IES Holdings, Inc. (or “IES” or the “Company”) (NASDAQ: IESC) today
announced financial results for the quarter ended December 31,
2020.
First Quarter 2021
Highlights
- Revenue of $315 million for the
first quarter of fiscal 2021, an increase of 14% compared with $276
million for the same quarter of fiscal 2020
- Operating income of $15.9 million
for the first quarter of fiscal 2021, an increase of 28% compared
with $12.4 million for the same quarter of fiscal 2020
- Net income attributable to IES
increased 42% to $12.1 million, or $0.58 per diluted share, for the
first quarter of fiscal 2021, compared with $8.5 million, or $0.39
per diluted share, for the same quarter of fiscal 2020
- Adjusted net income attributable to
IES (a non-GAAP financial measure, as defined below) increased 31%
to $14.8 million, or $0.71 per diluted share, for the first quarter
of fiscal 2021, compared with $11.3 million, or $0.54 per diluted
share, for the same quarter of fiscal 2020
- Remaining performance obligations,
a GAAP measure of future revenue to be recognized from current
contracts with customers, of approximately $525 million as of
December 31, 2020
- Backlog (a non-GAAP financial
measure, as defined below) of approximately $632 million as of
December 31, 2020
Overview of Results
"Despite the ongoing challenges presented by the COVID-19
pandemic, we are pleased with our overall results for the first
quarter of fiscal 2021, as demand for our services remained
strong,” said Jeffrey Gendell, Chairman and Chief Executive
Officer. “Entering the new fiscal year, our top priorities remain
the safety and health of our employees and serving the needs of our
customers in what continues to be a challenging environment. While
the pandemic continues to add uncertainty to our operations, we
believe we are well positioned to meet these challenges and
continue to grow the business.
"Consolidated revenue for the first quarter of fiscal 2021
increased 14% over the prior year, led by significant growth in our
Communications and Residential businesses, as well as the
acquisition of businesses in our Residential and Infrastructure
Solutions segments. Excluding the contribution of businesses
acquired subsequent to the first quarter of fiscal 2020, our
revenue increased 7% for the first quarter of fiscal 2021.
Operating income for the first quarter of fiscal 2021 increased 28%
over the prior year, despite the impact of rapidly escalating
copper and other commodity prices, as well as higher prices for
certain electrical component products used in our business."
For the first quarter of fiscal 2021, the Communications segment
reported revenue of $98.4 million, a 17% increase from the first
quarter of fiscal 2020, driven primarily by increased demand from
data center and distribution center customers, while operating
income increased 31% to $9.2 million. Reflecting strong demand in
the single-family housing market, as well as the contribution of
businesses acquired subsequent to the first quarter of fiscal 2020,
the Residential segment's revenue was $119.5 million in the first
quarter of fiscal 2021, an increase of 29% compared with the first
quarter of fiscal 2020. The Residential segment’s operating income
was $6.2 million for the first quarter of fiscal 2021, a decrease
of 3% compared to the first quarter of fiscal 2020, as higher
commodity and component prices offset the benefits of increased
revenue. Revenue in the Infrastructure Solutions segment increased
10% to $34.4 million in the first quarter of fiscal 2021 compared
to the first quarter of fiscal 2020, reflecting the impact of
businesses acquired subsequent to the first quarter of fiscal 2020.
The segment’s operating income increased 63% to $5.3 million
compared to the first quarter of fiscal 2020, primarily as a result
of improved margins in our custom power solutions business and the
impact of businesses acquired subsequent to the first quarter of
fiscal 2020.
The Commercial & Industrial segment reported revenue of
$62.6 million for the first quarter of fiscal 2021, a decline of 8%
compared to the first quarter of fiscal 2020. The segment reported
an operating loss of $0.7 million for the first quarter of fiscal
2021, compared with a loss of $0.5 million for the first quarter of
fiscal 2020. Although the business has adjusted its cost structure
in response to a highly competitive market, it continues to
experience inefficiencies on certain projects and be affected by
the ongoing COVID-19 pandemic, which resulted in delays in awarding
new projects and decreased demand for new construction in certain
sectors we serve.
Tracy McLauchlin, Chief Financial Officer, added,
“We generated $20 million of operating cash flow during the first
quarter of fiscal 2021 and ended the quarter with a cash balance,
net of outstanding debt, of $13 million, after investing an
aggregate of $55 million in the three previously announced
acquisitions completed during the quarter, K.E.P. Electric, Inc.,
Wedlake Fabricating, Inc. and Bayonet Plumbing, Heating and
Air-Conditioning, LLC. We believe that our strong balance sheet
provides us with a solid financial foundation to navigate through
this uncertain environment and leaves us well positioned to execute
our growth strategy in fiscal 2021.”
Stock Buyback PlanIn 2015, the
Company’s Board of Directors authorized and announced a stock
repurchase program for purchasing up to 1.5 million shares of our
common stock from time to time, and on May 2, 2019, authorized the
repurchase of up to an additional 1.0 million shares. During the
quarter ended December 31, 2020, the Company did not repurchase any
shares under this program. The Company had 993,825 shares remaining
under its stock repurchase authorization at December 31, 2020.
Non-GAAP Financial Measures and Other
AdjustmentsThis press release includes adjusted net income
attributable to IES, adjusted earnings per share attributable to
IES, and backlog, and, in the non-GAAP reconciliation tables
included herein, adjusted EBITDA and adjusted net income before
taxes, each of which is a financial measure 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, in the case of adjusted net
income attributable to IES, adjusted earnings per share
attributable to IES, adjusted EBITDA and adjusted net income before
taxes, distinguishing certain nonrecurring events such as
litigation settlements or significant expenses associated with
leadership changes, or noncash events, such as impairment charges
or our valuation allowances release and write-down of our deferred
tax assets, or, in the case of backlog, providing a common
measurement used in IES's industry, as described further below, and
that these measures, when reconciled to the most directly
comparable GAAP measures, 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,
which has been provided in the financial tables included in this
press release.
Remaining performance obligations represent the unrecognized
revenue value of our contract commitments. While backlog is not a
defined term under GAAP, it is a common measurement used in IES’s
industry and IES believes this non-GAAP measure enables it to more
effectively forecast its future results and better identify future
operating trends that may not otherwise be apparent. IES’s
remaining performance obligations are a component of IES’s backlog
calculation, which also includes signed agreements and letters of
intent which we do not have a legal right to enforce prior to work
starting. These arrangements are excluded from remaining
performance obligations until work begins. IES’s methodology for
determining backlog may not be comparable to the methodologies used
by other companies.
For further details on the Company’s financial
results, please refer to the Company’s quarterly report on Form
10-Q for the fiscal quarter ended December 31, 2020, to be filed
with the Securities and Exchange Commission (“SEC”) by
February 5, 2021, and any amendments thereto.
About IES Holdings, Inc.IES is
a holding company that owns and manages operating subsidiaries that
design and install integrated electrical and technology systems and
provide infrastructure products and services to a variety of end
markets, including data centers, residential housing, and
commercial and industrial facilities. Our more than 5,000 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 impact of the
COVID-19 outbreak or future epidemics on our business, including
the potential for job site closures or work stoppages, supply chain
disruptions, construction delays, reduced demand for our services,
or our ability to collect from our customers; 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 or write-downs on 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, or the subsequent underperformance of those
acquisitions; 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 or the housing market, 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, 2020 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 "Investor Relations." 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
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS(DOLLARS IN MILLIONS, EXCEPT PER SHARE
DATA)(UNAUDITED)
|
|
Three Months Ended December 31, |
|
|
2020 |
|
2019 |
Revenues |
$ |
314.8 |
|
|
|
$ |
276.0 |
|
Cost of
services |
|
256.2 |
|
|
|
|
225.8 |
|
|
Gross profit |
|
58.7 |
|
|
|
|
50.2 |
|
Selling, general
and administrative expenses |
|
42.8 |
|
|
|
|
37.9 |
|
|
Operating income |
|
15.9 |
|
|
|
|
12.4 |
|
Interest
expense |
|
0.2 |
|
|
|
|
0.2 |
|
Other (income)
expense, net |
|
(0.1 |
) |
|
|
|
0.1 |
|
|
Income from operations before
income taxes |
|
15.8 |
|
|
|
|
12.0 |
|
Provision for
income taxes |
|
3.6 |
|
|
|
|
3.5 |
|
|
Net income |
|
12.2 |
|
|
|
|
8.5 |
|
Net income
attributable to noncontrolling interest |
|
(0.1 |
) |
|
|
|
— |
|
|
Net income attributable to IES
Holdings, Inc. |
$ |
12.1 |
|
|
|
$ |
8.5 |
|
|
|
|
|
|
|
|
Earnings per share
attributable to IES Holdings, Inc.: |
|
|
|
|
|
|
Basic |
$ |
0.58 |
|
|
|
$ |
0.40 |
|
|
Diluted |
$ |
0.58 |
|
|
|
$ |
0.39 |
|
|
|
|
|
|
|
|
Shares used in the
computation of earnings per share: |
|
|
|
|
|
|
Basic (in thousands) |
|
20,735 |
|
|
|
|
20,883 |
|
|
Diluted (in thousands) |
|
21,061 |
|
|
|
|
21,148 |
|
IES HOLDINGS, INC. AND
SUBSIDIARIESNON-GAAP RECONCILIATION OF ADJUSTED
NET INCOME ATTRIBUTABLETO IES HOLDINGS, INC. AND
ADJUSTED EARNINGS PER SHAREATTRIBUTABLE TO IES
HOLDINGS, INC.(DOLLARS IN MILLIONS, EXCEPT PER
SHARE DATA)(UNAUDITED)
|
|
Three Months Ended December 31, |
|
|
2020 |
|
2019 |
Net income
attributable to IES Holdings, Inc. |
$ |
12.1 |
|
|
|
$ |
8.5 |
|
|
Provision for
income taxes |
|
3.6 |
|
|
|
|
3.5 |
|
|
|
Adjusted net income before taxes |
|
15.7 |
|
|
|
|
12.0 |
|
|
Current tax
expense (1) |
|
(0.9 |
) |
|
|
|
(0.7 |
) |
|
|
Adjusted net income
attributable to IES Holdings, Inc. |
$ |
14.8 |
|
|
|
$ |
11.3 |
|
|
|
|
|
|
|
|
|
Adjusted earnings
per share attributable to IES Holdings, Inc.: |
|
|
|
|
Basic |
$ |
0.72 |
|
|
|
$ |
0.54 |
|
|
|
Diluted |
$ |
0.71 |
|
|
|
$ |
0.54 |
|
|
|
|
|
|
|
|
|
Shares used in the
computation of earnings per share: |
|
|
|
|
|
|
Basic (in thousands) |
|
20,735 |
|
|
|
|
20,883 |
|
|
|
Diluted (in thousands) |
|
21,061 |
|
|
|
|
21,148 |
|
|
|
|
|
|
|
|
|
(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
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(DOLLARS IN
MILLIONS)(UNAUDITED)
|
|
|
|
December 31, |
|
September 30, |
|
|
|
|
2020 |
|
2020 |
ASSETS |
|
|
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
27.3 |
|
|
|
$ |
53.6 |
|
|
|
|
Restricted
cash |
|
4.8 |
|
|
|
|
— |
|
|
|
|
Accounts
receivable: |
|
|
|
|
|
|
|
|
Trade, net of allowance |
|
214.9 |
|
|
|
|
213.0 |
|
|
|
|
|
Retainage |
|
41.8 |
|
|
|
|
40.9 |
|
|
|
|
Inventories |
|
33.3 |
|
|
|
|
24.9 |
|
|
|
|
Costs and
estimated earnings in excess of billings |
|
23.8 |
|
|
|
|
29.9 |
|
|
|
|
Prepaid expenses
and other current assets |
|
12.9 |
|
|
|
|
9.2 |
|
|
|
Total current
assets |
|
358.9 |
|
|
|
|
371.5 |
|
|
|
|
Property and
equipment, net |
|
29.2 |
|
|
|
|
24.6 |
|
|
|
|
Goodwill |
|
86.4 |
|
|
|
|
53.8 |
|
|
|
|
Intangible assets,
net |
|
62.8 |
|
|
|
|
39.4 |
|
|
|
|
Deferred tax
assets |
|
29.8 |
|
|
|
|
33.8 |
|
|
|
|
Operating right of
use assets |
|
36.6 |
|
|
|
|
31.8 |
|
|
|
|
Other non-current
assets |
|
5.7 |
|
|
|
|
5.8 |
|
|
Total assets |
$ |
609.4 |
|
|
|
$ |
560.5 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
|
|
|
Accounts payable
and accrued expenses |
$ |
184.3 |
|
|
|
$ |
186.7 |
|
|
|
|
Billings in excess
of costs and estimated earnings |
|
64.7 |
|
|
|
|
55.7 |
|
|
|
Total current
liabilities |
|
249.0 |
|
|
|
|
242.4 |
|
|
|
Long-term
debt |
|
14.5 |
|
|
|
|
0.2 |
|
|
|
Operating
long-term lease liabilities |
|
23.9 |
|
|
|
|
20.5 |
|
|
|
Other non-current
liabilities |
|
13.9 |
|
|
|
|
12.2 |
|
|
Total
liabilities |
|
301.3 |
|
|
|
|
275.4 |
|
|
Noncontrolling
interest |
|
12.6 |
|
|
|
|
1.8 |
|
|
|
STOCKHOLDERS’
EQUITY: |
|
|
|
|
|
|
|
Preferred
stock |
|
— |
|
|
|
|
— |
|
|
|
|
Common stock |
|
0.2 |
|
|
|
|
0.2 |
|
|
|
|
Treasury stock, at
cost |
|
(25.0 |
) |
|
|
|
(24.5 |
) |
|
|
|
Additional paid-in
capital |
|
201.2 |
|
|
|
|
200.6 |
|
|
|
|
Retained
earnings |
|
119.0 |
|
|
|
|
107.0 |
|
|
Total
stockholders’ equity |
|
295.5 |
|
|
|
|
283.3 |
|
|
Total liabilities
and stockholders’ equity |
$ |
609.4 |
|
|
|
$ |
560.5 |
|
|
IES HOLDINGS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(DOLLARS IN
MILLIONS)(UNAUDITED)
|
|
|
Three Months Ended December 31, |
|
|
|
2020 |
|
2019 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net income |
$ |
12.2 |
|
|
|
$ |
8.5 |
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Bad debt expense |
|
(0.2 |
) |
|
|
|
— |
|
|
|
Deferred financing cost amortization |
|
— |
|
|
|
|
0.1 |
|
|
|
Depreciation and amortization |
|
4.0 |
|
|
|
|
2.4 |
|
|
|
Non-cash compensation expense |
|
0.8 |
|
|
|
|
0.9 |
|
|
|
Deferred income taxes |
|
2.8 |
|
|
|
|
2.8 |
|
|
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
6.0 |
|
|
|
|
16.7 |
|
|
|
Inventories |
|
(4.3 |
) |
|
|
|
1.7 |
|
|
|
Costs and estimated earnings in excess of billings |
|
6.1 |
|
|
|
|
1.9 |
|
|
|
Prepaid expenses and other current assets |
|
(2.5 |
) |
|
|
|
(6.3 |
) |
|
|
Other non-current assets |
|
(0.3 |
) |
|
|
|
0.1 |
|
|
|
Accounts payable and accrued expenses |
|
(14.8 |
) |
|
|
|
(22.8 |
) |
|
|
Billings in excess of costs and estimated earnings |
|
9.0 |
|
|
|
|
5.0 |
|
|
|
Other non-current liabilities |
|
1.3 |
|
|
|
|
— |
|
|
Net cash provided
by operating activities |
|
20.3 |
|
|
|
|
11.0 |
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
Purchases of
property and equipment |
|
(1.2 |
) |
|
|
|
(1.4 |
) |
|
|
Cash paid in
conjunction with business combinations |
|
(54.8 |
) |
|
|
|
— |
|
|
Net cash used in
investing activities |
|
(55.9 |
) |
|
|
|
(1.3 |
) |
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
Borrowings of
debt |
|
25.1 |
|
|
|
|
104.2 |
|
|
|
Repayments of
debt |
|
(10.1 |
) |
|
|
|
(104.2 |
) |
|
|
Cash paid for
finance leases |
|
(0.1 |
) |
|
|
|
— |
|
|
|
Distribution to
noncontrolling interest |
|
— |
|
|
|
|
(0.5 |
) |
|
|
Purchase of
treasury stock |
|
(0.7 |
) |
|
|
|
(0.9 |
) |
|
Net cash provided
by (used in) financing activities |
|
14.2 |
|
|
|
|
(1.3 |
) |
|
NET INCREASE
(DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
|
(21.5 |
) |
|
|
|
8.4 |
|
|
CASH, CASH
EQUIVALENTS and RESTRICTED CASH, beginning of period |
|
53.6 |
|
|
|
|
18.9 |
|
|
CASH, CASH
EQUIVALENTS and RESTRICTED CASH, end of period |
$ |
32.1 |
|
|
|
$ |
27.3 |
|
|
IES HOLDINGS, INC. AND
SUBSIDIARIESOPERATING SEGMENT STATEMENT OF
OPERATIONS(DOLLARS IN
MILLIONS)(UNAUDITED)
|
|
Three Months Ended December 31, |
|
|
2020 |
|
2019 |
Revenues |
|
|
|
|
|
|
Communications |
$ |
98.4 |
|
|
|
$ |
84.3 |
|
|
|
Residential |
|
119.5 |
|
|
|
|
92.7 |
|
|
|
Infrastructure Solutions |
|
34.4 |
|
|
|
|
31.3 |
|
|
|
Commercial & Industrial |
|
62.6 |
|
|
|
|
67.7 |
|
|
Total revenue |
$ |
314.8 |
|
|
|
$ |
276.0 |
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
|
|
|
|
Communications |
$ |
9.2 |
|
|
|
$ |
7.0 |
|
|
|
Residential |
|
6.2 |
|
|
|
|
6.4 |
|
|
|
Infrastructure Solutions |
|
5.3 |
|
|
|
|
3.3 |
|
|
|
Commercial & Industrial |
|
(0.7 |
) |
|
|
|
(0.5 |
) |
|
|
Corporate |
|
(4.1 |
) |
|
|
|
(3.8 |
) |
|
Total operating
income |
$ |
15.9 |
|
|
|
$ |
12.4 |
|
|
IES HOLDINGS, INC. AND
SUBSIDIARIESNON-GAAP RECONCILIATION OF ADJUSTED
EBITDA(DOLLARS IN
MILLIONS)(UNAUDITED)
|
|
Three Months Ended December 31, |
|
|
2020 |
|
|
2019 |
Net income
attributable to IES Holdings, Inc. |
$ |
12.1 |
|
|
|
$ |
8.5 |
|
Provision for
income taxes |
3.6 |
|
|
|
3.5 |
|
Interest &
other expense, net |
0.1 |
|
|
|
0.4 |
|
Depreciation and
amortization |
4.0 |
|
|
|
2.4 |
|
|
EBITDA |
$ |
19.8 |
|
|
|
$ |
14.7 |
|
Non-cash equity
compensation expense |
0.8 |
|
|
|
0.9 |
|
|
Adjusted EBITDA |
$ |
20.7 |
|
|
|
$ |
15.6 |
|
IES HOLDINGS, INC. AND
SUBSIDIARIESSUPPLEMENTAL REMAINING PERFORMANCE
OBLIGATIONS AND NON-GAAP RECONCILIATION OF BACKLOG
DATA(DOLLARS IN
MILLIONS)(UNAUDITED)
|
|
December 31, |
|
September 30, |
|
December 31, |
|
|
2020 |
|
2020 |
|
2019 |
Remaining performance obligations |
|
$ |
525 |
|
|
$ |
505 |
|
|
$ |
430 |
|
Agreements without an
enforceable obligation (1) |
|
|
107 |
|
|
|
97 |
|
|
|
79 |
|
Backlog |
|
$ |
632 |
|
|
$ |
602 |
|
|
$ |
509 |
|
|
|
|
|
|
|
|
|
|
|
(1) Our
backlog contains signed agreements and letters of intent which we
do not have a legal right to enforce prior to work starting. These
arrangements are excluded from remaining performance obligations
until work begins. |
Contact: Tracy McLauchlin, CFOIES Holdings, Inc.713-860-1500
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