IES Holdings Reports Fiscal 2020 First Quarter Results - Revenue of $276 million, an increase of 13% year-over-year
- Net Income Per Share of $0.39 and Adjusted Net Income Per Share of $0.54
HOUSTON, Feb. 04, 2020 (GLOBE NEWSWIRE) -- IES Holdings, Inc. (or “IES” or the “Company”) (NASDAQ: IESC) today announced financial results for the quarter ended December 31, 2019.
First Quarter of Fiscal Year 2020 Highlights
Revenue of $276 million for the first quarter of fiscal 2020, an increase of 13% compared with $244 million for the first quarter of fiscal 2019
Operating income of $12.4 million for the first quarter of fiscal 2020, an increase of 31% compared with $9.5 million for the first quarter of fiscal 2019
Net income attributable to IES of $8.5 million, or $0.39 per diluted share, for the first quarter of fiscal 2020, compared with $6.9 million, or $0.32 per diluted share, for the first quarter of fiscal 2019
Adjusted net income attributable to IES (a non-GAAP financial measure, as defined below) increased 35% to $11.3 million, or $0.54 per diluted share, for the first quarter of fiscal 2020, compared with $8.4 million, or $0.40 per diluted share, for the first quarter of fiscal 2019
Remaining performance obligations, a GAAP measure of future revenue to be recognized from current contracts with customers, of approximately $430 million as of December 31, 2019
Backlog (a non-GAAP financial measure, as defined below) of approximately $509 million as of December 31, 2019
Management Commentary
Gary S. Matthews, Chief Executive Officer, stated, “I am pleased with our first quarter performance, with revenue and operating income ahead of last year by 13% and 31%, respectively. Our Residential and Communications segments continue to demonstrate strong growth and execution, highlighted by operating income exceeding our prior year first quarter by $2.5 million and $2.0 million, respectively. Both segments are seeing increased demand from current customers and an expanding customer base. Infrastructure Solutions increased operating income by $1.9 million compared to prior year as it benefitted from improvements in project execution. Commercial & Industrial continues to be impacted by a combination of inefficiencies on several projects and reduced volume in a competitive marketplace. To address these issues, we have invested in a number of initiatives that we are implementing over the remainder of fiscal 2020. Specifically, we are working to streamline costs, improve our project selection and overhaul procurement sourcing, which we believe will lead to margin improvement for this segment. Looking ahead, we expect that full year performance will be supported by continued residential and data center end market momentum, and that these trends will offset soft results in the near-term at Commercial & Industrial. In addition, we are actively evaluating a number of acquisition candidates and I am confident in our ability to continue to build shareholder value through organic growth and strategic investments.”
Tracy A. McLauchlin, Chief Financial Officer, added, “We continue to maintain a conservative balance sheet, which was further strengthened by $11 million of cash from operations in the quarter. Our strong cash flow resulted in a cash balance, net of debt, of $27 million as of December 31, 2019, compared to a debt balance, net of cash, of $9 million a year earlier, an improvement of $36 million. Our disciplined capital allocation philosophy and our strong liquidity position continue to support our growth strategy as we focus on building shareholder value, including through acquisitions and stock repurchases.”
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 $306 million at September 30, 2019, including approximately $144 million resulting from net operating losses on which a deferred tax asset is not recorded. 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 “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended. Any such “ownership change” 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
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 December 31, 2019, the Company repurchased 19,817 shares at an average price of $22.51 per share. The Company had 1,237,168 shares remaining under its stock repurchase authorization at December 31, 2019.
Non-GAAP Financial Measures and Other Adjustments
This 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 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, 2019, to be filed with the Securities and Exchange Commission (“SEC”) by February 4, 2020, and any amendments thereto.