Infrastructure and Energy Alternatives, Inc.

Good morning, and welcome to Infrastructure and Energy Alternatives' third quarter 2021 conference call. I'd like to note that all participants on today's call are in a listen-only mode. And with that, I will turn the call over to Kimberly Estrickin, Investor Relations for IEA. Kimberly, please go ahead.

Hello, and thank you for joining us today to discuss IEA's third quarter 2021 financial results. With us from management are J.P. Rehm, President and Chief Executive Officer, and Pete Morbake, Executive Vice President and Chief Financial Officer. Before turning the call over to management, I would like to note that today's discussion contains forward-looking statements about IEA's future growth and financial expectations. Any forward-looking statements should be considered in conjunction with the cautionary statements in yesterday's press release and the risk factors included in the company's SEC filings. Except as required by law, IEA undertakes no obligation to update its forward-looking statements after today's call. Since management will be presenting some non-GAAP financial measurements as references, including adjusted EBITDA, the appropriate GAAP financial reconciliations can be found in the press release issued on November 8, 2021. And with that, I'll turn the call over to J.P. Ring, Chief Executive Officer. Please go ahead, J.P.

Well, thank you, Kimberly, and good morning to everyone. we appreciate you joining our third quarter 2021 earnings conference call. What an exciting time to host our earnings call just following the passage of the Federal Infrastructure Bill. That's certainly something we've all been waiting for, and I look forward to discussing what this means for IEA later in today's call. As those who have been following IEA know, we've had a busy start to the third quarter in which we completed a series of financial transactions that significantly reduced our annual interest expense, increased our liquidity, and improved and simplified our capital structure. Today, I'm pleased to announce that in addition to this progress previously made, our Board of Directors has now approved a $25 million warrant repurchase program, which we believe will be a strong benefit to our shareholders by reducing any potential further dilution from the conversion of our public warrants. Turning to the third quarter results, for the second quarter in a row, IEA has achieved record revenues. We followed a 560 million revenue quarter in Q2 2021 with a 698 million revenue quarter in Q3 2021, or an increase of 34% compared to last year's third quarter. At $517 million, Our renewable segment revenue increased by 58% year over year and accounted for 74% of our total revenue. Our solar division revenues grew by $35 million from $65 million in Q3 of 2020 to $100 million in Q3 of this year. We started building our solar capabilities at the end of 2019 and are now seeing the results of those efforts. In the quarter, we won multiple solar projects, including a 70-megawatt solar EPC project to install approximately 150,000 solar modules across a 520-acre site in Pike County, Kentucky. Our work scope includes all the engineering and installation of the civil, mechanical, and electrical works on the project. We also won two solar projects in Oregon, totaling 200 megawatts, Construction on these two farms began in September, with completion anticipated in November of 2022. IEA's scope of work includes the full EPC of the solar field, as well as the conversion and collection of power to the substation. And lastly, just before quarter end, we were awarded a 150 megawatt solar farm that will provide clean, affordable energy to Georgia's Clay County residents. We hope to begin construction yet next month. We also saw progress in our wind business during the third quarter. As previously announced, IEA secured a 110-megawatt, $49 million utility-scale wind construction contract in Huron County, Michigan. Construction of the Deerfield II wind farm will start in Q4 2021, and our team is self-performing the entire EPC scope of the project, including the construction of a 41-mile collection system. the installation of five and a half miles of private access roads, and the erection and installation of 21 wind turbine generators. At the end of the quarter, our renewable segment backlog was at almost 1.8 billion. That's a 24% increase from one year ago. Let me now comment on the results of our specialty civil segment, which accounted for 26% of the quarter's revenue. At $181 million, The specially civil revenue decreased by 8% compared to last year. While our environmental business revenue almost doubled, revenue in both our heavy civil and rail markets decreased year over year due to fewer construction projects and a lower average value of projects. Rail car counts have been down this year primarily because of the pandemic, and our freight rail customers have limited their spending as a result. I am pleased to know, however, that bidding for rail projects did pick up at the end of the third quarter, and this activity has continued into the fourth quarter. With the passage of the very large infrastructure bill this past weekend, we expect an improved bidding environment for our heavy civil business. Even with the new infrastructure bill, there are still challenges facing the construction industry. These include that of labor, material, and equipment inflation. as well as supply chain delays. Before turning the call over to Pete, I wanted to discuss these challenges. IEA does have some contractual protections to reduce our financial exposure to project delays and cost escalations. For example, in almost all renewable projects, the owner directly procures the wind turbines or solar panels. So, the owner is responsible for those price escalation and delays. Some owners also directly procure other components such as solar trackers, high voltage equipment, or cabling. In general, our contracts keep inflation risk at the owner's account until we receive a full notice to proceed. Since most renewable projects include mobilization or advance payments, we generally use these payments to fund material or equipment purchases made immediately at the time we receive the notice. We also have contractual protections in our large long-term environmental project, as the contract includes periodic adjustments based on a local cost of living index, and we are paid for actual fuel costs incurred. In other instances, we help reduce the risk for our other projects by ordering or purchasing materials at the time of the contract award. While these contractual protections help mitigate much of the material and equipment inflation risk, They are not a perfect hedge, and we have incurred some cost escalation. Similarly, we have also had instances of labor cost inflation. However, to date, that cost has not been material, and we have been able to employ the craft labor that we need to staff our projects. In addition to labor and equipment inflation, construction companies are naturally subject to the impacts of adverse weather conditions and the impact of supply chain delays. These delays make it difficult to properly sequence our construction jobs, creating inefficiencies and eventually increasing costs. It is these inefficiencies that reduced our renewable segment margins during the third quarter. And unfortunately, based on our discussions with clients and review of the overall market, they are expected to provide challenges for the near future. We are proactively taking measures to mitigate these headwinds whenever possible and will continue to do so. I can assure you that we are fully focused on these challenges and the efforts needed to improve our margins. As you will note, when PEAT gives our adjusted EBITDA guidance, we are lowering the top end to reflect the challenges, but we are remaining within our original range. Even with these challenges, however, I would reemphasize we achieved two record revenue quarters, and so Pete will also note that we are increasing our revenue guidance range for the year. I'll now turn the call over to Pete to speak about our third quarter financial results. Pete?