The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes to those financial statements included as Item 8 in this Annual Report. This discussion and analysis includes forward-looking statements that are based on current expectations and are subject to uncertainties and unknown or changed circumstances. For further discussion, please see "Forward-Looking Statements" at the beginning of this Annual Report. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those risks inherent with our business as discussed in "Item 1A. Risk Factors." Throughout this section, unless otherwise noted, "IEA," the "Company," "we," "us" and "our" refer toInfrastructure and Energy Alternatives, Inc. and its consolidated subsidiaries. Certain amounts in this section may not foot due to rounding. Overview We are a leading diversified infrastructure construction company with specialized energy and heavy civil expertise throughoutthe United States . We specialize in providing complete engineering, procurement and construction services throughoutthe United States for the renewable energy, traditional power and civil infrastructure industries. These services include the design, site development, construction, installation and restoration of infrastructure. We have completed more than 240 wind and solar projects in 40 states and construct one of every five gigawatts put in to place throughout theU.S. in any given year. Although the Company has historically focused on the renewable industry, but has recently focused on further expansion into the solar market and with our recent acquisitions have expanded its construction capabilities and geographic footprint in the areas of environmental remediation, industrial maintenance, specialty paving, heavy civil and rail infrastructure construction, creating a diverse national platform of specialty construction capabilities. We believe we have the ability to continue to expand these services because we are well-positioned to leverage our expertise and relationships in the wind energy business to provide complete infrastructure solutions in all areas. We have two reportable segments: the Renewables ("Renewables") segment and the Heavy Civil and Industrial ("Specialty Civil") segment. See Segment Results for a description of the reportable segments and their operations.
Coronavirus Pandemic Update
The COVID-19 pandemic continues to significantly impactthe United States and the world. Since the start of the COVID-19 pandemic, we have been focused on the safety of our employees and ensuring that our construction sites are managed by taking all reasonable precautions to protect on-site personnel.
We took the following actions in the first half of 2020 to address the risks attributable to the COVID-19 pandemic:
•We established a dedicated COVID-19 task force representing all parts of the Company to review and implement actions to prepare for the impacts on our operations, including a variety of protocols in the areas of social distancing, working from home, emergency office and project site closures, and travel restrictions.
•In addition to our existing site crisis management plans, our operations expanded and implemented their pandemic response plans to ensure a consistent, comprehensive response to various COVID-19 scenarios.
•We implemented more stringent office and project site cleaning and hygiene protocols in all locations. We also developed more stringent tool, vehicle and equipment cleaning protocols. •For employees, we established a regularly updated COVID-19 information hub with FAQs, important communications, regularly updated protocols, business planning tools, best practices, signage/flyers and other important resources.
•We significantly increased communications, signage and oversight of personal hygiene requirements to drive better prevention practices.
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•We postponed social gatherings, large in-person training sessions and other activities involving groups of 10 or more.
•We prohibited virtually all Company air travel unless approved by executive leadership. We also required all employees to report their personal travel schedules in order to closely monitor and take any necessary steps to maintain the safety of our workforce. •We increased our efforts to reduce selling, general and administrative expenses by implementing a hiring freeze, delaying the Company 401(k) match until later in the year, prohibiting all non-essential travel, reducing new initiatives, deferring promotions and salary changes, and canceling any non-essential capital expenditures or consulting work.
•To mitigate the effects of working from home and travel bans, we significantly increased the use of remote communication technologies.
We are actively monitoring the COVID-19 pandemic, including disease progression, federal, state and local government actions, theCenter for Disease Control ("CDC") andWorld Health Organization ("WHO") responses, supplier and supply chain risks, and prevention and containment measures to maintain business operations. As the COVID-19 pandemic and the responses by federal, state and local governments continue to evolve, we continue to make adjustments to our practices and policies to protect the health of our employees and those we work with at our projects and office locations, while continuing to provide our essential construction services to our clients. We believe that the foregoing actions have significantly reduced the Company's exposure to the effects of COVID-19, including our workforce's exposure to infection from COVID-19. As of today, we have had a low incidence of infection in our workforce. The impact of COVID-19 on construction businesses such as ours is evolving rapidly and its future effects are uncertain. The Company has received several notices of force majeure from project owners as a result of delivery delays due to COVID-19. We have experienced project interruptions and restrictions that have delayed project timelines from those originally planned, and we have experienced some temporary work stoppages. This has led to general inefficiencies from having to start and stop work, re-sequencing work, requiring on-site health screenings before entering a job site, and following proper social distancing practices. The Company incurred$3.0 million of specific expenses related to the COVID-19 pandemic and believe$5.0 to$8.0 million in estimated costs from production inefficiencies for the year endedDecember 31, 2020 . We cannot predict if there will be further significant disruptions beyond our control, including quarantines and customer work stoppages, significant force majeure declarations by our suppliers or other equipment providers material to our projects.
We have also noticed an impact of COVID-19 in adding new projects to our backlog. Our bidding activity continues at very high levels, but the final approval process for some projects has been slowed due to COVID-19. Despite that, we were able to maintain a relatively consistent total backlog for 2020 compared to 2019.
We are still evaluating the effects that the vaccination and new strains of COVID-19 may have on the current construction business. Therefore, we are continuing to take actions to preserve our liquidity such as limiting our hiring and delaying spending on non-critical initiatives. At this point, we do not believe that COVID-19 is having a negative impact on our liquidity. We could see a change in this status if we experience future work stoppages at our projects which would prevent us from billing customers for new work performed. If the federal, state and local governments proceed with more restrictive measures, and our customers determine to stop work or terminate projects, these actions would negatively impact our business, results of operations, liquidity and prospects. In addition, the Company is unable to predict any changes in the market for bonding by our sureties.
Current Year Financial Highlights
Key financial results for the year ended
•Consolidated revenues increased 20.1% to$1.8 billion as compared to$1.5 billion for the year endedDecember 31, 2019 , of which 65.2% was attributable to the Renewables segment and 34.8% was attributable to the Specialty Civil segment; 32 --------------------------------------------------------------------------------
•Operating income increased 104.8%, or
•Operating income as a percentage of revenue also increased significantly at
•Net income decreased 88.3%, or$5.5 million , to$0.7 million as compared to$6.2 million for the year endedDecember 31, 2019 . Included in the net income forDecember 31, 2019 , was a$23.1 million contingency gain; and
•Diluted loss per share increased 90.7%, or
2020 Trends and Future Opportunities
Renewables Segment
During 2020, results of the Renewables segment were impacted by the following significant operational trends:
•In late 2019, the Production Tax Credit ("PTC") was extended for one year, which increased customer demand to complete construction on more projects for 2020. The extension provided a pull forward of the 2020 quarterly revenue timing. •The locations of our construction projects in 2020 experienced more favorable weather conditions, which provided for less construction delays. •Our consistent, safe and reliable performance with our customers on our wind projects have allowed us to further expand our services into the solar market. We have maintained a heavy focus on construction of renewable power production capacity as renewable energy, particularly from wind and solar, has become widely accepted within the electric utility industry and has become a cost-effective solution for the creation of new generating capacity. We believe that this shift coupled with the below, will continue to drive opportunity in this segment over the long-term:
•The current administration has a goal of investing
•Renewable energy power generation has reached a level of scale and maturity that permits these technologies to now be cost-effective competitors to more traditional power generation technologies, including on an unsubsidized basis. The most significant changes have been related to increased turbine sizes and better battery storage methods.
•Over 40 states and the District of
•InDecember 2020 , there was a one year extension of the PTC at 60% for projects that begin construction prior toDecember 31, 2021 and a two year extension of 26% Solar Investment Tax Credit ("ITC") to 2022 (22% credit extended through 2023). As a result, wind and solar power are among the leading sources of new power generation capacity in theU.S. , and the Company does not anticipate this trend to change in the near future as we are continuing to see growth through new awards in our backlog: (in millions) Backlog at New Awards in Revenue Recognized December 31, Segment December 31, 2019 2020(1) in 2020 2020(2) Renewables $ 1,582.5$ 1,073.7 $ 1,142.8 $ 1,513.4 33
-------------------------------------------------------------------------------- (1) New awards consist of the original contract price of projects added to our backlog plus or minus subsequent changes to the estimated total contract price of existing contracts. (2) Backlog may differ from the transaction prices allocated to the remaining performance obligations as disclosed in Note 1. Business, Basis of Presentation and Significant Accounting Policies in Item 8. Such differences relate to the timing of executing a formal contract or receiving a notice to proceed. More specifically, backlog sometimes may include awards for which a contract has not yet been executed or a notice to proceed has not been issued, but for which there are no remaining major uncertainties that the project will proceed (e.g., adequate funding is in place).
Specialty Civil Segment
During 2020, our results of the Specialty Civil segment was impacted by the following significant operational trends:
•The COVID-19 pandemic impacted certain aspects of our projects in the rail and environmental remediation end markets:
•negatively impacted the budgets of some of our customers which led to uncertainty and further delays on portions of our large rail jobs; and
•increased the timing needed to obtain governmental approvals and environmental permitting that affected the start and bidding opportunities of certain environmental remediation and rail projects.
•Competition increased in a few of our end markets which led to lower margins on certain heavy civil construction projects reducing overall profitability.
•Despite the delays in project starts mentioned above we continued to see a strong bidding environment over the course of 2020 and had significant awarded projects related to:
•The rail market started two sizeable projects that will continue with consistent revenue through 2024; and
•The heavy civil construction market was consistent year over year for awarded projects.
We believe that our business relationships with customers in these sectors are excellent and the strong reputation that our acquired companies have built has provided us with the right foundation to continue to grow our revenue base. The drivers to further growing this segment our as follows: •The FMI 2021 Overview Report published in the first quarter of 2021 projects that nonresidential construction put in place forthe United States will be over$500 billion per year from 2021 to 2024.
•Fast Act extension and highway trust fund infusion of
•According to theAmerican Coal Ash Association , coal combustion residuals "CCRs" or "coal ash" are produced by coal-fired power plants and represent one of the largest categories of industrial waste in theU.S. , as 78.6 million tons of CCRs were produced in 2019. The Company anticipates this could be a$50.0 billion industry over the next ten years. Additionally, there is significant overlap in labor, skills and equipment needs between our Renewables segment and our Specialty Civil segment, which we expect will continue to provide us with operating efficiencies as we continue to expand this sector. The Company continues to cross leverage these two segments and continues to see future growth through new awards in our backlog: (in millions) Backlog at New Awards in Revenue Recognized December 31, Segment December 31, 2019 2020(1) in 2020 2020(2) Specialty Civil $ 588.7$ 577.5 $ 610.1 $ 556.1 34
-------------------------------------------------------------------------------- (1) New awards consist of the original contract price of projects added to our backlog plus or minus subsequent changes to the estimated total contract price of existing contracts. (2) Backlog may differ from the transaction prices allocated to the remaining performance obligations as disclosed in Note 1. Business, Basis of Presentation and Significant Accounting Policies in Item 8. Such differences relate to the timing of executing a formal contract or receiving a notice to proceed. More specifically, backlog sometimes may include awards for which a contract has not yet been executed or a notice to proceed has not been issued, but for which there are no remaining major uncertainties that the project will proceed (e.g., adequate funding is in place).
Backlog
See Backlog on Item 1. Business.
Significant Factors Impacting Results
Our revenues, margins and other results of operations can be influenced by a variety of factors in any given period, including those described in Item 1A. Risk Factors and in Results of Operations and Forward Looking Statements, and those factors have caused fluctuations in our results in the past and are expected to cause fluctuations in our results in the future. Additional information with respect to certain of those factors is provided below. Seasonality. Typically, our revenues are lowest in the first quarter of the year because cold, snowy or wet conditions can create challenging working environments that are more costly for our customers or cause delays on projects. In addition, infrastructure projects often do not begin in a meaningful way until our customers finalize their capital budgets, which typically occurs during the first quarter. Second quarter revenues are typically higher than those in the first quarter, as some projects begin, but continued cold and wet weather can often impact productivity. Third quarter revenues are typically the highest of the year, as a greater number of projects are underway and operating conditions, including weather, are normally more accommodating. Generally, revenues during the fourth quarter are lower than the third quarter but higher than the second quarter, as many projects are completed and customers often seek to spend their capital budgets before year end. However, the holiday season and inclement weather can sometimes cause delays during the fourth quarter, reducing revenues and increasing costs. Our revenue and results of operations for our Specialty Civil segment are also effected by seasonality but to a lesser extent as these projects are more geographically diverse and located in less severe weather areas. While the first and second quarter revenues are typically lower than the third and fourth quarter, the geographical diversity has allowed this segment to be less seasonal over the course of the year. Weather and Natural Disasters. The results of our business in a given period can be impacted by adverse weather conditions, severe weather events or natural disasters, which include, among other things, heavy or prolonged snowfall or rainfall, hurricanes, tropical storms, tornadoes, floods, blizzards, extreme temperatures, wildfires, pandemics and earthquakes. These conditions and events can negatively impact our financial results due to the termination, deferral or delay of projects, reduced productivity and exposure to significant liabilities. Cyclical demand. Fluctuations in end-user demand within the industries we serve, or in the supply of services within those industries, can impact demand for our services. As a result, our business may be adversely affected by industry declines or by delays in new projects. Variations in project schedules or unanticipated changes in project schedules, in particular, in connection with large construction and installation projects, can create fluctuations in revenue, which may adversely affect us in a given period. In addition, revenue from master service agreements, while generally predictable, can be subject to volatility. The financial condition of our customers and their access to capital, variations in project margins, regional, national and global economic, political and market conditions, regulatory or environmental influences, and acquisitions, dispositions or strategic investments can also materially affect quarterly results. Accordingly, our operating results in any particular period may not be indicative of the results that can be expected for any other period. Revenue mix. The mix of revenues based on the types of services we provide in a given period will impact margins, as certain industries and services provide higher-margin opportunities. Revenue derived from projects billed on a fixed-price basis totaled 97.7% for the year endedDecember 31, 2020 . Revenue and related costs for construction contracts billed on a time and materials basis are recognized as the services are rendered. Revenue derived from projects billed on a time and materials basis totaled 2.3% of consolidated revenue for the year endedDecember 31, 2020 . Size, scope and complexity of projects. Larger or more complex projects with design or construction complexities; more difficult terrain requirements; or longer distance requirements typically yield opportunities for higher margins as we 35 -------------------------------------------------------------------------------- assume a greater degree of performance risk and there is greater utilization of our resources for longer construction timeframes. Furthermore, smaller or less complex projects typically have a greater number of companies competing for them, and competitors at times may more aggressively pursue available work. A greater percentage of smaller scale or less complex work also could negatively impact margins due to the inefficiency of transitioning between a larger number of smaller projects versus continuous production on fewer larger projects. Also, at times we may choose to maintain a portion of our workforce and equipment in an underutilized capacity to ensure we are strategically positioned to deliver on larger projects when they move forward. Project variability and performance. Margins for a single project may fluctuate period to period due to changes in the volume or type of work performed, the pricing structure under the project contract or job productivity. Additionally, our productivity and performance on a project can vary period to period based on a number of factors, including unexpected project difficulties or site conditions; project location, including locations with challenging operating conditions; whether the work is on an open or encumbered right of way; inclement weather or severe weather events; environmental restrictions or regulatory delays; protests, other political activity or legal challenges related to a project; and the performance of third parties. Subcontract work and provision of materials. Work that is subcontracted to other service providers generally yields lower margins, and therefore an increase in subcontract work in a given period can decrease margins. Our customers are usually responsible for supplying the materials for their projects; however, under some contracts we agree to procure all or part of the required materials. Margins may be lower on projects where we furnish a significant amount of materials, including projects where we provide engineering, procurement and construction ("EPC") services, as our markup on materials is generally lower than our markup on labor costs. Furthermore, fluctuations in the price of materials we procure, including as a result of changes inU.S. or global trade relationships or other economic or political conditions, may impact our margins. In a given period, an increase in the percentage of work with higher materials procurement requirements may decrease our overall margins.
Results of Operations
A discussion of results of operations changes between the years endedDecember 31, 2019 and 2018 is included below if changes were deemed significant and all other changes were in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year endedDecember 31, 2019 , which was filed with theSEC onMarch 12, 2020 .
Comparison of Years Ended
The following table reflects our consolidated results of operations in dollar and percentage of revenue terms for the periods indicated:
Year Ended December 31, Change (in thousands, except percentages) 2020 2019 $ % Revenue$ 1,752,905 100.0 %$ 1,459,763 100.0 % 293,142 20.1 Cost of revenue 1,564,213 89.2 % 1,302,746 89.2 % 261,467 20.1 Gross profit 188,692 10.8 %
157,017 10.8 % 31,675 20.2 Selling, general and administrative expenses
113,266 6.5 %
120,186 8.2 % (6,920) (5.8) Income from operations
75,426 4.3 %
36,831 2.5 % 38,595 104.8 Other income (expense), net: Interest expense, net
(61,689) (3.5) %
(51,260) (3.5) % (10,429) 20.3 Contingent consideration fair value adjustment
- - %
23,082 1.6 % (23,082) 100.0 Other expense
(429) - % (4,043) (0.3) % 3,614 (89.4) Income before income taxes 13,308 0.8 % 4,610 0.3 % 8,698 188.7 (Provision) benefit for income taxes (12,580) (0.7) % 1,621 0.1 % (14,201) (876.1) Net income$ 728 - %$ 6,231 0.4 % (5,503) (88.3)
See Segment Results, below, for a discussion of Revenue and Gross profit.
Revenue. Revenue increased by 20.1%, or
36 --------------------------------------------------------------------------------
Gross profit. Gross profit increased by 20.2%, or
Selling, general and administrative expenses. Selling, general and administrative expenses decreased by 5.8%, or$6.9 million , during the year endedDecember 31, 2020 as compared to 2019. Selling, general and administrative expenses were 6.5% of revenue for the year endedDecember 31, 2020 , compared to 8.2% for 2019. The decrease in selling, general and administrative expenses was primarily driven by cost decreases in 2020 compared to 2019 for: •Acquisitions costs of$8.9 million were incurred in 2019 related to our purchase of CCS and William Charles, •Staff related benefit costs decreased$2.7 million , and •Business travel costs of$2.1 million decreased in 2020 due to Company mandate to adhere to state and national COVID-19 protocols.
The reductions above were partially offset by expense increases for:
•Outside service fees increased$4.6 million in 2020 due to an increase in legal fees and consulting fees related to equity transactions, and •Information technology expenses increased$2.6 million in 2020 due to an increase of field employees and mobile field sites, as well as work from home setups for office employees. Interest expense, net. Interest expense increased by 20.3%, or$10.4 million , during the year endedDecember 31, 2020 as compared to 2019. This increase was driven by an increase in Series B Preferred Stock dividends of$25.4 million partially offset by a reduction of interest expense related to the Company's credit facility of$14.0 million . Contingent consideration fair value adjustment. The Merger agreement required the Company to issue additional shares of our Common Stock to the Seller if certain financial targets for 2019 were achieved. The financial targets were not achieved. Therefore, the Company recorded a fair value adjustment of$23.1 million at the end of 2019, to remove the remaining liability for the contingent consideration. Other expense. Other expense decreased by 89.4%, or$3.6 million , during the year endedDecember 31, 2020 as compared to 2019, primarily related to the fair value adjustment on the anti-dilution warrants related to the potential issue of common stock for the conversion of the Series A Preferred shares. (Provision) benefit for income taxes. Income tax expense increased by 876.1%, or$14.2 million , during the year endedDecember 31, 2020 , compared to 2019. The effective tax rates for the years endedDecember 31, 2020 and 2019 were 94.5% and 35.2%, respectively. The higher effective tax rate in 2020 was primarily attributable to dividends on the Series B Preferred Stock, which are treated as interest expense but not deductible for taxes.
Segment Results
The Company operated our business as two reportable segments: the Renewables segment and the Specialty Civil segment. Each of our reportable segments is comprised of similar business units that specialize in services unique to the respective markets that each segment serves. The classification of revenue and gross profit for segment reporting purposes can at times require judgment on the part of management. Our segments may perform services across industries or perform joint services for customers in multiple industries. To determine reportable segment gross profit, certain allocations, including allocations of shared and indirect costs, such as facility costs, equipment costs and indirect operating expenses, were made based on segment revenue. 37 --------------------------------------------------------------------------------
The following table sets forth segment revenues and gross profit for the years indicated, as well as the dollar and percentage change from the prior year:
Year Ended December 31, (in thousands) 2020 2019 Change % of Total % of Total Segment Revenue Revenue Revenue Revenue $ % Renewables$ 1,142,842 65.2 %$ 834,029 57.1 % 308,813 37.0 % Specialty Civil 610,063 34.8 % 625,734 42.9 % (15,671) (2.5) % Total revenue$ 1,752,905 100.0 %$ 1,459,763 100.0 %$ 293,142 20.1 % Years ended December 31, (in thousands) 2020 2019 Change Gross Profit Gross Profit Segment Gross Profit Margin Gross Profit Margin $ % Renewables$ 126,919 11.1 %$ 88,309 10.6 % 38,610 43.7 % Specialty Civil 61,773 10.1 % 68,708 11.0 % (6,935) (10.1) % Total gross profit$ 188,692 10.8 %$ 157,017 10.8 %$ 31,675 20.2 %
Renewables Segment Results
Revenue. Renewables revenue was$1,142.8 million for the year endedDecember 31, 2020 as compared to$834.0 million for 2019, an increase of 37.0%, or$308.8 million . The increase in revenue was primarily due to an increase in customer demand from the extension of the PTC credit, which increased the number of wind projects in construction during the year, coupled with further increased growth in the Solar market during 2020: •The increased customer demand allowed the company to construct 28 projects of greater than$5.0 million of revenue in 2020 compared to only 23 projects during 2019, •The average value of the 28 projects was$40.1 million in 2020 compared to$37.1 million related to the 23 projects during 2019, and •Solar revenue increased$106.3 million for the year endedDecember 31, 2020 when compared to 2019. Gross profit. Renewables gross profit was$126.9 million for the year endedDecember 31, 2020 as compared to$88.3 million for 2019, an increase of 43.7%, or$38.6 million . As a percentage of revenue, gross profit was 11.1% in 2020, as compared to 10.6% in 2019. The increase was primarily attributable to the following: •Projects generated greater gross margins due to more favorable weather conditions which led to less project delays. •The year endedDecember 31, 2019 , also had lower gross margins related to completing construction on projects that were significantly impacted by weather in 2018.
Specialty Civil Segment Results
Revenue. Specialty Civil revenue was$610.1 million for the year endedDecember 31, 2020 as compared to$625.7 million for 2019, a decrease of 2.5%, or$15.7 million . The decrease in revenue was primarily due to the delay of certain projects in the rail and environmental remediation end markets, offset by higher revenue from our construction project mix in the heavy civil market as compared to 2019: •Rail and environmental remediation markets experienced a decrease in revenue primarily due to delay in project starts for utilities and railroads coupled with delays in obtaining environmental permit approvals, •Offsetting the decrease in revenue was a slight increase in our heavy civil construction mix of projects. 38 -------------------------------------------------------------------------------- Gross profit. Specialty Civil gross profit was$61.8 million for the year endedDecember 31, 2020 as compared to$68.7 million for 2019, a decrease of (10.1)%, or$6.9 million . As a percentage of revenue, gross profit was 10.1% in 2020, as compared to 11.0% in 2019. The decrease was primarily attributable to the mix of our projects in 2020 compared to 2019. In 2020, the Company had lower gross margin due to the mix of the projects as there were more heavy civil construction projects which typically generate lower gross margins then our rail and environmental remediation markets.
Liquidity and Capital Resources
Liquidity is provided by available cash balances, cash generated from operations, availability under our credit facility and access to capital markets. We have a committed line of credit totaling$75.0 million , which may be used for revolving loans, letters of credit and/or general purposes. We believe the cash generated from operations, along with our unused credit capacity of$67.2 million and available cash balances as ofDecember 31, 2020 , will be sufficient to fund any working capital needs for the next 12 months and beyond. To the extent that cash from operations and borrowings under our revolving credit facility are not sufficient to meet our liquidity needs in the next twelve months, we expect to access other sources of liquidity through alternative sources such as issuance of debt and equity securities, expansions of our credit facility or other sources. There can be no assurance that any such sources will be available or if they are available that we can obtain capital from such sources on commercially reasonable terms.
Working Capital
We require working capital to support seasonal variations in our business, primarily due to the effect of weather conditions on external construction and maintenance work and the spending patterns of our customers, both of which influence the timing of associated spending to support related customer demand. Our business is typically slower in the first quarter of each calendar year. Working capital needs are generally lower during the spring when projects are awarded and we receive down payments from customers. Conversely, working capital needs generally increase during the summer or fall months due to increased demand for our services when favorable weather conditions exist in many of the regions in which we operate. Working capital needs are typically lower and working capital is converted to cash during the winter months. These seasonal trends, however, can be offset by changes in the timing of projects, which can be affected by project delays or accelerations and/or other factors that may affect customer spending. Sources and Uses of Cash
Sources and uses of cash are summarized below for the periods indicated:
Year EndedDecember 31 , (in thousands) 2020
2019
Net cash provided by operating activities$ 57,745 $ 79,812 Net cash provided by (used in) investing activities (3,113) 610 Net cash (used in) financing activities (37,850) (4,474) Operating Activities. Net cash provided by operating activities for the year endedDecember 31, 2020 was$57.7 million as compared to$79.8 million for 2019. The$22.1 million decrease in operating cash flow for the year endedDecember 31, 2020 as compared to 2019 was attributable to the timing of receipts from customers and payments to vendors in the ordinary course of business. The decrease is primarily attributable to$183.6 million more cash collected for accounts receivable and contract assets, offset by$239.9 million more cash paid for accounts payable and contract liabilities. Investing Activities. Net cash used in investing activities for the year endedDecember 31, 2020 was$3.1 million as compared to net cash provided by investing activities of$0.6 million for 2019. The primary increase of net cash used in investing activities was mainly due to$9.7 million of purchases of property, plant and equipment in 2020 compared to$6.8 million spent in 2019. Financing Activities. Net cash used by financing activities for the year endedDecember 31, 2020 was$37.9 million as compared to$4.5 million for 2019. The$33.4 million decrease in cash for financing activities in 2020 compared to 2019 was primarily attributable to a reduction of proceeds from net debt and Series B Preferred Stock of$11.5 million for 2020 compared to$8.8 million in 2019, coupled with a reduction of proceeds from sale leaseback transactions of$24.3 million that occurred in 2019. 39 --------------------------------------------------------------------------------
Capital Expenditures
For the year endedDecember 31, 2020 , we incurred$26.2 million in finance lease principal payments and an additional$9.7 million in cash purchases. We estimate that we will spend approximately two percent of revenue for capital expenditures in 2020. Actual capital expenditures may increase or decrease in the future depending upon business activity levels, as well as ongoing assessments of equipment lease versus buy decisions based on short and long-term equipment requirements. Debt Third A&R Credit Agreement OnMay 20, 2019 , the Third A&R Credit Agreement (the "Third A&R Credit Agreement") became effective. The Third A&R Credit Agreement bifurcated the remaining principal amount of the initial term loan facility of$300.0 million (the "Initial Term Loan"). The Third A&R Credit Agreements leaves in place the revolving credit facility of$50.0 million (the "Initial Revolving Facility"), which provides for swing line loans of up to$20.0 million ("Swing Line Loans") and standby and commercial letters of credit. Obligations under the Third A&R Credit Agreement are guaranteed by all of the present and future assets, and those ofIntermediate Holdings (as defined therein) and the Subsidiary Guarantors (as defined therein), subject to customary carve-outs. Interest on the term loan tranche accrues at a per annum rate of, at the Company's option, (x) LIBOR plus a margin of 8.25% or (y) an alternate base rate plus a margin of 7.25%; provided, however, that upon achieving a FirstLien Net Leverage Ratio (as defined below) of no greater than 2.67:1.00, the margin shall permanently step down to (y) for LIBOR loans, 6.75% and (x) for alternative base rate loans, 5.75%. Interest on Initial Revolving Facility borrowings and Swing Line Loans accrues at a rate of, at the Company's option, (x) LIBOR plus a margin of 4.25% or (y) the applicable base rate plus a margin of 3.25%. Default interest will accrue on the obligations at the otherwise applicable rate plus 3%. The Initial Revolving Facility is required to be repaid and terminated onSeptember 25, 2023 . Borrowings under the Initial Revolving Facility may be paid and reborrowed. The Initial Term Loan matures onSeptember 25, 2024 . Borrowings under the Initial Term Loan are required to be repaid on the last business day of each March, June, September and December, continuing with the first fiscal quarter following the effective date of the Third A&R Credit Agreement, in an amount equal to 2.5% of the initial balance of the Initial Term Loan and may not be reborrowed. Beginning with 2020, an additional annual payment of a percentage of Excess Cash Flow (as defined in the Third A&R Credit Agreement) over the prior year is required on the Initial Term Loan depending upon the First Lien Net Leverage Ratio as of the last day of such year. The First Lien Net Leverage Ratio is defined as the ratio of: (A) the excess of (i) consolidated total debt that, as of such date, is secured by a lien on any of our asset or property or of any restricted subsidiary that is not expressly subordinated to the lien securing the obligations under the Third A&R Credit Agreement, over (ii) certain net cash as of such date not to exceed$50,000,000 , to (B) consolidated EBITDA, calculated on a pro forma basis for the most recently completed measurement period. The required payment percentage of Excess Cash Flow depending upon the First Lien Net Leverage Ratio will be as follows: Required Payment Amount Ratio 100% of Excess Cash Flow Greater than 5.00 : 1.00 Less than or equal to 5.00 : 1.00 but greater 75% of Excess Cash Flow than 1.76 : 1.00 Less than or equal to 1.76 : 1.00 but greater 50% of Excess Cash Flow than 1.26 : 1.00 Less than or equal to 1.26 : 1.00 but greater 25% of Excess Cash Flow than 0.76 : 1.00 0% of Excess Cash Flow Less than or equal to 0.76 : 1.00 Under the Third A&R Credit Agreement, the Company is required to not permit the First Lien Net Leverage Ratio, as of the last day of any consecutive four fiscal quarter period to be greater than: 40 -------------------------------------------------------------------------------- Measurement Period
Ratio
From and after fiscal quarter endingMarch 31, 2019 throughDecember 31, 2019 4.75 : 1.00 From and after fiscal quarter endingMarch 31, 2020 throughDecember 31, 2020 3.50 : 1.00 From and after fiscal quarter endingMarch 31, 2021 throughDecember 31, 2021 2.75 : 1.00 From and after the fiscal quarter endingMarch 31, 2022
2.25 : 1.00
Amendment to Third A&R Credit Agreement
On
In addition, the Amendment provides that afterOctober 30, 2020 and until delivery of the financial statements for the fiscal quarter endedDecember 31, 2020 , the percentage per annum interest rate for revolving loans and swing line loans is, at the Company's option, (x) LIBOR plus a margin of 2.75% or (y) the applicable base rate plus a margin of 1.75%. Thereafter, for any day, the applicable percentage per annum interest rate for revolving loans and swing line loans is LIBOR or the base rate plus a margin depending upon the Company's first lien net leverage ratio as of the last day of the most recently ended consecutive four fiscal quarter period, as set forth below: First Lien Net Leverage Ratio LIBOR Loans Base Rate Loans Less than 1.00:1.00 2.50% 1.50% Less than 2.00:1.00 but greater than or equal to 2.75% 1.75%
1.00:1.00
Less than 3.00:1.00 but greater than or equal to 3.00% 2.00%
2.00:1.00
Less than 3.50:1.00 but greater than or equal to 3.25% 2.25%
3.00:1.00
Greater than or equal to 3.50:1.00 3.50% 2.50% The Amendment also further specifies the unused commitment fee rate. On and after the Amendment's effective date and until delivery of the financial statements for the fiscal quarter endedDecember 31, 2020 , as required under the Amendment, the rate is 0.40% per annum. Thereafter, for any day, the applicable percentage per annum depends upon the Company's senior secured net leverage ratio, as set forth below: Senior Secured Net Leverage Ratio Applicable Unused Commitment Fee Rate Less than 1.00:1.00 0.35% Less than 2.00:1.00 but greater than or equal 0.40% to 1.00:1.0 Less than 3.00:1.00 but greater than or equal 0.45% to 2.00:1.00 Greater than or equal to 3.00:1.00 0.50%
We were in compliance with the provisions and covenants contained in our
outstanding debt instruments as of
Series A Preferred Stock
As ofDecember 31, 2020 , we had 17,483 shares of Series A Preferred Stock with a stated value of$1,000 per share plus accumulated dividends. Dividends are paid on the Series A Preferred Stock as, if and when declared by our Board. To extent permitted and only as, if and when declared by our Board, dividends are required to be paid in cash quarterly in arrears on eachMarch 31 ,June 30 ,September 30 andDecember 31 on the stated value at a rate of 10% per annum. The Company did not pay any dividends in cash for any quarter in 2020, on the Series A Preferred Stock and therefore dividends accrued on the stated value and increased the stated value on and effective as of the applicable dividend date without any further action by the Board at 12% per annum. So long as any shares of Series B Preferred Stock of the Company are currently outstanding or from and after the occurrence of any non-payment event or default event and until cured or waived, the foregoing rates will increase by 2% per annum. 41 -------------------------------------------------------------------------------- As ofDecember 31, 2020 , the Company has accrued a cumulative of$4.4 million in dividends to holders of Series A Preferred Stock as a reduction to additional paid-in capital. Series B Preferred Stock In 2019, the Company entered into three equity agreements with Ares Management, LLC, on behalf of its affiliated funds, investment vehicles and/or managed accounts ("Ares") and funds managed byOaktree Capital Management ("Oaktree"). These resulted in Series B-1 Preferred Stock (the "Series B-1 Preferred Stock"), Series B-2 Preferred Stock (the "Series B-2 Preferred Stock") and Series B-3 Preferred Stock (the "Series B-3 Preferred Stock") (collectively referred to as "Series B Preferred Stock"). The Series B Preferred Stock is a mandatorily redeemable financial instrument under ASC Topic 480 and has been recorded as a liability using the effective interest rate method for each tranche. The mandatory redemption date for all tranches of the Series B Preferred isFebruary 15, 2025 . As ofDecember 31, 2020 , we had 199,474 shares of Series B Preferred Stock outstanding, with each share having an initial stated value of$1,000 plus accumulated but unpaid dividends. Our Common Stock and Series A Preferred Stock are junior to the Series B Preferred Stock. Dividends are paid on the Series B Preferred Stock only as, if and when declared by our Board. The Series B Preferred Stock requires quarterly dividend payments calculated at a 12% annual rate on all outstanding Series B Preferred Stock when the Company's First Lien Net Leverage Ratio (as defined in the Third A&R Credit Agreement) is less than or equal to 1.50:1.0 and a 13.5% rate if the ratio if greater. The Series B Preferred Stock agreements allow the Company to accrue, but not pay, the dividends at a 15.0% annual rate. Accrued dividends increase the amount of Series B Preferred Stock. Accrued dividends were$18.3 million atDecember 31, 2020 . Prior toJune 30, 2020 , the Company accrued its Series B Preferred Stock payments; theJune 30 ,September 30 , andDecember 31, 2020 payments were made in cash. Dividend payments are not deductible in calculating the Company's federal and state income taxes. Deferred Taxes - COVID-19
The CARES Act was enacted on
•Eliminating the 80% of taxable income limitation by allowing corporate entities to fully utilize net operating losses ("NOLs") to offset taxable income in 2018, 2019 or 2020
•Allowing NOLs originating in 2018, 2019 or 2020 to be carried back five years
•Increasing the net interest expense deduction limit to 50% of adjusted taxable
income from 30% for tax years beginning
•Allowing taxpayers with alternative minimum tax ("AMT") credits to claim a refund in 2020 for the entire amount of the credit instead of recovering the credit through refunds over a period of years, as originally enacted by the Tax Cuts and Jobs Act ("TCJA")
•Payroll tax deferral
The new NOL carryforward and interest expense deduction rules are favorable for the Company and will help defer future cash tax liabilities. The Company has filed an election to refund$0.5 million AMT credit inApril 2020 that was received in the third quarter. The Company has also made use of the payroll deferral provision to defer the 6.2% social security tax, which is approximately$13.6 million throughDecember 31, 2020 . This amount is required to be paid at 50% on each ofDecember 31, 2021 andDecember 31, 2022 . 42 --------------------------------------------------------------------------------
Contractual Obligations
The following table sets forth our contractual obligations and commitments for
the periods indicated as of
Payments due by period (in thousands) Total 2021 2022 2023 2024 2025 Thereafter Debt (principal)(1)$ 178,927 $ 2,506 $ 16,938 $ 29,986 $ 129,368 $ 129 $ - Debt (interest)(2) 41,248 12,365 12,109 10,361 6,409 4 - Debt - Series B Preferred Stock(3) 199,474 - - - - 199,474 - Dividends - Series B Preferred Stock(4) 125,853 26,113 26,113 26,113 26,113 21,401 Finance leases(5) 60,806 27,391 22,161 6,946 2,847 1,461 - Operating leases(6) 51,666 11,162 9,372 7,022 3,461 1,751 18,898 Total$ 657,974 $ 79,537 $ 86,693 $ 80,428 $ 168,198 $ 224,220 $ 18,898 (1)Represents the contractual principal payment due dates on our outstanding debt. (2)Includes variable rate interest usingDecember 31, 2020 rates. (3)Represents the mandatorily redeemable debt - Series B Preferred with expected redemption date ofFebruary 15, 2025 . (4)Future declared dividends have been included at 12% but payment determination will be evaluated each quarter resulting in differing accumulated dividend rates. (5)We have obligations, including associated interest, recognized under various finance leases for equipment totaling$60.8 million atDecember 31, 2020 . Net amounts recognized within property, plant and equipment, net in the condensed consolidated balance sheet under these financed lease agreements atDecember 31, 2020 totaled$72.9 million . (6)We lease real estate, vehicles, office equipment and certain construction equipment from unrelated parties under non-cancelable leases. Lease terms range from month-to-month to terms expiring through 2038.
Off-Balance Sheet Arrangements
As is common in our industry, we have entered into certain off-balance sheet arrangements in the ordinary course of business. Our significant off-balance sheet transactions include liabilities associated with letter of credit obligations, surety and performance and payment bonds entered into in the normal course of business, liabilities associated with deferred compensation plans and liabilities associated with certain indemnification and guarantee arrangements.
Letters of Credit and Surety Bonds
In the ordinary course of business, we may be required to post letters of credit and surety bonds to customers in support of performance under certain contracts. Such letters of credit are generally issued by a bank or similar financial institution. The letter of credit or surety bond commits the issuer to pay specified amounts to the holder of the letter of credit or surety bond under certain conditions. If the letter of credit or surety bond issuer were required to pay any amount to a holder, we would be required to reimburse the issuer, which, depending upon the circumstances, could result in a charge to earnings. As ofDecember 31, 2020 and 2019, we were contingently liable under letters of credit issued under our respective revolving lines of credit in the amount of$7.8 million and$21.0 million , respectively, related to projects. In addition, as ofDecember 31, 2020 and 2019, we had outstanding surety bonds on projects of$2.8 billion and$2.4 billion . We anticipate that our current bonding capacity will be sufficient for the next twelve months based on current backlog and available capacity.
See Note 9. Commitments and Contingencies to our consolidated financial statements for further discussion pertaining to certain of our off-balance sheet arrangements.
Critical Accounting Policies and Estimates
This management's discussion and analysis of our financial condition and results of operations is based upon IEA's consolidated financial statements included in Item 8, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires the use of estimates and assumptions that affect the amounts reported in our consolidated financial statements and the accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Given that 43 -------------------------------------------------------------------------------- management estimates, by their nature, involve judgments regarding future uncertainties, actual results may differ from these estimates if conditions change or if certain key assumptions used in making these estimates ultimately prove to be inaccurate. For discussion of all of our significant accounting policies, see Note 1. Business, Basis of Presentation and Significant Accounting Policies to our consolidated financial statements. We believe that the accounting policies described below are the most critical in the preparation of our consolidated financial statements as they are important to the portrayal of our financial condition and require significant or complex judgment and estimates on the part of management.
Revenue Recognition for Projects
The Company adopted the requirements of Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers, which is also referred to as Accounting Standards Codification ("ASC") Topic 606, under the modified retrospective transition approach effectiveJanuary 1, 2019 , with application to all existing contracts that were not substantially completed as ofJanuary 1, 2019 .
Contracts
The Company derives revenue primarily from construction projects performed under contracts for specific projects requiring the construction and installation of an entire infrastructure system or specified units within an infrastructure system. Contracts contain multiple pricing options, such as fixed price, time and materials, or unit price. Generally, renewable energy projects are performed for private customers while Specialty Civil projects are performed for various governmental entities. Revenue from construction contracts is recognized over time using the cost-to-cost measure of progress. For these contracts, the cost-to-cost measure of progress best depicts the continuous transfer of control of goods or services to the customer. Such contracts provide that the customer accept completion of progress to date and compensate the Company for services rendered. Construction contract revenue is recognized over time using the cost-to-cost measure of progress for fixed price contracts. The cost-to-cost measure of progress best depicts the continuous transfer of control of goods or services to the customer. The contractual terms provide that the customer compensates the Company for services rendered. Contract costs include all direct materials, labor and subcontracted costs, as well as indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and the costs of capital equipment. The cost estimation and review process for recognizing revenue over time under the cost-to-cost method is based on the professional knowledge and experience of the Company's project managers, engineers and financial professionals. Management reviews estimates of total contract transaction price and total project costs on an ongoing basis. Changes in job performance, job conditions and management's assessment of expected variable consideration are factors that influence estimates of the total contract transaction price, total costs to complete those contracts and profit recognition. Changes in these factors could result in revisions to revenue and costs of revenue in the period in which the revisions are determined on a prospective basis, which could materially affect the Company's consolidated results of operations for that period. Provisions for losses on uncompleted contracts are recorded in the period in which such losses are determined. Performance Obligations A performance obligation is a contractual promise to transfer a distinct good or service to the customer and is the unit of account under Topic 606. The transaction price of a contract is allocated to distinct performance obligations and recognized as revenue when or as the performance obligations are satisfied. The Company's contracts often require significant integrated services and, even when delivering multiple distinct services, are generally accounted for as a single performance obligation. Contract amendments and change orders are generally not distinct from the existing contract due to the significant integrated service provided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation. With the exception of certain Specialty Civil service contracts, the majority of the Company's performance obligations are generally completed within one year. When more than one contract is entered into with a customer on or close to the same date, the Company evaluates whether those contracts should be combined and accounted for as a single contract as well as whether those contracts should be accounted for as more than one performance obligation. This evaluation requires significant judgment and is based on the facts and circumstances of the various contracts, which could change the amount of revenue and profit recognition in a given period depending upon the outcome of the evaluation. 44 -------------------------------------------------------------------------------- Remaining performance obligations represent the amount of unearned transaction prices for fixed price contracts and open purchase orders for which work is wholly or partially unperformed. As ofDecember 31, 2020 , the amount of the Company's remaining performance obligations was$1,328.0 million . The Company expects to recognize approximately 83.1% of its remaining performance obligations as revenue in 2020, with the remainder recognized primarily in 2021. Revenue recognized from performance obligations satisfied in previous periods was$(10.0) million and$11.3 million for the years endedDecember 31, 2020 and 2019, respectively. Variable Consideration Transaction pricing for the Company's contracts may include variable consideration, such as unapproved change orders, claims, incentives and liquidated damages. Management estimates variable consideration for a performance obligation utilizing estimation methods that best predict the amount of consideration to which the Company will be entitled. Variable consideration is included in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Management's estimates of variable consideration and determination of whether to include estimated amounts in transaction price are based on past practices with the customer, specific discussions, correspondence or preliminary negotiations with the customer, legal evaluations and all other relevant information that is reasonably available. The effect of a change in variable consideration on the transaction price of a performance obligation is typically recognized as an adjustment to revenue on a cumulative catch-up basis. To the extent unapproved change orders, claims and liquidated damages reflected in transaction price are not resolved in the Company's favor, or to the extent incentives reflected in transaction price are not earned, there could be reductions in, or reversals of, previously recognized revenue. As ofDecember 31, 2020 and 2019 , the Company included approximately$52.6 million and$73.3 million , respectively, on unapproved change orders and/or claims in the transaction price for certain contracts that were in the process of being resolved in the normal course of business, including through negotiation, arbitration and other proceedings. These transaction price adjustments are included within Contract Assets or Contract Liabilities as appropriate. The Company actively engages with its customers to complete the final approval process, and generally expects these processes to be completed within one year. Amounts ultimately realized upon final acceptance by customers could be higher or lower than such estimated amounts.
We have goodwill that has been recorded in connection with our businesses. For the year endedDecember 31, 2020 , management performed a qualitative assessment for its Renewable Segment goodwill by examining relevant events and circumstances that could have an effect on its fair value, such as macroeconomic conditions, industry and market conditions, entity-specific events, financial performance and other relevant factors or events that could affect earnings and cash flows. Based on evaluation of these qualitative assessments, it was determined that there was no goodwill impairment for these years. In our Specialty Civil segment, we valued these reporting units using a weighted combination of the income and market approaches. The critical assumptions that factored into the valuations are the projected future revenues and profitability of the reporting units, their long-term growth rates, the discount rate used to present value the future cash flows and the valuation multiples derived from a set of guideline public companies. The test determined that goodwill was not impaired since the estimated fair value of each reporting unit exceeded its net book value. There can be no assurance that a future goodwill impairment doesn't exist if future events are less favorable than what we assumed or estimated in our impairment analysis.
Impairment of Property, Plant and Equipment and Intangibles
We review long-lived assets that are held and used for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared with the asset's carrying amount to determine if there has been an impairment, which is calculated as the difference between the fair value of an asset and its carrying value. Estimates of future undiscounted cash flows are based on expected growth rates for the business, anticipated future economic conditions and estimates of residual values. Fair values take into consideration management's estimates of risk-adjusted discount rates, which are believed to be consistent with assumptions that market participants would use in their estimates of fair value. There were no impairments of property, plant and equipment or intangible assets recognized during the years endedDecember 31, 2020 , 2019 and 2018. 45 --------------------------------------------------------------------------------
"Emerging Growth Company" Status
As ofDecember 31, 2019 , the Company's total annual gross revenues exceed$1.07 billion and we are no longer an "emerging growth company," as defined in the Jumpstart Our Business Startups Act (the "JOBS Act"). See Note 1. Business, Basis of Presentation and Significant Accounting Policies to our consolidated financial statements for more information.
Recently Issued Accounting Pronouncements
See Note 1. Business, Basis of Presentation and Significant Accounting Policies to our consolidated financial statements included in this Annual Report on 10-K for disclosures concerning recently issued accounting standards. These disclosures are incorporated herein by reference.
Quarterly Financial Information (Unaudited)
Summarized quarterly results of operations for the year endedDecember 31, 2020 were as follows: ($ in thousands, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter Revenue$ 358,163 $ 480,604 $ 522,232 $ 391,906 Gross profit 33,041 54,241 58,889 42,521 (Loss) income from operations 3,557 26,167 29,233 16,469 Net (loss) income (12,743) 3,597 11,266 (1,392) Less: Convertible preferred share dividends (766) (606) (619) (637) Less: Net income allocated to participating securities - (802) (2,854) - Net income (loss) available to common stockholders$ (13,509) $
2,189
Net (loss) income per common share - basic
0.11 $ 0.37 $ (0.10)
Net (loss) income per common share - diluted
0.09 $ 0.32 $ (0.10)
Weighted average common shares outstanding - basic 20,522,216 20,751,673 20,968,271 20,992,062 Weighted average common shares outstanding - diluted 20,522,216 39,978,382 35,336,064 20,992,062 Summarized quarterly results of operations for the year endedDecember 31, 2019 were as follows: ($ in thousands, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter Revenue$ 189,781 $ 327,961 $ 422,022 $ 519,999 Gross profit 5,744 31,422 52,870 66,981 (Loss) Income from operations (22,010) 5,544 21,557 31,740 Net (loss) income (23,639) 6,208 12,609 11,053 Less: Convertible preferred share dividends (525) (918) (759) (673) Less: Contingent consideration fair value adjustment - (18,835) (4,247) - Net income (loss) available to common stockholders$ (24,164) $
(13,545)
Net income per common share - basic$ (1.09) $
(0.61) $ 0.37 $ 0.51 Net income per common share - diluted
(1.09) (0.61) 0.24 0.31 Weighted average common shares outstanding - basic 22,188,757 22,252,489 20,446,811 20,446,811 Weighted average common shares outstanding - diluted 22,188,757 22,252,489 35,419,432 35,711,512
Certain transactions affecting comparisons of the Company's quarterly results, which may not represent the amounts recognized for the full year for such transactions, include the following:
•Beginning in the third quarter of 2019, there is an adjustment to shares outstanding for removal of 1.8 million unvested shares. The number of outstanding shares of Common Stock for voting purposes remains at 22.3 million shares, as the
46 --------------------------------------------------------------------------------
aforementioned 1.8 million shares are entitled to vote those shares during the vesting period. See Note 10. Earnings (Loss) Per Share in the notes to the audited consolidated financial statements included in Item 8.
•Typically, our revenue in our Renewables segment is lowest in the first quarter of the year because cold, snowy or wet conditions experienced in the northern climates are not conducive to efficient or safe construction practices. Revenue in the second quarter is typically higher than in the first quarter, as some projects begin, but continued cold and wet weather and effects from thawing ground conditions can often impact second quarter productivity. The third and fourth quarters are typically the most productive quarters of the year as a greater number of projects are underway and weather is normally more accommodating to construction projects. In the fourth quarter, many projects tend to be completed by customers seeking to spend their capital budgets before the end of the year, which generally has a positive impact on our revenue. Nevertheless, the holiday season and inclement weather can cause delays, which can reduce revenue and increase costs on affected projects. Any quarter may be positively or negatively affected by adverse or unusual weather patterns, including from excessive rainfall, warm winter weather or natural catastrophes such as hurricanes or other severe weather, making it difficult to predict quarterly revenue and margin variations. The Company started construction on 2020 renewable projects in late 2019 due to the desire of our customers to finish these projects beforeSeptember 30, 2020 . This shift in demand impacted 2020 quarterly revenues, which shifted revenue from the fourth quarter into the second and third quarter of 2020. 47
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