warrants were recorded as a liability.

        Rights Offering - The Company conducted a rights offering in connection with the offering of the Series B Preferred Stock, in which, each common shareholder as of the record date was issued a right to purchase Series B Preferred Stock and warrants. The right that was issued was fair valued using a Black-Scholes model based on certain significant unobservable inputs, such as a risk rate premium, stock price volatility, dividend yield and expected term of rights offering. The rights offering fair value was recorded as a liability and was a deemed dividend to common stockholders and reflected as a reduction in additional paid in capital. On March 4, 2020 we completed the rights offering, removed the liability associated with the fair value (rights offering - recurring) and issued and sold 350 shares of Series B-3 Preferred Stock (Series B-3 Preferred Stock - non-recurring at a fair value of $313,000) and 12,029 warrants (non-recurring Series B Preferred Stock - Warrants at closing - non-recurring at a fair value of $37,000) to purchase common stock.

        2020 Commitment - The Company was obligated to sell to, Ares and Oaktree, and they were obligated to purchase, additional shares of Series B Preferred Stock up to approximately $15.0 million based on a failure by the Company to achieve specified debt and liquidity levels. On May 6, 2020, the Company entered into an amendment to the Equity Commitment Agreement. The amendment extended the period of time required to enter into the 2020 Commitment and purchase from the Company additional shares of Series B-3 Preferred Stock and warrants to July 14, 2020, or such other date as mutually agreed upon. Additionally, the amendment clarified that the 2020 Commitment shall in no event exceed $5.65 million. See Note 12. Subsequent Events for further discussion on the termination of the transaction.

        Other financial instruments of the Company not listed in the table consist of cash and cash equivalents, accounts receivable, accounts payable and other current liabilities that approximate their fair values. Additionally, management believes that the outstanding recorded balance on the line of credit and long-term debt, approximates fair value due to their floating interest rates.








14


Note 6. Debt

        Debt consists of the following obligations as of:
(in thousands) June 30, 2020 December 31, 2019
Term loan $ 173,345    $ 182,687   
Commercial equipment notes 4,205    4,456   
   Total principal due for long-term debt 177,550    187,143   
Unamortized debt discount and issuance costs (19,324)   (22,296)  
Less: Current portion of long-term debt (1,680)   (1,946)  
   Long-term debt, less current portion $ 156,546    $ 162,901   
Debt - Series B Preferred Stock $ 189,716    $ 180,444   
Unamortized debt discount and issuance costs (12,916)   (14,303)  
  Long-term Series B Preferred Stock $ 176,800    $ 166,141   
        
The weighted average interest rate for the term loan as of June 30, 2020 and December 31, 2019, was 8.20% and 10.35%, respectively.
Debt Covenants
        The term loan is governed by the terms of the Third A&R Credit Agreement, which include customary affirmative and negative covenants and provide for customary events of default, which include, nonpayment of principal or interest and failure to timely deliver financial statements. Under the Third A&R Credit Agreement, the financial covenant provides that the First Lien Net Leverage Ratio (as defined therein) may not exceed (i) prior to the fiscal quarter ending December 31, 2019, 4.75:1.0, (ii) for the four fiscal quarters ending December 31, 2020, 3.50:1.0, (iii) for the four fiscal quarters ending December 31, 2021, 2.75:1.0, and (iv) for all subsequent quarters, 2.25:1.0.

        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.

Letters of Credit and Surety Bonds

        In the ordinary course of business, the Company is required to post letters of credit and surety bonds to customers in support of performance under certain contracts. Such letters of credit are generally issued by a bank or similar financial institution. The letter of credit or surety bond commits the issuer to pay specified amounts to the holder of the letter of credit or surety bond under certain conditions. If the letter of credit or surety bond issuer were required to pay any amount to a holder, the Company would be required to reimburse the issuer, which, depending upon the circumstances, could result in a charge to earnings. As of June 30, 2020, and December 31, 2019, the Company was contingently liable under letters of credit issued under its Third A&R Credit Agreement, in the amount of $23.5 million and $21.0 million, respectively, related to projects. In addition, as of June 30, 2020 and December 31, 2019, the Company had outstanding surety bonds on projects of $2.6 billion and $2.4 billion, respectively.
15



Contractual Maturities

        Contractual maturities of the Company's outstanding principal on debt obligations as of June 30, 2020:
(in thousands) Maturities
Remainder of 2020 $ 1,621   
2021 1,228   
2022 15,859   
2023 29,735   
2024 129,107   
Thereafter —   
Total contractual maturities $ 177,550   

Note 7. Commitments and Contingencies

        In the ordinary course of business, the Company enters into agreements that provide financing for its machinery and equipment, facility and vehicle needs. The Company reviews these agreements for potential lease classification, and at inception, determines whether a lease is an operating or finance lease. Lease assets and liabilities, which generally represent the present value of future minimum lease payments over the term of the lease, are recognized as of the commencement date. Under Topic 842, leases with an initial lease term of twelve months or less are classified as short-term leases and are not recognized in the condensed consolidated balance sheets unless the lease contains a purchase option that is reasonably certain to be exercised.
        Lease term, discount rate, variable lease costs and future minimum lease payment determinations require the use of judgment as these are based on the facts and circumstances related to each specific lease. Lease terms are generally based on their initial non-cancelable terms, unless there is a renewal option that is reasonably certain to be exercised. Various factors, including economic incentives, intent, past history and business need are considered to determine if a renewal option is reasonably certain to be exercised. The implicit rate in a lease agreement is used when it can be determined. Otherwise, the Company's incremental borrowing rate, which is based on information available as of the lease commencement date, including applicable lease terms and the current economic environment, is used to determine the value of the lease obligation.
Finance Leases
        
        The Company has obligations, exclusive of associated interest, under various finance leases for equipment totaling $59.4 million and $64.2 million at June 30, 2020 and December 31, 2019, respectively. Gross property under this capitalized lease agreement at June 30, 2020 and December 31, 2019, totaled $121.8 million and $116.1 million, less accumulated depreciation of $45.0 million and $34.0 million, respectively, for net balances of $76.8 million and $82.1 million, respectively. Depreciation of assets held under the finance leases are included in cost of revenue in the condensed consolidated statements of operations.

        The future minimum payments of finance lease obligations are as follows:
(in thousands)
Remainder of 2020 $ 13,437   
2021 23,355   
2022 19,304   
2023 5,204   
2024 1,617   
Thereafter 487   
Future minimum lease payments 63,404   
Less: Amount representing interest (3,999)  
Present value of minimum lease payments 59,405   
Less: Current portion of finance lease obligations 23,790   
Finance lease obligations, less current portion $ 35,615   
16


Operating Leases
        
        In the ordinary course of business, the Company enters into non-cancelable operating leases for certain of its facilities, vehicles and equipment. The Company has obligations, exclusive of associated interest, totaling $44.0 million and $44.2 million at June 30, 2020 and December 31, 2019, respectively. Property under these operating lease agreements at June 30, 2020 and December 31, 2019, totaled $43.0 million and $43.4 million, respectively.

        The Company has long-term power-by-the-hour equipment rental agreements with a construction equipment manufacturer that have a guaranteed minimum monthly hour requirement. The minimum guaranteed amount based on the Company's current operations is $3.2 million per year. Total expense under these agreements are listed below as variable lease costs.

        The future minimum payments under non-cancelable operating leases are as follows:
(in thousands)
Remainder of 2020 $ 6,769   
2021 11,902   
2022 9,480   
2023 6,754   
2024 3,454   
Thereafter 20,650   
Future minimum lease payments 59,009   
Less: Amount representing interest (14,984)  
Present value of minimum lease payments 44,025   
Less: Current portion of operating lease obligations 10,392   
Operating lease obligations, less current portion $ 33,633   

17


Lease Information
Three months ended Six Months Ended
June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
Finance Lease cost:
   Amortization of right-of-use assets $ 5,858    $ 5,837    $ 11,555    $ 10,845   
   Interest on lease liabilities $ 940    $ 1,249    $ 2,126    $ 2,898   
Operating lease cost $ 3,490    $ 2,314    $ 6,967    $ 4,145   
Short-term lease cost $ 45,134    $ 6,272    $ 66,768    $ 14,768   
Variable lease cost $ 985    $ 2,189    $ 1,944    $ 2,380   
Sublease Income $ (33)   $ (24)   $ (66)   $ (47)  
Total lease cost $ 56,374    $ 17,837    $ 89,294    $ 34,989   
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
   Operating cash flows from finance leases $ 940    $ 1,249    $ 2,126    $ 2,898   
   Operating cash flows from operating leases $ 3,385    $ 3,929    $ 6,728    $ 7,176   
Weighted-average remaining lease term - finance leases 2.70 years 3.14 years
Weighted-average remaining lease term - operating leases 7.86 years 9.74 years
Weighted-average discount rate - finance leases 6.27  % 6.67  %
Weighted-average discount rate - operating leases 6.96  % 6.91  %



Note 8. Earnings Per Share

        The Company calculates earnings (loss) per share (“EPS”) in accordance with ASC 260, Earnings per Share. Basic EPS is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares of common stock outstanding during the period.

        Income (loss) available to common stockholders is computed by deducting the dividends accrued for the period on cumulative preferred stock from net income. If there is a net loss, the amount of the loss is increased by those preferred dividends.

        Diluted EPS assumes the dilutive effect of (i) contingently issuable earn-out shares, (ii) Series A cumulative convertible preferred stock, using the if-converted method, and (iii) the assumed exercise of in-the-money stock options and warrants and the assumed vesting of outstanding restricted stock units (“RSUs”), using the treasury stock method.

        Whether the Company has net income, or a net loss determines whether potential issuances of common stock are included in the diluted EPS computation or whether they would be anti-dilutive. As a result, if there is a net loss, diluted EPS is computed in the same manner as basic EPS is computed. Similarly, if the Company has net income but its preferred dividend adjustment made in computing income available to common stockholders results in a net loss available to common stockholders, diluted EPS would be computed the same as basic EPS.

        
18


The calculations of basic and diluted EPS, are as follows:
Three Months Ended Six Months Ended
June 30, June 30,
($ in thousands, except per share data) 2020 2019 2020 2019
Numerator:
  Net income (loss) $ 3,597    $ 6,208    $ (9,146)   $ (17,431)  
  Less: Convertible Preferred Stock dividends (606)   (918)   (1,372)   (1,443)  
  Less: Contingent consideration fair value adjustment —    (18,835)   —    (18,835)  
  Less: Net income allocated to participating securities (802)   —    —    —   
    Net income (loss) available to common stockholders 2,189    (13,545)   (10,518)   (37,709)  
Denominator:
  Weighted average common shares outstanding - basic 20,751,673    22,252,489    20,636,944    22,220,799   
   Series B Preferred - Warrants at closing 7,683,716    —    —    —   
   Convertible Series A Preferred 9,448,988    —    —    —   
   RSUs 2,094,005    —    —    —   
  Weighted average common shares outstanding - diluted 39,978,382    22,252,489    20,636,944    22,220,799   
Anti-dilutive: (1)(2)
  Convertible Series A Preferred —    9,122,860    8,001,014    7,084,004   
  Series B Preferred - Warrants at closing —    1,131,526    7,679,520    565,749   
  RSUs —    632,911    1,775,182    493,508   
Basic EPS 0.11    (0.61)   (0.51)   (1.70)  
Diluted EPS 0.09    (0.61)   (0.51)   (1.70)  

(1)  As of June 30, 2020 and 2019, publicly traded warrants to purchase 8,480,000 shares of common stock at $11.50 per share were not considered as dilutive as the warrants’ exercise price was greater than the average market price of the common stock during the period.
        
(2) As of June 30, 2020 and 2019, there were 539,034 and 646,405 of vested and unvested options and 513,153 and 817,817 unvested RSUs, respectively. These were also not considered as dilutive as the respective exercise price or average stock price required for vesting of such awards was greater than the average market price of the common stock during the period.

Series A Preferred Stock

        As of June 30, 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, dividends are required to be paid in cash quarterly in arrears on each March 31, June 30, September 30 and December 31 on the stated value at a rate of 10% per annum.

        If not paid in cash, dividends will accrue on the stated value and will increase the stated value on and effective as of the applicable dividend date without any further action by the Board at 12% per annum.

        So long as any shares of Series B Preferred Stock of the Company are currently outstanding or from and after the occurrence of any non-payment event or default event and until cured or waived, the foregoing rates will increase by 2% per annum.

        As of June 30, 2020, the Company has accrued a cumulative of $3.1 million in dividends to holders of Series A Preferred Stock as a reduction to additional paid-in capital.
19




Series B Preferred Stock

        As of June 30, 2020, we had 199,474 shares of Series B Preferred Stock outstanding, with each share having a stated value of $1,000 plus accumulated dividends. Our common stock and Series A Preferred Stock are junior to the Series B Preferred Stock. Dividends are paid in cash on the Series B Preferred Stock as, if and when declared by our Board. To the extent not prohibited by applicable law, dividends are required to be declared and paid in cash quarterly in arrears on each March 31, June 30, September 30 and December 31. Any dividend period for which the Total Net Leverage Ratio is greater than 1.50:1.00, the dividend rate is 13.5% per annum and (ii) with respect to any dividend period for which the Total Net Leverage Ratio is less than or equal to 1.50:1.00, at a rate of 12% per annum.

        If not paid in cash, dividends will accrue on the stated value and will increase the stated value on Series B Preferred Stock and is effective as of the applicable dividend date without any further action by the Board at a rate of 15%.

        The Company has accrued a cumulative of $18.3 million in dividends to holders of Series B Preferred Stock, which is recorded in convertible debt in the Company's condensed consolidated balance sheet for the period ended June 30, 2020. See Note 5. Fair Value of Financial Instruments for discussion regarding the Company's valuation of Series B Preferred Stock.

Contingent Consideration

Pursuant to the original merger agreement with M III Acquisition Corp., the Company was required to issue up to an additional 9,000,000 shares of common stock, which should have been fully earned if the final 2019 adjusted EBITDA targets were achieved. As of June 30, 2019, the Company recorded an adjustment of $18.8 million to the liability primarily based on the significant decrease in the Company's prior year stock price.

Stock Compensation
        
        Under guidance of ASC Topic 718 “Compensation — Stock Compensation,” stock-based compensation expense is measured at the date of grant, based on the calculated fair value of the stock-based award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the award).

        The fair value of the RSUs was based on the closing market price of our common stock on the date of the grant. Stock compensation expense for the RSUs is being amortized using the straight-line method over the service period. For the three months ended June 30, 2020 and 2019, we recognized $0.8 million and $0.8 million in compensation expense, respectively, and $2.0 million and $1.8 million for the six months ended June 30, 2020 and 2019, respectively.


Note 9. Income Taxes

        The Company’s statutory federal tax rate was 21.00% for the periods ended June 30, 2020 and 2019, respectively. State tax rates for the same period vary among states and range from approximately 0.8% to 12.0%. A small number of states do not impose an income tax.

        The effective tax rates for the three months ended June 30, 2020 and 2019 were 56.8% and 49.6%, respectively, and were (73.42)% and 13.82% for the six months ended June 30, 2020 and 2019, respectively. The difference between the Company’s effective tax rate and the federal statutory rate primarily results from permanent differences related to the interest accrued for the Series B Preferred Stock, which is not deductible for federal and state income taxes. The six months ended June 30, 2020 have the full impact of all the Series B Preferred Stock that was issued in 2019 whereas the six months ended June 30, 2019 only have a relatively small amount of non-deductible Series B Preferred Stock expenses. There were no changes in uncertain tax positions during the periods ended June 30, 2020 and 2019.

        On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted by the US Government in response to the COVID-19 pandemic to provide employment retention incentives. We do not believe that these relief measures materially affect the condensed consolidated financial statements for the first or second quarter of 2020.



20



Note 10. Segments

        We operate our business as two reportable segments: the Renewables segment and the Specialty Civil segment. Each of our reportable segments is comprised of similar business units that specialize in services unique to 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 United States and specializes in a range of services for the power delivery, solar, wind and battery storage markets that includes design, procurement, construction, restoration, and maintenance.

Specialty Civil Segment

        The Specialty Civil segment operates throughout the United States and specializes in a range of services that include:

Heavy civil construction services such as road and bridge construction, specialty paving, sports field development, industrial maintenance, outsourced contract mining and heavy hauling.

Environmental remediation services such as site development, environmental site closure, and coal ash management.
Rail infrastructure services such as planning, design, procurement, construction and maintenance of major railway and intermodal facilities.

Segment Revenue

        Revenue by segment was as follows:
Three Months Ended June 30, Six months ended June 30,
(in thousands) 2020 2019 2020 2019
Segment Revenue % of Total Revenue Revenue % of Total Revenue Revenue % of Total Revenue Revenue % of Total Revenue
Renewables $ 324,262    67.5  % $ 179,149    54.6  % $ 573,008    68.3  % $ 253,180    48.9  %
Specialty Civil 156,342    32.5  % 148,812    45.4  % 265,759    31.7  % 264,562    51.1  %
  Total revenue $ 480,604    100.0  % $ 327,961    100.0  % $ 838,767    100.0  % $ 517,742    100.0  %


21



Segment Gross Profit

    &