UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
| CURRENT REPORT | ||||||||
| PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
| Date of Report (Date of Earliest Event Reported): | ||||||||
| (State or other jurisdiction of incorporation) | (Commission file number) | (I.R.S. Employer Identification No.) | ||||||
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (713 ) 860-1500
Check the appropriate box below if the From 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| 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. ☐
Item 2.02 Results of Operations and Financial Condition.
On August 5, 2021, IES Holdings, Inc. (the “Company”) issued a press release announcing its results of operations for the fiscal 2021 third quarter. A copy of the press release is furnished with this report as Exhibit 99.1.
Item 7.01 Regulation FD Disclosure.
On August 5, 2021, the Company posted to its website, www.ies-co.com, under the Investor Relations section, a presentation with the title “IES Holdings, Inc.–Third Quarter 2021 Update.” A copy of the presentation is furnished with this report as Exhibit 99.2. The presentation will remain on the Company’s website for a period of at least thirty days.
The information set forth herein is furnished pursuant to Item 7.01–Regulation FD Disclosure and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of such section nor shall the information be deemed incorporated by reference in any filing of the Company.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number | Description | ||||
| 99.1 — | |||||
| 99.2 — | |||||
| 104 — | Cover Page Interactive Data File (embedded within the Inline XBRL document). | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
IES HOLDINGS, INC.
| Date: | August 5, 2021 | /s/ Mary K. Newman | ||||||
| Mary K. Newman | ||||||||
| General Counsel and Corporate Secretary | ||||||||
FOR IMMEDIATE RELEASE EXHIBIT 99.1
IES Holdings Reports Fiscal 2021 Third Quarter Results
HOUSTON — August 5, 2021 — IES Holdings, Inc. (or “IES” or the “Company”) (NASDAQ: IESC) today announced financial results for the quarter ended June 30, 2021.
Third Quarter 2021 Highlights
•Revenue of $406 million for the third quarter of fiscal 2021, an increase of 38% compared with $293 million for the same quarter of fiscal 2020
•Operating income of $22.5 million for the third quarter of fiscal 2021, an increase of 60% compared with $14.1 million for the same quarter of fiscal 2020
•Net income attributable to IES increased 57% to $19.3 million for the third quarter of fiscal 2021, compared with $12.3 million for the same quarter of fiscal 2020; diluted earnings per share attributable to common stockholders of $0.92 compared with $0.58 for the third fiscal quarters of 2021 and 2020, respectively
•Adjusted net income attributable to IES (a non-GAAP financial measure, as defined below) increased 62% to $20.7 million compared with $12.8 million for the same quarter of fiscal 2020; adjusted diluted earnings per share attributable to common stockholders (a non-GAAP financial measure, as defined below) of $0.99 compared with $0.60 for the third fiscal quarters of 2021 and 2020, respectively
•Remaining performance obligations of $669 million and backlog (a non-GAAP financial measure, as defined below) of $825 million as of June 30, 2021
•Acquired Edmonson Electric, adding to IES Residential capabilities
•Terminated NOL Rights Plan effective May 21, 2021
Overview of Results
“We are pleased with our third quarter results, which continued to demonstrate the benefits and strength of our end market and geographic diversification,” said Jeff Gendell, Chairman and Chief Executive Officer. “We reported strong year-over-year growth in revenue and profitability for the quarter, despite industry-wide supply chain constraints and significant raw materials price increases as the U.S. and global economies continue to recover. Notably, higher earnings contribution from our Infrastructure Solutions segment, increased Communications revenue as a result of strong demand, ongoing operating improvements within our Commercial & Industrial segment, and continued strong performance from our Residential business during the quarter all contributed to our improved results compared with the prior year.”
Mr. Gendell continued, “Consolidated revenue for the third quarter of fiscal 2021 increased 38% over the prior year, reflecting strong demand and the benefit of acquisitions completed in fiscal 2021, with all four of our operating segments experiencing substantial top-line growth year-over-year. Operating income for the third quarter of fiscal 2021 increased 60% over the prior year, driven by strong execution by our operating teams. Across our entire business, our employees continue to demonstrate dedication, resilience and creativity, enabling us to grow our profitability and market share in a dynamic environment.”
For the third quarter of fiscal 2021, the Communications segment reported revenue of $116.2 million, a 20% increase from the third quarter of fiscal 2020, driven primarily by increased demand from our data center and distribution center customers. Operating income for the Communications segment increased 5% year-over-year to $9.9 million, as higher revenue was partially offset by increased personnel costs, particularly in estimating and project management, as we continue to invest in our capabilities to support future growth opportunities. In addition, selling expenses increased this quarter as travel and other activities that were curtailed in response to the pandemic began to return to a more normal level.
The Residential segment's revenue was $186.4 million in the third quarter of fiscal 2021, an increase of 73% compared with the third quarter of fiscal 2020, reflecting the contribution of businesses acquired during fiscal 2021, strength in our single-family business and the impact of price increases in connection with higher material costs. Operating income for IES’s Residential segment was $11.0 million for the third quarter of fiscal 2021, an increase of 23% compared to the third quarter of fiscal 2020, as benefits of higher revenue were partly offset by substantially increased input prices including copper, electrical components, and other materials, as well as the impact of intangible amortization on businesses acquired in fiscal 2021.
Revenue in the Infrastructure Solutions segment increased 22% to $39.1 million in the third quarter of fiscal 2021 compared to the third quarter of fiscal 2020, driven primarily by increased demand for our custom power solutions. The segment’s operating income increased 25% to
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$4.8 million compared to the third quarter of fiscal 2020, primarily reflecting higher year-over-year revenue and strong execution.
The Commercial & Industrial segment reported revenue of $64.1 million for the third quarter of fiscal 2021, an increase of 13% compared to the third quarter of fiscal 2020. The segment reported operating income of $1.0 million for the third quarter of fiscal 2021, compared with a loss of $4.2 million for the third quarter of fiscal 2020. The improvement in operating performance primarily resulted from the increase in revenue, improved project execution and a focus on controlling costs. Although the market remains highly competitive, we have begun to see a return to more typical levels of activity in the awarding of new contracts.
Tracy McLauchlin, Chief Financial Officer, added, “We believe that our strong balance sheet has been a competitive advantage in this period of supply chain uncertainties and escalating raw materials prices, as we have strategically invested in inventory in anticipation of customer needs. As supply chain issues are resolved, we expect to see inventory return to more normal levels. In addition, our cash generation and financial position continue to allow us to execute on our strategic objectives.
“During the quarter, we completed the acquisition of Edmonson Electric, a leading provider of residential electric, low voltage, and heating, ventilation, and air conditioning (HVAC) installation services in Florida. Through the first nine months of fiscal 2021, we have invested a total of $93 million of cash to complete four acquisitions, increasing our market share, extending our geographic presence and expanding our capabilities across multiple end markets.
“We continue to be optimistic as we look toward the remainder of fiscal 2021 and into fiscal 2022, despite ongoing uncertainties relating to the supply chain, input costs and the trajectory of COVID-19. Our operating segments remain focused on executing their business, improving operational efficiencies and driving profitable growth, while our strong financial position provides us the flexibility to take advantage of organic and strategic growth opportunities that may arise.”
During the third quarter of fiscal 2021, Elizabeth Leykum was appointed to the Company’s Board of Directors, bringing over 20 years of investment and financial management experience, as well as corporate governance expertise, to IES. In addition, during the quarter, the Board of Directors approved the accelerated expiration of the Company’s NOL Rights Plan, effective May 21, 2021.
Stock Buyback Plan
In 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 June 30, 2021, the Company did not repurchase any shares under this program. The Company had 993,825 shares remaining under its stock repurchase authorization at June 30, 2021.
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Non-GAAP Financial Measures and Other Adjustments
This press release includes adjusted net income attributable to IES, adjusted diluted earnings per share attributable to common stockholders, and backlog, and, in the non-GAAP reconciliation tables included herein, adjusted net income attributable to common stockholders, 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 common stockholders, adjusted earnings per share attributable to common stockholders, 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 June 30, 2021, to be filed with the Securities and Exchange Commission (“SEC”) by August 5, 2021, and any amendments thereto.
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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 5,700 employees serve clients in the United States. For more information about IES, please visit www.ies-co.com.
Company Contact:
Tracy McLauchlin
Chief Financial Officer
IES Holdings, Inc.
(713) 860-1500
Investor Relations Contact:
Robert Winters or Ross Collins
Alpha IR Group
312-445-2870
IESC@alpha-ir.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.
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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.
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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, | |||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||
| Revenues | $ | 405.9 | $ | 293.1 | $ | 1,052.7 | $ | 860.4 | ||||||||||||||||||||||||||||||
| Cost of services | 333.0 | 234.8 | 856.3 | 700.6 | ||||||||||||||||||||||||||||||||||
| Gross profit | 72.8 | 58.3 | 196.4 | 159.8 | ||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | 50.3 | 44.3 | 140.8 | 124.2 | ||||||||||||||||||||||||||||||||||
| Contingent consideration | 0.1 | — | 0.1 | — | ||||||||||||||||||||||||||||||||||
| Operating income | 22.5 | 14.1 | 55.5 | 35.7 | ||||||||||||||||||||||||||||||||||
| Interest expense | 0.2 | 0.3 | 0.6 | 0.8 | ||||||||||||||||||||||||||||||||||
| Other (income) expense, net | (0.1) | (0.2) | (0.2) | 0.2 | ||||||||||||||||||||||||||||||||||
| Income from operations before income taxes | 22.3 | 14.0 | 55.1 | 34.7 | ||||||||||||||||||||||||||||||||||
| Provision for income taxes | 2.6 | 1.7 | 9.9 | 7.6 | ||||||||||||||||||||||||||||||||||
| Net income | 19.6 | 12.3 | 45.2 | 27.1 | ||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interest | (0.3) | (0.1) | (1.0) | (0.1) | ||||||||||||||||||||||||||||||||||
| Net income attributable to IES Holdings, Inc. | $ | 19.3 | $ | 12.3 | $ | 44.2 | $ | 27.0 | ||||||||||||||||||||||||||||||
| Earnings per share attributable to common stockholders: | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | 0.93 | $ | 0.58 | $ | 2.11 | $ | 1.28 | ||||||||||||||||||||||||||||||
| Diluted | $ | 0.92 | $ | 0.58 | $ | 2.08 | $ | 1.26 | ||||||||||||||||||||||||||||||
| Shares used in the computation of earnings per share: | ||||||||||||||||||||||||||||||||||||||
| Basic (in thousands) | 20,829 | 20,728 | 20,781 | 20,820 | ||||||||||||||||||||||||||||||||||
| Diluted (in thousands) | 21,088 | 20,997 | 21,066 | 21,084 | ||||||||||||||||||||||||||||||||||
IES HOLDINGS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF ADJUSTED NET INCOME ATTRIBUTABLE
TO IES HOLDINGS, INC. AND ADJUSTED EARNINGS PER SHARE
ATTRIBUTABLE TO IES HOLDINGS, INC.
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||
| Net income attributable to IES Holdings, Inc. | $ | 19.3 | $ | 12.3 | $ | 44.2 | $ | 27.0 | ||||||||||||||||||||||||||||||
| Provision for income taxes | 2.6 | 1.7 | 9.9 | 7.6 | ||||||||||||||||||||||||||||||||||
| Adjusted net income before taxes | 21.9 | 14.0 | 54.1 | 34.6 | ||||||||||||||||||||||||||||||||||
Current tax expense (1) | (1.2) | (1.2) | (3.0) | (2.5) | ||||||||||||||||||||||||||||||||||
| Adjusted net income attributable to IES Holdings, Inc. | 20.7 | 12.8 | 51.1 | 32.1 | ||||||||||||||||||||||||||||||||||
| Adjustments for computation of earnings per share: | ||||||||||||||||||||||||||||||||||||||
| (Increase) decrease in noncontrolling interest | 0.1 | — | (0.4) | — | ||||||||||||||||||||||||||||||||||
| Net income attributable to restricted stockholders | — | (0.2) | — | (0.4) | ||||||||||||||||||||||||||||||||||
| Adjusted net income attributable to common stockholders | $ | 20.8 | $ | 12.6 | $ | 50.7 | $ | 31.7 | ||||||||||||||||||||||||||||||
| Adjusted earnings per share attributable to common stockholders: | ||||||||||||||||||||||||||||||||||||||
| Basic | $ | 1.00 | $ | 0.61 | $ | 2.44 | $ | 1.52 | ||||||||||||||||||||||||||||||
| Diluted | $ | 0.99 | $ | 0.60 | $ | 2.41 | $ | 1.50 | ||||||||||||||||||||||||||||||
| Shares used in the computation of earnings per share: | ||||||||||||||||||||||||||||||||||||||
| Basic (in thousands) | 20,829 | 20,728 | 20,781 | 20,820 | ||||||||||||||||||||||||||||||||||
| Diluted (in thousands) | 21,088 | 20,997 | 21,066 | 21,084 | ||||||||||||||||||||||||||||||||||
(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, | September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | |||||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||
| CURRENT ASSETS: | ||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 18.5 | $ | 53.6 | ||||||||||||||||||||||
| Accounts receivable: | ||||||||||||||||||||||||||
| Trade, net of allowance | 243.9 | 213.0 | ||||||||||||||||||||||||
| Retainage | 39.2 | 40.9 | ||||||||||||||||||||||||
| Inventories | 71.6 | 24.9 | ||||||||||||||||||||||||
| Costs and estimated earnings in excess of billings | 32.0 | 29.9 | ||||||||||||||||||||||||
| Prepaid expenses and other current assets | 20.2 | 9.2 | ||||||||||||||||||||||||
| Total current assets | 425.2 | 371.5 | ||||||||||||||||||||||||
| Property and equipment, net | 35.9 | 24.6 | ||||||||||||||||||||||||
| Goodwill | 92.0 | 53.8 | ||||||||||||||||||||||||
| Intangible assets, net | 89.3 | 39.4 | ||||||||||||||||||||||||
| Deferred tax assets | 24.0 | 33.8 | ||||||||||||||||||||||||
| Operating right of use assets | 42.7 | 31.8 | ||||||||||||||||||||||||
| Other non-current assets | 6.8 | 5.8 | ||||||||||||||||||||||||
| Total assets | $ | 715.9 | $ | 560.5 | ||||||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||||
| CURRENT LIABILITIES: | ||||||||||||||||||||||||||
| Accounts payable and accrued expenses | $ | 222.3 | $ | 186.7 | ||||||||||||||||||||||
| Billings in excess of costs and estimated earnings | 67.2 | 55.7 | ||||||||||||||||||||||||
| Total current liabilities | 289.5 | 242.4 | ||||||||||||||||||||||||
| Long-term debt | 30.6 | 0.2 | ||||||||||||||||||||||||
| Operating long-term lease liabilities | 28.7 | 20.5 | ||||||||||||||||||||||||
| Other non-current liabilities | 15.5 | 12.2 | ||||||||||||||||||||||||
| Total liabilities | 364.4 | 275.4 | ||||||||||||||||||||||||
| Noncontrolling interest | 23.4 | 1.8 | ||||||||||||||||||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||||||||||||||||||||
| Preferred stock | — | — | ||||||||||||||||||||||||
| Common stock | 0.2 | 0.2 | ||||||||||||||||||||||||
| Treasury stock, at cost | (23.8) | (24.5) | ||||||||||||||||||||||||
| Additional paid-in capital | 201.1 | 200.6 | ||||||||||||||||||||||||
| Retained earnings | 150.6 | 107.0 | ||||||||||||||||||||||||
| Total stockholders’ equity | 328.2 | 283.3 | ||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 715.9 | $ | 560.5 | ||||||||||||||||||||||
IES HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
(UNAUDITED)
| Nine Months Ended June 30, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||||||
| Net income | $ | 45.2 | $ | 27.1 | |||||||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||
| Bad debt expense | — | 1.7 | |||||||||||||||||||||
| Deferred financing cost amortization | 0.1 | 0.3 | |||||||||||||||||||||
| Depreciation and amortization | 15.9 | 8.8 | |||||||||||||||||||||
| Non-cash compensation expense | 2.7 | 2.8 | |||||||||||||||||||||
| Deferred income taxes | 6.8 | 5.0 | |||||||||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||||||||
| Accounts receivable | (10.7) | (2.0) | |||||||||||||||||||||
| Inventories | (33.8) | (3.3) | |||||||||||||||||||||
| Costs and estimated earnings in excess of billings | (2.0) | 4.6 | |||||||||||||||||||||
| Prepaid expenses and other current assets | (6.1) | (8.8) | |||||||||||||||||||||
| Other non-current assets | (0.3) | 0.5 | |||||||||||||||||||||
| Accounts payable and accrued expenses | 4.0 | 0.2 | |||||||||||||||||||||
| Billings in excess of costs and estimated earnings | 11.5 | 14.4 | |||||||||||||||||||||
| Other non-current liabilities | 1.6 | 4.3 | |||||||||||||||||||||
| Net cash provided by operating activities | 35.1 | 55.6 | |||||||||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||||||
| Purchases of property and equipment | (5.4) | (3.7) | |||||||||||||||||||||
| Proceeds from sale of assets | 0.2 | 0.1 | |||||||||||||||||||||
| Cash paid in conjunction with business combinations | (92.7) | (29.0) | |||||||||||||||||||||
| Net cash used in investing activities | (97.9) | (32.6) | |||||||||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||||||
| Borrowings of debt | 947.1 | 592.6 | |||||||||||||||||||||
| Repayments of debt | (915.9) | (592.6) | |||||||||||||||||||||
| Cash paid for finance leases | (0.4) | (0.1) | |||||||||||||||||||||
| Noncontrolling interest option exercised | (1.2) | — | |||||||||||||||||||||
| Distribution to noncontrolling interest | (0.3) | (0.6) | |||||||||||||||||||||
| Purchase of treasury stock | (1.5) | (5.4) | |||||||||||||||||||||
| Net cash provided by (used in) financing activities | 27.7 | (6.1) | |||||||||||||||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (35.1) | 16.9 | |||||||||||||||||||||
| CASH and CASH EQUIVALENTS, beginning of period | 53.6 | 18.9 | |||||||||||||||||||||
| CASH and CASH EQUIVALENTS, end of period | $ | 18.5 | $ | 35.8 | |||||||||||||||||||
IES HOLDINGS, INC. AND SUBSIDIARIES
OPERATING SEGMENT STATEMENT OF OPERATIONS
(DOLLARS IN MILLIONS)
(UNAUDITED)
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||||||||
| Communications | $ | 116.2 | $ | 96.5 | $ | 309.5 | $ | 276.8 | ||||||||||||||||||||||||||||||
| Residential | 186.4 | 107.9 | 456.3 | 300.7 | ||||||||||||||||||||||||||||||||||
| Infrastructure Solutions | 39.1 | 31.9 | 108.2 | 92.5 | ||||||||||||||||||||||||||||||||||
| Commercial & Industrial | 64.1 | 56.8 | 178.7 | 190.5 | ||||||||||||||||||||||||||||||||||
| Total revenue | $ | 405.9 | $ | 293.1 | $ | 1,052.7 | $ | 860.4 | ||||||||||||||||||||||||||||||
| Operating income (loss) | ||||||||||||||||||||||||||||||||||||||
| Communications | $ | 9.9 | $ | 9.4 | $ | 29.0 | $ | 23.6 | ||||||||||||||||||||||||||||||
| Residential | 11.0 | 8.9 | 25.6 | 22.5 | ||||||||||||||||||||||||||||||||||
| Infrastructure Solutions | 4.8 | 3.8 | 13.4 | 9.4 | ||||||||||||||||||||||||||||||||||
| Commercial & Industrial | 1.0 | (4.2) | (0.9) | (8.9) | ||||||||||||||||||||||||||||||||||
Corporate | (4.2) | (3.9) | (11.7) | (11.0) | ||||||||||||||||||||||||||||||||||
| Total operating income | $ | 22.5 | $ | 14.1 | $ | 55.5 | $ | 35.7 | ||||||||||||||||||||||||||||||
IES HOLDINGS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF ADJUSTED EBITDA
(DOLLARS IN MILLIONS)
(UNAUDITED)
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||
| Net income attributable to IES Holdings, Inc. | $ | 19.3 | $ | 12.3 | $ | 44.2 | $ | 27.0 | ||||||||||||||||||||||||
| Provision for income taxes | 2.6 | 1.7 | 9.9 | 7.6 | ||||||||||||||||||||||||||||
| Interest & other expense, net | 0.2 | — | 0.4 | 1.0 | ||||||||||||||||||||||||||||
| Depreciation and amortization | 6.1 | 3.2 | 15.9 | 8.8 | ||||||||||||||||||||||||||||
| EBITDA | $ | 28.2 | $ | 17.2 | $ | 70.4 | $ | 44.4 | ||||||||||||||||||||||||
| Non-cash equity compensation expense | 1.0 | 1.2 | 2.7 | 2.8 | ||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 29.2 | $ | 18.4 | $ | 73.1 | $ | 47.2 | ||||||||||||||||||||||||
IES HOLDINGS, INC. AND SUBSIDIARIES
SUPPLEMENTAL REMAINING PERFORMANCE OBLIGATIONS AND NON-GAAP RECONCILIATION OF BACKLOG DATA
(DOLLARS IN MILLIONS)
(UNAUDITED)
| June 30, | March 31, | June 30, | |||||||||||||||||||||||||||
| 2021 | 2021 | 2020 | |||||||||||||||||||||||||||
| Remaining performance obligations | $ | 669 | $ | 614 | $ | 523 | |||||||||||||||||||||||
Agreements without an enforceable obligation (1) | 156 | 93 | 74 | ||||||||||||||||||||||||||
| Backlog | $ | 825 | $ | 707 | $ | 597 | |||||||||||||||||||||||
(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. | |||||||||||||||||||||||||||||
Exhibit 99.2 I ES H O L D I N G S , I N C . ( N A S DAQ : I ES C ) | T h i rd Q u a r te r 2 0 2 1 U p d ate | J U N E 3 0 , 2 0 2 1
2 Forward-Looking Statements 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. Non-GAAP Financial Measures and Other Adjustments This document includes adjusted net income per share and backlog, and, in the non-GAAP reconciliation tables included herein, adjusted net income attributable to IES, adjusted earnings per share attributable to IES, 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 per share, 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 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 document. 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 annual report on Form 10-Q for the quarter ended June 30, 2021, to be filed with the Securities and Exchange Commission (“SEC”) by August 5, 2021, and any amendments thereto. 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. Disclosures
3 • Revenue of $406 million, an increase of 38% year-over-year (“y-o-y”) • Operating Income of $22.5 million, an increase of 60% y-o-y • Earnings per Share of $0.92 (+59%) and Adjusted Earnings per Share* of $0.99 (+65%) • Remaining Performance Obligations of $669 million, a GAAP measure of future revenue to be recognized from current contracts with customers, and record Backlog* of $825 million • Acquired Edmonson Electric, adding to IES Residential capabilities • Terminated NOL Rights Plan effective May 21, 2021 Third Quarter 2021 Highlights * Non-GAAP financial measure; see reconciliation table
4 Revenue and Operating Income: 3Q & YTD FY’21 +38% +60% +22% +55% REVENUE: THREE MONTHS ENDING ($ in millions) REVENUE: YEAR-TO-DATE ($ in millions) OPERATING INCOME: THREE MONTHS ENDING ($ in millions) OPERATING INCOME: YEAR-TO-DATE ($ in millions) $293 $406 3Q '20 3Q '21 $860 $1,053 YTD FY'20 YTD FY'21 $14.1 $22.5 3Q '20 3Q '21 $35.7 $55.5 YTD FY'20 YTD FY'21
5 Earnings per Share and Adjusted Earnings per Share*: 3Q & YTD FY’21 +59% +65% +65% +61% EARNINGS PER SHARE: THREE MONTHS ENDING ($ / share) EARNINGS PER SHARE: YEAR-TO-DATE ($ / share) ADJ. EARNINGS PER SHARE*: THREE MONTHS ENDING ($ / share) ADJ. EARNINGS PER SHARE*: YEAR-TO-DATE ($ / share) * Non-GAAP financial measure; see reconciliation table $0.58 $0.92 3Q '20 3Q '21 $0.60 $0.99 3Q '20 3Q '21 $1.26 $2.08 YTD FY'20 YTD FY'21 $1.50 $2.41 YTD FY'20 YTD FY'21
6 Segment Results: 3Q & YTD FY’21 • Revenue: $116.2 million (+20% from 3Q FY’20) • Operating Income: $9.9 million (+5%) Communications • Revenue: $186.4 million (+73%) • Operating Income: $11.0 million (+23%) Residential • Revenue: $39.1 million (+22%) • Operating Income: $4.8 million (+25%) Infrastructure Solutions • Revenue: $64.1 million (+13%) • Operating Income: $1.0 million Commercial & Industrial • Revenue: $309.5 million (+12% from YTD FY’20) • Operating Income: $29.0 million (+23%) • Revenue: $456.3 million (+52%) • Operating Income: $25.6 million (+14%) • Revenue: $108.2 million (+17%) • Operating Income: $13.4 million (+43%) • Revenue: $178.7 million (-6%) • Operating Loss: $0.9 million THIRD QUARTER NINE MONTHS YEAR-TO-DATE
7 Quarterly Backlog* Trend $597 $602 $632 $707 $825 6/30/20 9/30/20 12/31/20 3/31/21 6/30/21 Remaining Performance Obligations $614 $669$523 $505 $525 * Non-GAAP financial measure; see reconciliation table BACKLOG* ($ in millions)
Appendix
9 Income Statement Three Months Ended Nine Months Ended (in mill ions, except earnings per share) June 30, June 30, 2020 2021 2020 2021 Revenue $293.1 $405.9 $860.4 $1,052.7 Operating income 14.1 22.5 $35.7 $55.5 Interest expense & other 0.1 0.2 $1.0 $0.4 Provision for income taxes 1.7 2.6 $7.6 $9.9 Net income attributable to noncontroll ing interest (0.1) (0.3) ($0.1) ($1.0) Net income attributable to IES Holdings, Inc. $12.3 $19.3 $27.0 $44.2 Adjusted net income attributable to common stockholders (1) $12.6 $20.8 $31.7 $50.7 Earnings per share attributable to common stockholders $0.58 $0.92 $1.26 $2.08 Adjusted earnings per share attributable to common stockholders (1) $0.60 $0.99 $1.50 $2.41 Diluted shares used to calculate earnings per share 21.0 21.1 21.1 21.1 (1) Adjusted net income attributable to common stockholders, and Adjusted earnings per share attributable to common stockholders are non-GAAP financial measures; see reconcil iation table
10 Non-GAAP Reconciliation of Adjusted Net Income Attributable to IES Holdings, Inc. (in mill ions, except earnings per share) Three Months Ended Nine Months Ended 2020 2021 2020 2021 Net income attributable to IES Holdings, Inc. $12.3 $19.3 $27.0 $44.2 Provision for income taxes 1.7 2.6 7.6 9.9 Adjusted net income before taxes $14.0 $21.9 $34.6 $54.1 Current tax expense (1) (1.2) (1.2) (2.5) (3.0) Severance expense – – – – Adjusted net income attributable to IES Holdings, Inc. (2) $12.8 $20.7 $32.1 $51.1 Adjustments for computation of earnings per share: (Increase) decrease in noncontroll ing interest – 0.1 – (0.4) Net income attributable to restricted stockholders (0.2) – (0.4) – Adjusted net income attributable to common stockholders (2) $12.6 $20.8 $31.7 $50.7 Adjusted earnings per share attributable to common stockholders (2) $0.60 $0.99 $1.50 $2.41 Diluted shares used to calculate adjusted earnings per share 21.0 21.1 21.1 21.1 (1) Represents the tax expense for the current period which will be paid in cash and not offset by the uti l ization of deferred tax assets (2) Adjusted net income attributable to IES Holdings, Inc., Adjusted net income attributable to common stockholders, and Adjusted earnings per share attributable to common stockholders are non-GAAP financial measures
11 Select Balance Sheet Data (in mill ions) 6/30/20 9/30/20 6/30/21 Cash $35.8 $53.6 $18.5 Other Current Assets 290.5 317.9 406.7 Deferred Tax Assets 33.4 33.8 24.0 Non-Current Assets 165.6 155.3 266.7 Total Assets $525.3 $560.5 $715.9 Current Liabil ities $222.8 $242.4 $289.5 Other Liabil ities 28.8 32.7 44.4 Debt 0.3 0.2 30.5 Total Liabil ities $251.8 $275.4 $364.4 Noncontroll ing interest 2.8 1.8 23.4 Equity 270.7 283.3 328.2 Total Liabil ities & Equity $525.3 $560.5 $715.9 Net Cash / (Debt) $35.6 $53.4 ($12.0)
12 Segment Results Three Months Ended Nine Months Ended (in mill ions) June 30, June 30, 2020 2021 2020 2021 Revenue Communications $96.5 $116.2 $276.8 $309.5 Residential 107.9 186.4 300.7 456.3 Infrastructure Solutions 31.9 39.1 92.5 108.2 Commercial & Industrial 56.8 64.1 190.5 178.7 Total Revenue $293.1 $405.9 $860.4 $1,052.7 Operating Income (Loss) Communications $9.4 $9.9 $23.6 $29.0 Residential 8.9 11.0 22.5 25.6 Infrastructure Solutions 3.8 4.8 9.4 13.4 Commercial & Industrial (4.2) 1.0 (8.9) (0.9) Corporate (3.9) (4.2) (11.0) (11.7) Total Operating Income $14.1 $22.5 $35.7 $55.5
13 Non-GAAP Reconciliation of Adjusted EBITDA Three Months Ended Nine Months Ended (in mill ions) June 30, June 30, 2020 2021 2020 2021 Net income attributable to IES Holdings, Inc. $12.3 $19.3 $27.0 $44.2 Provision for income taxes 1.7 2.6 7.6 9.9 Interest & other expense, net - 0.2 1.0 0.4 Depreciation and amortization 3.2 6.0 8.8 15.8 EBITDA $17.2 $28.1 $44.4 $70.3 Non-cash equity compensation expense 1.2 1.0 2.8 2.7 Adjusted EBITDA $18.4 $29.1 $47.2 $73.0
14 Non-GAAP Reconciliation of Remaining Performance Obligations to Backlog (in mill ions) June 30, 2020 March 31, 2021 June 30 2021 Remaining performance obligations $523 $614 $669 Agreements without an enforceable obligation (1) 74 93 156 Backlog $597 $707 $825 (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.
15 $217 Million of NOLs as of September 30, 2020 $439 $404 $378 $355 $306 $217 2015 2016 2017 2018 2019 2020 * Assumes tax rate of 21% and utilization of entire NOL balance at 9/30/2020 including approximately $27 million associated with NOLs on which a deferred tax asset is not recorded Estimated net operating loss carry forwards (“NOLs”) of approximately $217 million as of September 30, 2020, including approximately $128 million resulting from net operating losses on which a deferred tax asset is not recorded NOL Utilization Expected to Result in Cash Tax Savings of ~$45 million * REMAINING NOL BALANCES AS OF FY ENDING DATES