IES Holdings, Inc. (or “IES” or the “Company”) (NASDAQ:IESC) today
announced financial results for the quarter ended June 30,
2017.
Third Quarter 2017 and Year-to-Date
Highlights
- Revenue of $208 million for the third quarter of fiscal 2017,
an increase of 16% compared with the third quarter of fiscal 2016;
Revenue of $604 million for the year-to-date 2017, an increase of
23% compared with the year-to-date 2016
- Income from operations of $4.7 million for the third quarter of
fiscal 2017, a decrease of $3.5 million compared with the third
quarter of fiscal 2016; Income from operations of $13.3 million for
the year-to-date 2017, a decrease of $2.5 million compared with the
year-to-date 2016
- Net income attributable to IES for the third quarter of fiscal
2017 of $5.9 million, or $0.27 per diluted share, a decrease of
$4.9 million, or $0.23 per diluted share, compared with the third
quarter of fiscal 2016; Net income attributable to IES for the
year-to-date 2017 of $10.3 million, or $0.48 per diluted share, a
decrease of $8.5 million, or $0.39 per diluted share, compared with
the year-to-date 2016
- Adjusted net income attributable to IES (a non-GAAP financial
measure, as defined below) for the third quarter of fiscal 2017 of
$3.7 million, a decrease of $3.7 million compared with the third
quarter of fiscal 2016; Adjusted net income attributable to IES for
the year-to-date 2017 of $10.8 million, a decrease of $3.2 million
compared with the year-to-date 2016
- Backlog of approximately $314 million as of June 30, 2017, as
compared to approximately $335 million as of March 31, 2017 and
approximately $361 million as of June 30, 2016
- Commercial & Industrial segment market repositioning
included the acquisition of Technical Services and, subsequent to
June 30, 2017, the acquisition of NEXT Electric and wind-down of
two underperforming branches
Management CommentaryRobert
Lewey, President, stated, “We continued to experience strong growth
during our third quarter of 2017, with revenues improving at three
of our four segments, compared with the third quarter of
2016. However, our third quarter results were negatively
impacted by continued underperformance at our Denver, Colorado and
Roanoke, Virginia branches within our Commercial & Industrial
segment. Upon completing our detailed reviews of operations,
we determined that these branches no longer met our criteria to
remain in our portfolio of businesses and made the decision to exit
these markets.
"As part of our strategic growth plan, we
expanded and strengthened offerings in our Commercial &
Industrial segment with two recent acquisitions, including NEXT
Electric, which provided an opportunity to partner with an
experienced and deep management team, and Technical Services, which
expanded our mechanical services capabilities. We believe
these actions collectively position our Commercial & Industrial
segment for steadier growth and diversified, higher margin business
going forward.”
Tracy McLauchlin, Chief Financial Officer,
added, “During the third quarter we generated $7.5 million of cash
flow from operations and $4.7 million of operating income despite a
$2.6 million operating loss associated with the wind-down branches.
We believe that our strong balance sheet and available liquidity,
as well as expected cash flow from both our legacy and acquired
businesses, will support our organic and acquisition growth
strategies.”
A summary of the historical results of the
wind-down branches has been provided in the financial tables
included in this press release.
Net Operating Loss
Carryforwards The Company estimates that it has available
Net Operating Loss Carryforwards (NOLs) for U.S. federal income tax
purposes of approximately $404 million at September 30, 2016,
including approximately $142 million resulting from the additional
amortization of personal goodwill. The Company's common stock
is subject to a Rights Plan dated November 8, 2016, which is
intended to assist in limiting the number of 5% or more owners of
the Company’s common stock and, thereby reduce the risk of a
possible “change of ownership” under Section 382 of the Internal
Revenue Code of 1986, as amended. Any such “change of ownership”
under these rules would limit or eliminate the ability of the
Company to use its existing NOLs for federal income tax purposes.
There is no guarantee that the Rights Plan will achieve the
objective of preserving the value or realization of the NOLs.
Stock Buyback Plan The
Company’s Board of Directors has authorized and previously
announced a stock repurchase program for purchasing up to 1.5
million shares of our common stock from time to time. During
the quarter ended June 30, 2017, the Company repurchased 51,673
shares at an average price of $15.68 per share.
Non-GAAP Financial Measures and Other
AdjustmentsThis press release includes adjusted net income
attributable to IES and, in the non-GAAP reconciliation table
included herein, adjusted net income before taxes, both of which
are financial measures not calculated in accordance with generally
accepted accounting principles in the U.S. (“GAAP”).
Management believes that these measures provide useful information
to our investors by distinguishing certain noncash events such as
our valuation allowances release, and that these measures, when
reconciled to net income attributable to IES, which is the most
directly comparable GAAP measure, help our investors to better
identify underlying trends in the operations of our business and
facilitate easier comparisons of our financial performance with
prior and future periods and to our peers. Non-GAAP financial
measures should not be considered in isolation from, or as a
substitute for, financial information calculated in accordance with
GAAP. Investors are encouraged to review the reconciliation
of these non-GAAP measures to their most directly comparable GAAP
financial measures. A reconciliation of these non-GAAP
financial measures to GAAP results has been provided in the
financial tables included in this press release.
For further details on the Company’s financial
results, please refer to the Company’s annual report on Form 10-K
for the fiscal year ended September 30, 2016 and quarterly report
on Form 10-Q for the period ended June 30, 2017, to be filed with
the Securities and Exchange Commission (“SEC”) by August 4, 2017,
and any amendments thereto.
About IES Holdings, Inc.IES is
a holding company that owns and manages diverse operating
subsidiaries, comprised of providers of industrial infrastructure
services to a variety of end markets. Our approximately 4,000
employees serve clients in the United States. For more information
about IES, please visit www.ies-co.com.
Certain statements in this release may be deemed
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, all of which are based upon various estimates
and assumptions that the Company believes to be reasonable as of
the date hereof. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "could," "should,"
"expect," "plan," "project," "intend," "anticipate," "believe,"
"seek," "estimate," "predict," "potential," "pursue," "target,"
"continue," the negative of such terms or other comparable
terminology. These statements involve risks and uncertainties that
could cause the Company's actual future outcomes to differ
materially from those set forth in such statements. Such risks and
uncertainties include, but are not limited to, the ability of our
controlling shareholder to take action not aligned with other
shareholders; the possibility that certain tax benefits of our net
operating losses may be restricted or reduced in a change in
ownership or a change in the federal tax rate; the potential
recognition of valuation allowances on net deferred tax assets; the
inability to carry out plans and strategies as expected, including
our inability to identify and complete acquisitions that meet our
investment criteria in furtherance of our corporate strategy;
competition in the industries in which we operate, both from third
parties and former employees, which could result in the loss of one
or more customers or lead to lower margins on new projects;
fluctuations in operating activity due to downturns in levels of
construction, seasonality and differing regional economic
conditions; and our ability to successfully manage projects,
as well as other risk factors discussed in this document, in
the Company's annual report on Form 10-K for the year ended
September 30, 2016 and in the Company’s other reports on file with
the SEC. You should understand that such risk factors could
cause future outcomes to differ materially from those experienced
previously or those expressed in such forward-looking statements.
The Company undertakes no obligation to publicly update or revise
any information, including information concerning its controlling
shareholder, net operating losses, borrowing availability, or cash
position, or any forward-looking statements to reflect events or
circumstances that may arise after the date of this release.
Forward-looking statements are provided in this press release
pursuant to the safe harbor established under the Private
Securities Litigation Reform Act of 1995 and should be evaluated in
the context of the estimates, assumptions, uncertainties, and risks
described herein.
General information about IES Holdings, Inc. can be found at
http://www.ies-co.com under "Investors." The Company's annual
report on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K, as well as any amendments to those reports,
are available free of charge through the Company's website as soon
as reasonably practicable after they are filed with, or furnished
to, the SEC.
|
|
|
|
|
|
|
|
IES HOLDINGS, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS |
(DOLLARS IN MILLIONS, EXCEPT PER SHARE
DATA) |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
Revenues |
$ |
208.3 |
|
|
$ |
179.6 |
|
|
$ |
604.2 |
|
|
$ |
490.3 |
|
Cost of services |
|
172.9 |
|
|
|
145.6 |
|
|
|
501.8 |
|
|
|
400.9 |
|
Gross
profit |
|
35.4 |
|
|
|
34.0 |
|
|
|
102.4 |
|
|
|
89.4 |
|
Selling, general and
administrative expenses |
|
30.8 |
|
|
|
25.7 |
|
|
|
89.1 |
|
|
|
72.5 |
|
Contingent
consideration expense |
|
- |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.3 |
|
Loss on sale of
assets |
|
(0.1 |
) |
|
|
- |
|
|
|
(0.1 |
) |
|
|
0.8 |
|
Income
from operations |
|
4.7 |
|
|
|
8.2 |
|
|
|
13.3 |
|
|
|
15.8 |
|
Interest expense,
net |
|
0.4 |
|
|
|
0.3 |
|
|
|
1.3 |
|
|
|
0.9 |
|
Other expense (income),
net |
|
- |
|
|
|
- |
|
|
|
(0.1 |
) |
|
|
- |
|
Income
from continuing operations before income taxes |
|
4.4 |
|
|
|
7.9 |
|
|
|
12.1 |
|
|
|
15.0 |
|
Provision (benefit) for
income taxes |
|
(1.5 |
) |
|
|
(2.9 |
) |
|
|
1.8 |
|
|
|
(3.9 |
) |
Net
income |
|
5.9 |
|
|
|
10.8 |
|
|
|
10.3 |
|
|
|
18.8 |
|
Net income attributable
to noncontrolling interest |
|
- |
|
|
|
- |
|
|
|
(0.1 |
) |
|
|
- |
|
Net
income attributable to IES Holdings, Inc. |
$ |
5.9 |
|
|
$ |
10.8 |
|
|
$ |
10.3 |
|
|
$ |
18.8 |
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to IES Holdings, Inc.: |
|
|
|
|
|
|
|
Basic |
$ |
0.27 |
|
|
$ |
0.50 |
|
|
$ |
0.48 |
|
|
$ |
0.88 |
|
Diluted |
$ |
0.27 |
|
|
$ |
0.50 |
|
|
$ |
0.48 |
|
|
$ |
0.87 |
|
|
|
|
|
|
|
|
|
Shares used in the
computation of income per share: |
|
|
|
|
|
|
|
Basic (in
thousands) |
|
21,301 |
|
|
|
21,298 |
|
|
|
21,295 |
|
|
|
21,280 |
|
Diluted
(in thousands) |
|
21,556 |
|
|
|
21,457 |
|
|
|
21,551 |
|
|
|
21,412 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IES HOLDINGS, INC. AND
SUBSIDIARIES |
NON-GAAP RECONCILIATION OF ADJUSTED NET
INCOME |
ATTRIBUTABLE TO IES HOLDINGS, INC. (DOLLARS IN
MILLIONS) |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Nine Months Ended June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
Net income attributable
to IES Holdings, Inc. |
$ |
5.9 |
|
|
$ |
10.8 |
|
|
$ |
10.3 |
|
|
$ |
18.8 |
|
Provision (benefit) for
income taxes |
|
(1.5 |
) |
|
|
(2.9 |
) |
|
|
1.8 |
|
|
|
(3.9 |
) |
Adjusted
net income before taxes |
|
4.3 |
|
|
|
7.9 |
|
|
|
12.1 |
|
|
|
14.9 |
|
Current tax expense
(1) |
|
(0.7 |
) |
|
|
(0.5 |
) |
|
|
(1.3 |
) |
|
|
(1.0 |
) |
Adjusted
net income attributable to IES Holdings, Inc. |
$ |
3.7 |
|
|
$ |
7.3 |
|
|
$ |
10.8 |
|
|
$ |
13.9 |
|
|
|
|
|
|
|
|
|
(1)
Represents the tax expense for the current period which will be
paid in cash, and not offset by the utilization of deferred tax
assets |
|
|
|
|
|
|
IES HOLDINGS, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(DOLLARS IN MILLIONS) |
(UNAUDITED) |
|
|
|
|
|
June 30, 2017 |
|
September 30, 2016 |
ASSETS |
|
|
|
CURRENT
ASSETS: |
|
|
|
Cash and
cash equivalents |
$ |
23.9 |
|
|
$ |
33.0 |
|
Restricted cash |
|
- |
|
|
|
0.3 |
|
Accounts
receivable: |
|
|
|
Trade,
net of allowance |
|
132.9 |
|
|
|
124.4 |
|
Retainage |
|
24.6 |
|
|
|
20.1 |
|
Inventories |
|
19.0 |
|
|
|
13.2 |
|
Costs and
estimated earnings in excess of billings |
|
18.7 |
|
|
|
15.6 |
|
Prepaid
expenses and other current assets |
|
4.7 |
|
|
|
3.2 |
|
Total
current assets |
|
223.8 |
|
|
|
209.7 |
|
Property
and equipment, net |
|
24.6 |
|
|
|
15.7 |
|
Goodwill |
|
45.0 |
|
|
|
39.9 |
|
Intangible assets |
|
31.5 |
|
|
|
31.7 |
|
Deferred
tax assets |
|
88.9 |
|
|
|
93.5 |
|
Other
non-current assets |
|
3.3 |
|
|
|
3.7 |
|
Total
assets |
$ |
417.2 |
|
|
$ |
394.3 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
CURRENT
LIABILITIES: |
|
|
|
Accounts
payable and accrued expenses |
$ |
116.2 |
|
|
$ |
108.8 |
|
Billings
in excess of costs and estimated earnings |
|
30.7 |
|
|
|
24.2 |
|
Total
current liabilities |
|
146.9 |
|
|
|
133.1 |
|
Long-term
debt, net of current maturities |
|
29.4 |
|
|
|
29.3 |
|
Other
non-current liabilities |
|
4.4 |
|
|
|
6.8 |
|
Total
liabilities |
|
180.8 |
|
|
|
169.1 |
|
Noncontrolling interest |
|
1.7 |
|
|
|
1.8 |
|
|
|
|
|
STOCKHOLDERS' EQUITY: |
|
|
|
Preferred
stock |
|
- |
|
|
|
- |
|
Common
stock |
|
0.2 |
|
|
|
0.2 |
|
Treasury
stock, at cost |
|
(5.4 |
) |
|
|
(4.8 |
) |
Additional paid-in capital |
|
196.5 |
|
|
|
195.2 |
|
Retained
earnings |
|
43.3 |
|
|
|
32.7 |
|
Total
stockholders' equity |
|
234.7 |
|
|
|
223.4 |
|
Total
liabilities and stockholders' equity |
$ |
417.2 |
|
|
$ |
394.3 |
|
|
|
|
|
|
|
|
|
|
IES HOLDINGS, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(DOLLARS IN MILLIONS) |
(UNAUDITED) |
|
Nine Months Ended March 31, |
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
Net income |
$ |
10.3 |
|
|
$ |
18.8 |
|
Adjustments to
reconcile net income to net cash provided |
|
|
|
by operating
activities: |
|
|
|
Bad debt
expense |
|
- |
|
|
|
0.3 |
|
Amortization of deferred financing cost |
|
0.2 |
|
|
|
0.3 |
|
Depreciation and amortization |
|
6.9 |
|
|
|
3.5 |
|
Loss
(gain) on sale of assets |
|
(0.1 |
) |
|
|
0.8 |
|
Deferred
income taxes |
|
0.5 |
|
|
|
- |
|
Non-cash
compensation expense |
|
1.3 |
|
|
|
0.6 |
|
Changes in operating
assets and liabilities, net of effects |
|
|
|
of acquisitions and
divestitures: |
|
|
|
Accounts
receivable |
|
(1.6 |
) |
|
|
(8.0 |
) |
Inventories |
|
(3.9 |
) |
|
|
(0.2 |
) |
Costs and
estimated earnings in excess of billings |
|
(3.2 |
) |
|
|
3.0 |
|
Prepaid expenses
and other current assets |
|
(9.1 |
) |
|
|
(3.1 |
) |
Other
non-current assets |
|
0.4 |
|
|
|
(1.3 |
) |
Accounts payable
and accrued expenses |
|
0.6 |
|
|
|
1.6 |
|
Billings in
excess of costs and estimated earnings |
|
6.4 |
|
|
|
2.5 |
|
Other
non-current liabilities |
|
1.3 |
|
|
|
(4.8 |
) |
Net cash provided by
operating activities |
|
10.2 |
|
|
|
13.9 |
|
CASH FLOWS USED IN
INVESTING ACTIVITIES: |
|
|
|
Purchases
of property and equipment |
|
(3.8 |
) |
|
|
(2.2 |
) |
Proceeds
from sale of property and equipment |
|
0.2 |
|
|
|
2.2 |
|
Cash paid
for acquisitions, net of cash acquired |
|
(14.7 |
) |
|
|
(59.7 |
) |
Net cash used in
investing activities |
|
(18.2 |
) |
|
|
(59.7 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
Borrowings of debt |
|
5.3 |
|
|
|
20.0 |
|
Repayments of debt |
|
(5.3 |
) |
|
|
(0.1 |
) |
Contingent consideration payment |
|
(0.4 |
) |
|
|
- |
|
Distribution to noncontrolling interest |
|
(0.2 |
) |
|
|
- |
|
Options
exercised |
|
0.2 |
|
|
|
0.1 |
|
Purchase
of treasury stock |
|
(0.9 |
) |
|
|
(0.6 |
) |
Change in
restricted cash |
|
0.3 |
|
|
|
(0.3 |
) |
Net cash provided by
(used in) financing activities |
|
(1.0 |
) |
|
|
19.2 |
|
NET INCREASE (DECREASE)
IN CASH EQUIVALENTS |
|
(9.1 |
) |
|
|
(26.6 |
) |
CASH AND CASH
EQUIVALENTS, beginning of period |
|
33.0 |
|
|
|
49.4 |
|
CASH AND CASH
EQUIVALENTS, end of period |
$ |
23.9 |
|
|
$ |
22.8 |
|
|
|
|
|
|
IES HOLDINGS, INC. AND
SUBSIDIARIES |
OPERATING SEGMENT STATEMENTS OF
OPERATIONS |
(DOLLARS IN MILLIONS) |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|
June 30, |
June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
Commercial & Industrial |
$ |
58.8 |
|
|
$ |
59.5 |
|
|
$ |
168.0 |
|
|
$ |
158.9 |
|
Communications |
|
57.1 |
|
|
|
48.7 |
|
|
|
172.1 |
|
|
|
128.8 |
|
Infrastructure Solutions |
|
22.3 |
|
|
|
14.5 |
|
|
|
59.6 |
|
|
|
40.2 |
|
Residential |
|
70.2 |
|
|
|
56.9 |
|
|
|
204.5 |
|
|
|
162.4 |
|
Total Revenue |
$ |
208.3 |
|
|
$ |
179.6 |
|
|
$ |
604.2 |
|
|
$ |
490.3 |
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
|
|
|
|
Commercial & Industrial |
$ |
(0.2 |
) |
|
$ |
2.9 |
|
|
$ |
(1.0 |
) |
|
$ |
4.7 |
|
Communications |
|
3.9 |
|
|
|
3.0 |
|
|
|
9.3 |
|
|
|
8.1 |
|
Infrastructure Solutions |
|
- |
|
|
|
1.3 |
|
|
|
1.2 |
|
|
|
0.7 |
|
Residential |
|
4.8 |
|
|
|
4.2 |
|
|
|
14.6 |
|
|
|
11.1 |
|
Corporate |
|
(3.7 |
) |
|
|
(3.3 |
) |
|
|
(10.8 |
) |
|
|
(8.7 |
) |
Total Operating
Income |
$ |
4.7 |
|
|
$ |
8.2 |
|
|
$ |
13.3 |
|
|
$ |
15.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IES HOLDINGS, INC. AND
SUBSIDIARIES |
WIND-DOWN STATEMENTS OF
OPERATIONS* |
(DOLLARS IN MILLIONS) |
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|
June 30, |
June 30, |
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
Revenues |
$ |
7.6 |
|
|
$ |
7.6 |
|
|
$ |
27.4 |
|
|
$ |
18.2 |
|
Cost of service |
|
9.5 |
|
|
|
6.9 |
|
|
|
31.6 |
|
|
|
17.8 |
|
Gross
profit |
|
(2.0 |
) |
|
|
0.7 |
|
|
|
(4.3 |
) |
|
|
0.4 |
|
Selling, general and
administrative expenses |
|
0.6 |
|
|
|
0.7 |
|
|
|
2.1 |
|
|
|
2.3 |
|
Income
from operations |
$ |
(2.6 |
) |
|
$ |
(0.1 |
) |
|
$ |
(6.4 |
) |
|
$ |
(1.9 |
) |
|
|
|
|
|
|
|
|
* Includes
results from the Denver and Roanoke branches of our Commercial
& Industrial segment. In July, |
2017, we implemented a plan to wind-down operations at these
branches. |
|
|
|
|
|
|
|
|
|
Contact: Tracy McLauchlin, CFO
IES Holdings, Inc.
713-860-1500
IES (NASDAQ:IESC)
Historical Stock Chart
From Apr 2024 to May 2024
IES (NASDAQ:IESC)
Historical Stock Chart
From May 2023 to May 2024