Infrastructure & Energy Alternatives, Inc. (Form: 10-Q, Received: 11/08/2018 11:40:45)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2018

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 001-37796

Infrastructure and Energy Alternatives, Inc.

(Exact Name of Registrant as Specified in Charter)



Delaware				47-4787177
(State or Other Jurisdiction of Incorporation)				(IRS Employer Identification No.)



6325 Digital Way Suite 460 Indianapolis, Indiana		46214
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (765) 828-2580

None.

(Former Name or Former Address, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past ninety days. þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Large accelerated filer ¨ Accelerated filer þ Non-accelerated filer ¨ Smaller reporting company ¨ Emerging growth Company þ

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. ¨

I ndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ Yes þ No

Number of shares of Common Stock outstanding as of the close of business on November 8, 2018 : 21,577,650 .



	Infrastructure and Energy Alternatives, Inc.
	Table of Contents

	PART I. FINANCIAL INFORMATION

Item 1	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017	3
	Condensed Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2018 and 2017	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017	5
	Notes to Condensed Consolidated Financial Statements	6

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4	Controls and Procedures	33

	Part II. Other Information
Item 1A	Risk Factors	35
Item 6	Exhibits	35

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC

Condensed Consolidated Balance Sheets

($ in thousands, except per share data)

(Unaudited)



	September 30, 2018			December 31, 2017
Assets
Current assets:
Cash and cash equivalents	35,611			4,877
Accounts receivable, net of allowances of $216 and $216, respectively	198,330			60,981
Costs and estimated earnings in excess of billings on uncompleted contracts	74,155			18,613
Prepaid expenses and other current assets	4,209			862
Total current assets	312,305			85,333

Property, plant and equipment, net	104,060			30,905
Goodwill	26,701			3,020
Intangibles	34,865			—
Company-owned life insurance	4,406			4,250
Other assets	967			115
Deferred income taxes - long term	2,582			3,080
Total assets	$	485,886		$	126,703

Liabilities and Stockholder's Equity (Deficit)
Current liabilities:
Accounts payable and accrued liabilities	227,406			70,030
Billings in excess of costs and estimated earnings on uncompleted contracts	40,989			7,398
Current portion of capital lease obligations	9,492			4,691
Term loan - short-term	4,416			—
Line of credit - short-term	—			33,674
Total current liabilities	282,303			115,793

Capital lease obligations, net of current maturities	20,072			15,899
Long-term debt	220,613			—
Deferred compensation	6,046			5,030
Contingent consideration	69,373			—
Total liabilities	$	598,407		$	136,722

Commitments and contingencies:

Preferred stock, par value, $0.0001 per share; 1,000,000 shares authorized; 34,965 shares and 0 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively	34,965			—

Stockholders' equity (deficit)
Common stock, par value, $0.0001 per share; 100,000,000 shares authorized; 21,577,650 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively	2			2
Additional paid in capital	500			—
Retained earnings (deficit)	(147,988		)	(10,021		)
Total stockholders' equity (deficit)	(112,521		)	(10,019		)
Total liabilities and stockholders' equity (deficit)	$	485,886		$	126,703

See accompanying notes to condensed consolidated financial statements.

INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC

Condensed Consolidated Statement of Operations

($ in thousands)

(Unaudited)



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Revenue	$	279,279		$	177,830		$	503,487		$	336,128
Cost of revenue	252,271			153,526			462,765			289,556
Gross profit	27,008			24,304			40,722			46,572

Selling, general and administrative expenses	16,964			9,491			43,122			23,953
Income (loss) from operations	10,044			14,813			(2,400		)	22,619

Other income (expense), net:
Interest expense, net	(1,579		)	(690		)	(3,960		)	(1,404		)
Other income (expense)	(1,859		)	386			(1,848		)	1,046
Income (loss) before benefit (provision) for income taxes	6,606			14,509			(8,208		)	22,261

Benefit (provision) for income taxes	(870		)	(5,354		)	1,467			(8,128		)

Net income (loss)	$	5,736		$	9,155		$	(6,741	)	$	14,133

Net income (loss) per common share - basic	0.24			0.42			(0.36		)	0.65
Net income (loss) per common share - diluted	0.17			0.42			(0.36		)	0.65
Weighted average shares - basic	21,577,650			21,577,650			21,577,650			21,577,650
Weighted average shares - diluted	34,100,088			21,577,650			21,577,650			21,577,650

See accompanying notes to condensed consolidated financial statements.

INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC

Condensed Consolidated Statements of Cash Flows

($ in thousands)

(Unaudited)



	Nine Months Ended September 30,
	2018			2017
Cash flows from operating activities:
Net income (loss)	$	(6,741	)	$	14,133
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	6,591			3,534
Amortization of deferred financing charges	357			—
Stock compensation expense	500			40
(Gain) Loss on sale of equipment	28			(1,219		)
Deferred compensation	313			(234		)
Deferred income taxes	(577		)	4,344
Change in operating assets and liabilities:
Accounts receivable	(72,895		)	(11,874		)
Costs and estimated earnings in excess of billings on uncompleted contracts	(46,030		)	3,654
Prepaid expenses and other assets	(1,489		)	165
Accounts payable and accrued liabilities	131,682			(248		)
Billings in excess of costs and estimated earnings on uncompleted contracts	19,896			(10,024		)
Net cash provided by (used in) operating activities	31,635			2,271

Cash flow from investing activities:
Company-owned life insurance	(156		)	(1,545		)
Purchases of property, plant and equipment	(2,445		)	(2,331		)
Proceeds from sale of property, plant and equipment	40			352
Acquisition of business, net of cash acquired	(106,579		)	—
Net cash used in investing activities	(109,140		)	(3,524		)

Cash flows from financing activities:
Proceeds from debt and line of credit	381,272			—
Payments on debt and line of credit	(139,501		)	—
Payments on line of credit - short term	(38,447		)	—
Extinguishment of debt	(51,762		)	—
Debt issuance costs	(12,675		)	—
Payments on capital lease obligations	(4,284		)	(855		)
Preferred dividends	(548		)	—
Recapitalization transaction	(25,816		)	—
Net cash used in financing activities	108,239			(855		)

Net change in cash and cash equivalents	30,734			(2,108		)

Cash and cash equivalents, beginning of the period	4,877			21,607

Cash and cash equivalents, end of the period	$	35,611		$	19,499

Supplemental disclosure of cash and non-cash transactions:
Cash paid for interest	$	3,622		$	1,424
Cash paid for income taxes	$	649		$	3,049
Acquisition of assets/liabilities through capital lease	$	12,133		$	21,947
Merger-related contingent consideration	$	69,373		$	—
Issuance of common shares	$	90,282		$	—
Issuance of preferred shares	$	34,965		$	—
Preferred dividends declared	$	524		$	—

See accompanying notes to condensed consolidated financial statements.

INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Note 1. Organization, business and basis of presentation

Infrastructure and Energy Alternatives, Inc. (f/k/a M III Acquisition Corporation ("M III")) is a Delaware holding company organized on August 4, 2015 (together with its wholly-owned subsidiaries, collectively "IEA", "we" or the "Company"). The Company specializes in providing complete engineering, procurement and construction (“EPC”) services throughout the U.S. for the renewable energy, traditional power and civil infrastructure industries. The services are performed under fixed-price and time-and-materials contracts.

In the opinion of management, these financial statements reflect all adjustments that are necessary to present fairly the results of operations for the interim periods presented. The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 . These financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2017 and notes thereto included in Exhibit 99.4 to the Company's Form 8-K filed on March 29, 2018 .

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of IEA and its wholly-owned direct and indirect domestic and foreign subsidiaries: IEA Intermediate Holdco, LLC (“Holdings”), IEA Energy Services, LLC ("IEA Services"), IEA Management Services, Inc., IEA Constructors, Inc. (f/k/a IEA Renewable, Inc.), White Construction, Inc. (“White”), White Electrical Constructors, Inc., and IEA Equipment Management, Inc., White’s wholly-owned subsidiary H.B. White Canada Corp. and from their date of acquisition, Consolidated Construction Solutions I LLC (“CCS”), American Civil Constructors LLC (“ACC Companies”) and Saiia LLC (“Saiia”). The Company operates in one reportable segment, providing EPC services.

On March 26, 2018 (the "Closing Date"), we consummated a merger (the "Merger") pursuant to that certain Agreement and Plan of Merger, dated November 3, 2017 (as amended, the "Merger Agreement"), by and among the Company, IEA Services, Wind Merger Sub I, Inc. ("Merger Sub I"), a Delaware corporation and a wholly-owned subsidiary of the Company, Wind Merger Sub II, LLC ("Merger Sub II"), a Delaware limited liability company and a wholly-owned subsidiary of the Company, Infrastructure and Energy Alternatives, LLC, a Delaware limited liability company ("Seller"), and other parties thereto, which provided for, among other things, the merger of Merger Sub I with and into IEA Services with IEA Services surviving such merger and, immediately thereafter, merging with and into Merger Sub II with Merger Sub II surviving such merger as an indirect, wholly-owned subsidiary of the Company. Following the Merger we changed our name from M III Acquisition Corporation to Infrastructure and Energy Alternatives, Inc. See Note 3 of the Notes to Condensed Consolidated Financial Statements for more information about the Merger.

On September 25, 2018, we completed our acquisition of CCS and its subsidiaries for total purchase consideration of approximately $106.6 million . See Note 3 of the Notes to Condensed Consolidated Financial Statements for more information about the acquisition.

Basis of Accounting and Use of Estimates

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of the consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Key estimates include: the recognition of revenue and project profit or loss (which the Company defines as project revenue less project costs of revenue), in particular, on construction contracts accounted for under the percentage-of completion method, for which the recorded amounts require estimates of costs to complete projects, ultimate project profit and the amount of probable contract price adjustments as inputs; allowances for doubtful accounts; accrued self-insured claims; other reserves and accruals; accounting for income taxes; and the estimated impact of contingencies and ongoing litigation. While management believes that such estimates are reasonable when considered in conjunction with the Company’s consolidated financial position and results of operations, actual results could differ materially from those estimates.

Note 2. Summary of significant accounting policies

“Emerging Growth Company” Reporting Requirements:

The Company qualifies as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). For as long as a company is deemed to be an “emerging growth company,” it may take advantage of specified reduced reporting and other regulatory requirements that are generally unavailable to other public companies. Among other things, we are not required to provide an auditor attestation report on the assessment of the internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002. Section 107 of the JOBS Act also provides that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We would cease to be an “emerging growth company” upon the earliest of:


•	the last day of the fiscal year following July 6, 2021, the five -year anniversary of the completion of M III's IPO;


•	the last day of the fiscal year in which our total annual gross revenues exceed $1.07 billion ;


•	the date on which we have, during the previous three -year period, issued more than $1 billion in non-convertible debt

securities; or


•	the date on which we become a “large accelerated filer,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our common stock held by nonaffiliates exceeds $700 million as of the last day of our most recently completed second fiscal quarter.

We continue to monitor our status as an “emerging growth company” and are currently preparing, and expect to be ready to comply with, the additional reporting and regulatory requirements that will be applicable to us when we cease to qualify as an “emerging growth company.”

Revenue Recognition

Revenue under construction contracts are accounted for under the percentage-of-completion method of accounting. Under the percentage-of-completion method, the Company estimates profit as the difference between total estimated revenue and total estimated cost of a contract and recognizes that profit over the contract term based on costs incurred. Contract costs include all direct materials, labor and subcontracted costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, depreciation and the operational costs of capital equipment.

The estimation process for revenue recognized under the percentage-of-completion method is based on the professional knowledge and experience of the Company’s project managers, engineers and financial professionals. Management reviews estimates of contract revenue and costs on an ongoing basis. Changes in job performance, job conditions and management’s assessment of expected contract settlements are factors that influence estimates of total contract value and total costs to complete those contracts and, therefore, the Company’s profit recognition. Changes in these factors may result in revisions to costs and income, and their effects are recognized in the period in which the revisions are determined, which could materially affect the Company’s results of operations in the period in which such changes are recognized.

Revenue derived from projects billed on a fixed-price basis totaled 99.8% and 97.4% of consolidated revenue from operations for the three months ended September 30, 2018 and 2017 , respectively, and totaled 97.4% and 98.3% for the nine months ended September 30, 2018 and 2017 , respectively. 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, also accounted for under the percentage of completion method totaled 0.2% and 2.6% of consolidated revenue from operations for the three months ended September 30, 2018 and 2017 , respectively, and totaled 2.6% and 1.7% for the nine months ended September 30, 2018 and 2017 , respectively.

For an approved change order which can be reliably estimated, the anticipated revenues and costs associated with the change order are added to the total contract value and total estimated costs of the project, respectively. When costs are incurred for a) an unapproved change order which is likely to be approved or b) an approved change order which cannot be reliably estimated, the total anticipated costs of the change order are added to both the total contract value and total estimated costs for the project. Once a change order becomes approved and reliably estimable any margin related to the change order is added to the total contract value of the project.

Provisions for losses on uncompleted contracts are made in the period in which such losses are determined to be probable and the amount can be reasonably estimated. The Company may incur costs subject to change orders, whether approved or unapproved by the customer, and/or claims related to certain contracts. Management determines the probability that such costs will be recovered based upon engineering studies and legal opinions, past practices with the customer, specific discussions, correspondence or preliminary negotiations with the customer.

As of September 30, 2018 and 2017 , the Company had revenue related to unapproved change orders which totaled approximately $60,039 and $20,530 , respectively. The Company actively engages in substantive meetings with its customers to complete the final approval process, and generally expects these processes to be completed within a year. The amounts ultimately realized upon final acceptance by its customers could be higher or lower than such estimated amounts.

Classification of Construction Contract-Related Assets and Liabilities

Contract costs include all direct subcontract, material, and labor costs, and those indirect costs related to contract

performance, such as indirect labor, supplies, tools, insurance, repairs, maintenance, communications, and use of Company-owned equipment. Contract revenues are earned and matched with related costs as incurred.

Costs and estimated earnings in excess of billings on uncompleted contracts are presented as a current asset in the accompanying consolidated balance sheets, and billings in excess of costs and estimated earnings on uncompleted contracts are presented as a current liability in the accompanying consolidated balance sheets. The Company’s contracts vary in duration, with the duration of some larger contracts exceeding one year. Consistent with industry practices, the Company includes the amounts realizable and payable under contracts, which may extend beyond one year, in current assets and current liabilities. These balances are generally settled within one year.

New Accounting Pronouncements

The effective dates shown in the following pronouncements are based on the Company's current status as an "Emerging Growth Company".

In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance on the recognition of revenue from contracts with customers. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration which the company expects to receive in exchange for those goods or services. To achieve this core principle, the guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. The guidance addresses several areas including transfer of control, contracts with multiple performance obligations, and costs to obtain and fulfill contracts. The guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued additional guidance deferring the effective date for one year while allowing entities the option to adopt one year early. For public companies, the guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that annual reporting period. For as long as we remain an “emerging growth company” the guidance will be effective for our fiscal year 2019 annual financial statements and for interim periods beginning in fiscal year 2020. The Company continues to evaluate the impact the adoption of this new standard will have on its consolidated financial statements. Under the guidance there are two acceptable adoption methods: (i) full retrospective adoption to each prior reporting period presented with the option to elect certain practical expedients; or (ii) modified retrospective adoption with the cumulative effect of initially applying the guidance recognized at the date of initial application and providing certain additional disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which is effective for annual reporting periods beginning after December 15, 2018. Under ASU 2016-02, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: 1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and 2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 required entities to adopt the new leases standard using a modified retrospective method and initially apply the related guidance at the beginning of the earliest period presented in the financial statements. During July 2018, the FASB issued ASU 2018-11, which allows for an additional and optional transition method under which an entity would record a cumulative-effect adjustment at the beginning of the period of adoption. See Note 10 - Commitments and Contingencies for additional information about our leases. For as long

as we remain an "Emerging Growth Company" the new guidance will be effective for our fiscal year 2020 annual financial statements and for the interim statements beginning in fiscal year 2020.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which simplifies several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of related amounts within the statement of cash flows. Early adoption is permitted for any interim or annual period. This ASU, which the Company adopted early as of January 1, 2018, did not have a material effect on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments . ASU 2016-15 eliminates the diversity in practice related to the classification of certain cash receipts and payments for debt prepayment or extinguishment costs, the maturing of a zero-coupon bond, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, distributions from certain equity method investees and beneficial interests obtained in a financial asset securitization. ASU 2016-15 designates the appropriate cash flow classification, including requirements to allocate certain components of these cash receipts and payments among operating, investing and financing activities. Early adoption is permitted for any interim or annual period. This ASU, which the Company adopted early as of January 1, 2018, did not have a material effect on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other, Simplifying the Accounting for Goodwill Impairment . ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. This new guidance will be applied prospectively, and is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for any interim or annual period. This ASU, which the Company adopted early as of January 1, 2018, did not have a material effect on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business , which amends the current definition of a business. Under ASU 2017-01, to be considered a business, an acquisition would have to include an input and a substantive process that together significantly contributes to the ability to create outputs. ASU 2017-01 further states that when substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. The new guidance also narrows the definition of the term "outputs" to be consistent with how it is described in Topic 606, Revenue from Contracts with Customers . The changes to the definition of a business will likely result in more acquisitions being accounted for as asset acquisitions. Early adoption is permitted for any interim or annual period. This ASU, which the Company adopted early as of January 1, 2018, did not have a material effect on the Company’s consolidated financial statements.

Management has evaluated other recently issued accounting pronouncements and does not believe that they will have a significant impact on the financial statements and related disclosures.

Note 3. Merger and Acquisition

Merger and Recapitalization

The Merger, as described in Note 1, has been accounted for as a reverse recapitalization in accordance with U.S. GAAP. As such, IEA Services is treated as the continuing company and M III is treated as the ‘‘acquired’’ company for financial reporting purposes. This determination was primarily based on IEA Services’ operations comprising substantially all of the ongoing operations of the post-combination company, M III directors not constituting a majority of the Board of Directors of the post-combination company, IEA Services’ senior management comprising substantially all of the senior management of the post-combination company and the Seller holding a 48.3% voting interest in the Company, while no single M III shareholder holds more than a 20% voting interest. Accordingly, for accounting purposes, the Merger is treated as the equivalent of IEA Services issuing stock for the net assets of M III, accompanied by a recapitalization. The net assets of M III are stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Merger are the historical operations of IEA Services.

The amount of merger consideration paid at the Closing Date to IEA (the “Merger Consideration”) was $81.4 million in cash, and 10,428,500 shares of Common Stock and 34,965 shares of Series A Preferred Stock with an aggregate stated value of $126.3 million at the Closing Date. Immediately following the Closing, Seller owned approximately 48.3% of the Company’s common stock and other stockholders owned approximately 51.7% of the Company’s outstanding common stock.

The Merger Consideration was subject to adjustment based on final determinations of IEA Services’ closing date working capital and indebtedness, which determination was finalized approximately 45 days after the Closing Date with minimal impact to the Merger Consideration as calculated on the Closing Date of the Merger.

Pursuant to the Merger Agreement, the Company is required to issue to the Seller up to an additional 9,000,000 common shares in the aggregate based upon satisfaction of EBITDA targets for 2018 and 2019. See Note 8 to these Notes to the Condensed Consolidated Financial Statements.

The Company's Profits Interest Unit Incentive Plan (the "Plan") was terminated as a part of the Merger.

Acquisition

On September 25, 2018 (the acquisition date), we acquired CCS, a provider of environmental and industrial engineering services, for $106.6 million in cash. The acquisition is being accounted for as a business combination in accordance with ASC 805 Business Combinations .

The wholly-owned subsidiaries of CCS, Saiia and the ACC Companies, generally enter into long-term contracts with both government and non-government customers to provide engineering, procurement and construction services for environmental, heavy-civil and mining projects. We believe our acquisition of Saiia and the ACC Companies will provide IEA with a strong and established presence in the environmental and industrial engineering markets, enhanced civil construction capabilities and an expanded domestic geographic footprint.

The following table summarizes the provisional amounts recognized for assets acquired and liabilities assumed as of the acquisition date at fair value. The estimated values are not yet finalized (see below) and are subject to potentially significant changes. We will finalize the amounts recognized as we obtain the information necessary to complete the analysis. We expect to finalize these amounts as soon as possible but no later than one year from the acquisition date.



Preliminary identifiable assets acquired and liabilities assumed (in thousands)
Cash	$	—
Accounts Receivable	58,041
Costs and estimated earnings in excess of billings on uncompleted contracts	9,512
Other current assets	1,813
Property, plant and equipment	65,033
Intangible assets:
Customer relationships	21,000
Backlog	5,250
Tradename	8,750
Deferred income taxes	(1,076		)
Other non-current assets	964
Accounts payable and accrued liabilities	(25,219		)
Billings in excess of costs and estimated earnings on uncompleted contracts	(13,694		)
Debt, net of cash acquired	(39,464		)
Capital lease obligations	(1,124		)
Other liabilities	(6,888		)
Total identifiable assets	82,898
Goodwill	23,681
Total purchase consideration	$	106,579

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

Specifically, the goodwill recorded as part of the acquisition of CCS is related to the expected specific synergies and other benefits that we believe will result from combining the operations of CSS with the operations of IEA. Goodwill is not amortized and goodwill related to the acquisition of CCS is related to our single reportable segment.

Impact of Acquisition:

The results of CCS have been included in the results of the Company's financial statements for the period September 25, 2018, the acquisition date, to September 30, 2018, CCS contributed revenue of $ 5.6 million and no impact on net income.

Acquisition related costs were $4.1 million and $4.8 million for the three and nine months ended September 30, 2018, respectively, related to the acquisition of CCS and are included in Selling, general and administrative expenses on the Condensed Consolidated Statements of Operations. Such costs primarily consisted of professional services and adviser fees.

The following table provides the supplemental unaudited pro forma total revenue and net income of the combined entity had the acquisition date of CCS been the first day of our fiscal 2017:



	Three months ended September 30,		Nine months ended September 30,
(in thousands)	2018	2017	2018	2017
Total revenue	361,008	264,817	724,236	546,091
Total net income	14,139	12,539	2,804	17,108
Basic and diluted earnings per share:
Basic earnings per share	0.63	0.58	0.08	0.79
Diluted earnings per share	0.41	0.58	0.08	0.79

The amounts in the supplemental pro forma results apply our accounting policies and reflect adjustments for transaction costs and additional depreciation and amortization that would have been charged assuming the same fair value adjustments to property and equipment and acquired intangibles had been applied on the first day of our fiscal 2017. Accordingly, these pro forma results have been prepared for comparative purposes only and are not intended to be indicative of results of operations that would have occurred had the acquisition actually occurred in the prior year period or indicative of the results of operations for any future period.

Note 4. Earnings per share

The Company calculates earnings per share in accordance with ASC 260 — Earnings per Share. Basic earnings per common share (“EPS”) applicable to common stockholders is computed by dividing earnings applicable to common stockholders by the weighted-average number of common shares.

Income (loss) available to common stockholders is computed by deducting the dividends accumulated for the period on cumulative preferred stock from net income. If there is a net loss, the amount of the loss is increased by those preferred dividends.

Diluted EPS assumes the dilutive effect of outstanding earn-out shares and the dilutive effect of the Series A cumulative convertible preferred stock, using the if-converted method. The if-converted method adds back preferred stock dividends to net income if dilutive.

Whether the Company has net income or net loss from operations determines whether potential issuances of Common Stock are included in the diluted EPS computation or whether they would be anti-dilutive. As a result, if there is a loss from operations, diluted EPS is computed in the same manner as basic EPS is computed. Similarly, if the Company has net income but its preferred dividend adjustment made in computing income available to common stockholders results in a net loss available to common stockholders, diluted EPS would be computed in the same manner as basic EPS.

The calculations of basic and diluted EPS, are as follows ($ in thousands):



	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2018		2017	2018		2017
Numerator:
Net income (loss)	5,736		9,155	(6,741	)	14,133
Convertible Preferred Share dividends	(524	)	—	(1,072	)	—
Numerator for basic earnings (loss) per share - income (loss) available to common stockholders	5,212		9,155	(7,813	)	14,133

Denominator:
Weighted average shares basic	21,577,650		21,577,650	21,577,650		21,577,650

Convertible earn-out shares (see Note 8)	9,000,000		—	—		—
Convertible preferred shares	3,522,438		—	—		—
Weighted average shares diluted	34,100,088		21,577,650	21,577,650		21,577,650

Anti-dilutive:
Convertible earn-out shares (see Note 8)	—		—	9,000,000		—
Convertible preferred shares	—		—	2,832,765		—

Basic EPS	0.24		0.42	(0.36	)	0.65
Diluted EPS	0.17		0.42	(0.36	)	0.65

The calculation of weighted average shares outstanding during the periods preceding a reverse recapitalization generally requires the Company to use the capital structure of the entity deemed to be the acquirer for accounting purposes to calculate earnings per share. However, as a limited liability company, IEA Services had no outstanding shares prior to the Merger. Therefore, the weighted average shares outstanding for all comparable prior periods preceding the Merger is based on the capital structure of the acquired company, as management believes that is the most useful measure.



	Shares outstanding
Company (f/k/a M III Acquisition Corp.) shares outstanding as of December 31, 2017	19,210,000
Redemption of shares by M III stockholders prior to the merger transaction	(7,967,165	)
Common shares issued pursuant to Advisor Commitment Agreements, net of forfeited sponsor founder shares	(93,685	)
Shares issued to Infrastructure and Energy Alternatives, LLC/Seller	10,428,500
IEA shares outstanding as of March 26, 2018	21,577,650

At the closing of the Merger, 34,965 shares of Series A Preferred Stock were issued to Seller with an initial stated value of $1,000 per share, for total consideration of $34,965,000 . Dividends on each share of Series A Preferred Stock shall accrue at a rate of 6% per annum during the period from the closing date until the 18 -month anniversary of the closing date and 10% per annum thereafter, with such dividends payable quarterly in cash. These shares are convertible to common shares under certain circumstances and have been included above in the dilutive calculation. As of September 30, 2018 , the Board declared $1,072 in dividends to Holders of Series A Preferred Stock.

Warrants to purchase 8,480,000 shares of common stock at $11.50 per share were outstanding at September 30, 2018 but are not included in the computation of diluted EPS because the warrants’ exercise price was greater than the average market price of the Common Stock during the period.

Stock Compensation

In March 2018, we adopted the 2018 IEA Omnibus Equity Incentive Plan (“Equity Plan”). On September 14, 2018 our Board of Directors granted 388,924 Restricted Stock Units (“Units”) and 741,614 Stock Option Awards ("Options") to executives and management under the Equity Plan. The grants were documented in RSU and Option Award Agreements, which provide for a vesting schedule and require continuing employment. The Units and Options are subject to earlier acceleration, termination, cancellation or forfeiture as provided in the underlying Award Agreement.

Under guidance of ASC Topic 718 “Compensation — Stock Compensation”, stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the stock-based award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the award).

The fair value of the Units was based on the closing market price of our common stock on the date of the grant. Stock compensation expense for the Units is being amortized using the straight-line method over the service period. We recognized $0.5 million in compensation expense for the each of the three months and nine months ended September 30, 2018.

Note 5. Accounts receivable, net of allowance

The following table provides details of accounts receivable, net of allowance as of the dates indicated (in thousands):



	September 30, 2018			December 31, 2017
Contract receivables	$	152,958		$	44,696
Contract retainage	45,588			16,501
Accounts receivable, gross	198,546			61,197
Less: allowance for doubtful accounts	(216		)	(216		)
Accounts receivable, net	$	198,330		$	60,981

Included in contract receivables as of September 30, 2018, is an unapproved change order of approximately $9.0 million for which the Company is pursuing settlement through dispute resolution.

Activity in the allowance for doubtful accounts for the periods indicated is as follows (in thousands):



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Allowance for doubtful accounts at beginning of period	$	216	$	135	$	216	$	135
Plus: (reduction in) provision for allowances	—		—		—		—
Less: write-offs, net of recoveries	—		—		—		—
Allowance for doubtful accounts at period end	$	216	$	135	$	216	$	135

Gross profit for the nine months ended September 30, 2018 , includes a dispute for approximately $5,600 , with a specific customer concerning change orders with respect to one specific project for the nine months ended 2018. The Company believes that the charge reflected in the disputed change orders are properly the obligation of the customer. Nonetheless, the Company elected to settle the dispute and absorb these costs in order to maintain a valuable customer relationship and in exchange for additional project work from that customer.

Note 6. Contracts in progress

Contracts in progress were as follows as of the dates indicated (in thousands):



	September 30, 2018			December 31, 2017
Costs on contracts in progress	$	1,432,367		$	861,050
Estimated earnings on contracts in progress	174,334			131,997
Revenue on contracts in progress	1,606,701			993,047
Less: billings on contracts in progress	(1,573,535		)	(981,832		)
Net underbillings	$	33,166		$	11,215

The above amounts have been included in the accompanying Consolidated Balance Sheets under the following captions (in thousands):



	September 30, 2018			December 31, 2017
Costs and estimated earnings in excess of billings on uncompleted contracts	$	74,155		$	18,613
Billings in excess of costs and earnings on uncompleted contracts	(40,989		)	(7,398		)
Net underbillings	$	33,166		$	11,215

The Company recognizes a contract asset within costs and estimated earnings in excess of billings on uncompleted contracts in the consolidated balance sheet for revenue earned related to unapproved change orders that are probable of recovery. The Company actively engages in substantive meetings with its customers to complete the final approval process, and generally expects these processes to be completed within a year. The amounts ultimately realized upon final acceptance by its customers could be higher or lower than such estimated amounts. The table below shows the contract asset amounts (net of any allowance) related to unapproved change orders (in thousands):



	September 30, 2018		December 31, 2017
Gross amount of unresolved change orders and claims	$	60,039	$	33,479
Valuation allowance	—		—
Net amount of unresolved change orders and claims	$	60,039	$	33,479

Note 7. Property, plant and equipment, net

Property, plant and equipment, net consisted of the following (in thousands):



	September 30, 2018			December 31, 2017
Buildings and leasehold improvements	$	1,768		$	416
Land	860			—
Construction equipment	120,627			46,404
Office equipment, furniture and fixtures	1,863			1,451
Vehicles	2,293			404
	127,411			48,675
Accumulated depreciation	(23,351		)	(17,770		)
Property, plant and equipment, net	$	104,060		$	30,905

Depreciation expense of property, plant and equipment was $2,471 and $1,355 for the three month period ended September 30, 2018 and 2017 , respectively, and was $6,388 and $3,444 for the nine months ended September 30, 2018 and 2017 , respectively.

Note 8. Fair value of financial instruments

The Company applies ASC 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability, and are to be developed based on the best information available in the circumstances.

The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below:

Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities.

The following table sets forth information regarding the Company's assets measured at fair value on a recurring basis (in thousands):



		Fair Value Measurements at Reporting Date
	Amount recorded on balance sheet	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
Liabilities as of September 30, 2018
Contingent consideration	69,373	—	—	69,373

The following is a reconciliation of the beginning and ending balances for the periods indicated of recurring fair value measurements using Level 3 inputs (in thousands):



Beginning Balance, December 31, 2017	$	—
Contingent consideration issued during merger	69,373
Ending Balance, September 30, 2018	69,373

Contingent Consideration

Pursuant to the Merger Agreement, the Company shall issue to the Seller up to an additional 9,000,000 common shares in the aggregate, which shall be fully earned if the final 2018 and 2019 adjusted EBITDA targets are achieved. The Company recorded the contingent consideration at fair value as a liability by using a Monte Carlo Simulation with inputs of a risk rate premium, a peer group EBITDA volatility and a stock price volatility. The calculation derived a fair value of the liability based on 9,000,000 common shares. There have been no significant changes to inputs for the three months ended September 30, 2018 , and therefore no adjustment was recorded.

Other financial instruments of the Company not listed in the table consist of cash and cash equivalents, accounts receivable, accounts payable and other current liabilities that approximate their fair values. Additionally, management believes that the outstanding recorded balance on the line of credit and long-term debt, further discussed in Note 9, approximates fair value due to their floating interest rates.

Note 9. Debt

Debt consists of the following obligations as of:



	September 30, 2018		December 31, 2017

Line of credit - short term	—		33,674
Line of credit - long term	30,500		—
Term loan - short term	4,416		—
Term loan - long term	200,644		—
Total debt	235,560		33,674
Less - Current portion	(4,416	)	(33,674	)
Less - Debt issuance costs	(10,531	)	—
Long-term debt	220,613		—

Old Credit Facility

In conjunction with the completion of the Merger, all amounts outstanding under the Company's then existing credit facility were repaid and the agreement was terminated. The amount of $33.7 million was recorded as line of credit - short term on the Consolidated Balance Sheet as of December 31, 2017 .

Merger Credit Facility

In conjunction with the completion of the Merger, IEA Services refinanced its prior credit facility with a new credit facility which provided for aggregate revolving borrowings of up to $50.0 million and a $50.0 million delayed-draw term loan facility, each maturing in March 2021. All amounts outstanding under this facility were repaid and the agreement was terminated upon completion of the acquisition of CCS and a $1.8 million loss on extinguishment was realized primarily due to the write-off of deferred debt issuance costs.

Acquisition Credit Facility

Concurrently with the acquisition of CCS, IEA Services entered into a $325.0 million senior secured credit facility that included the following:

•

$200.0 million senior secured first lien term loan facility (the “ Initial Term Loan Facility”) with a maturity date of September 25, 2024 . The Initial Term Loan Facility was drawn in full on the closing date of the acquisition to pay the acquisition consideration, pay transaction costs and repay borrowings under IEA’s previous credit facility and certain indebtedness of Saiia and the ACC Companies.


•	$75.0 million delayed draw term loan facility with a maturity date of September 25, 2024 which is available for a period of three months following the closing date to finance a specified acquisition, subject to meeting certain conditions, including compliance with a pro forma first lien leverage ratio (the “Delayed Draw Term Loan Facility”).

•

$50.0 million asset-based revolving line of credit (the “ABL Facility”) with a maturity date of September 25, 2023 . Availability is subject to customary borrowing base calculations. As of September 30, 2018, the Company had $30.5 million outstanding on the ABL Facility. See Note 14. Subsequent events in these Notes to the Condensed Consolidated Financial Statements for information regarding the amendment of the Acquisition Credit Facility.

Interest on the Initial Term Loan Facility and Delayed Draw Term Loan Facility accrues at an interest rate of (x) LIBOR plus a margin of 5.00% or 5.25% or (y) an alternate base rate plus a margin of 4.00% or 4.25% . Interest on the ABL Facility accrues at an interest rate of (x) LIBOR plus a margin of 4.00% or 4.25% or (y) an alternate base rate plus a margin of

3.00% or 3.25% . The applicable margin for all facilities is determined based on a pro forma first lien leverage ratio. The weighted average interest rate on our debt as of September 30, 2018 and December 31, 2017 , was 7.46% and 4.50% , respectively.

The Initial Term Loan Facility and Delayed Term Loan Facility are subject to quarterly amortization of principal, commencing on the last day of the first fiscal quarter ending after such draw, in an amount equal to 0.25% of the aggregate principal amount of such loans.

IEA capitalized $10.5 million of debt issuance costs which were incurred to obtain the new financing.

On November 2, 2018, the Company announced that its indirect, a wholly owned, indirect subsidiary IEA Energy Services, completed its previously announced acquisition (the “Acquisition”) of William Charles Construction Group, including Ragnar Benson (“William Charles”), pursuant to the terms of the Equity Purchase Agreement, dated October 12, 2018 (the “Agreement”), by and among IEA, William Charles and the owners thereof.

At closing of the Acquisition, the Company entered into an Amended and Restated Credit Agreement, dated November 2, 2018, (the “A&R Credit Agreement”), which amends and restates the Credit Agreement dated September 25, 2018. The A&R Credit Agreement provides for an incremental term loan facility of $25.0 million . On the closing date, $100.0 million was drawn under the delayed draw term loan facility, which included the incremental term loan facility to refinance existing indebtedness, to pay a portion of the Acquisition consideration, to pay transaction expenses and for working capital and other general corporate purposes.

The A&R Credit Agreement provides that borrowings under the Credit Facilities will bear interest at a fluctuating rate equal to, at IEA’s option, LIBOR or the applicable base rate plus a margin calculated as described in the Credit Agreement, which margin is equal to 625 basis points. The A&R Credit Agreement provides for annual repayments of 10% of the outstanding term loan borrowings and an additional annual payment based equal to 75% of excess cash flow (as defined in the A&R Credit Agreement) beginning with fiscal 2019, with the percentage of excess cash flow subject to reduction based upon the Company’s consolidated leverage ratio.

Debt Covenants

Under the A&R Credit Agreement, the financial covenant to which the credit parties are subject is amended to provide that the First Lien Net Leverage Ratio (as defined therein) may not exceed (i) prior to the fiscal quarter ending December 31, 2020, 3.50 :1.0 and (ii) from and after the fiscal quarter ending December 31, 2020, 2.25 :1.0. The A&R Credit Agreement also provided for certain amendments to the Company’s affirmative and negative covenants.

Contractual Maturities

Contractual maturities of the Company's debt and capital lease obligations as of September 30, 2018 (in thousands):



2018	$	3,991
2019	15,639
2020	14,535
2021	8,437
2022	3,718
Thereafter	222,026
Total contractual obligations ⁽¹⁾⁽²⁾	$	268,346

⁽¹⁾ The total contractual obligations contains interest payments related to capital lease obligations.

⁽²⁾ Excludes the additional debt assumed as a subsequent event to finance the acquisition of William Charles. See discussion above.

Letters of Credit and Surety Bonds

earnings. As of September 30, 2018 , and December 31, 2017 , the Company was contingently liable under letters of credit issued under its revolving credit facility or its old credit facility, respectively, in the amount of $6,179 and $5,934 , respectively, related to projects. In addition, as of September 30, 2018 and December 31, 2017 , the Company had outstanding surety bonds on projects of $1,085,196 and $535,529 , respectively.

Note 10. Commitments and contingencies

Capital Leases

The Company has obligations, exclusive of associated interest, under various capital leases for equipment totaling $29,563 and $20,590 at September 30, 2018 and December 31, 2017 , respectively. Gross property under this capitalized lease agreement at September 30, 2018 and December 31, 2017 , totaled $40,092 and $27,005 , less accumulated depreciation of $ 7,798 and $2,817 , respectively, for net balances of $ 32,294 and $24,188 , respectively. Depreciation of assets held under the capital leases is included in cost of revenue on the Consolidated Statements of Operations.

Operating Leases

In the ordinary course of business, the Company enters into non-cancelable operating leases for certain of its facility, vehicle and equipment needs, including related party leases. See Note 13 - Related Party Transactions. Rent and related expense for operating leases that have non-cancelable terms totaled approximately $512 and $273 for the three months ended September 30, 2018 and 2017 , respectively and $1,501 and $1,080 for the nine months ended September 30, 2018 and 2017 , respectively.

Deferred Compensation

The Company has two deferred compensation plans. The first plan is a supplemental executive retirement plan established in 1993 that covers four specific employees or former employees, whose deferred compensation is determined by the number of service years. Payment of the benefits is to be made for 20 years after employment ends. Two former employees are currently receiving benefits, and two participants are still employees of the Company. The present value of the liability is estimated using the early retirement method. Of the two current employees, one has reached the full benefit level and the other will reach the full benefit level in 2018. Annual payments under this plan for 2018 will be $93 . Maximum aggregate payments per year if all participants were retired would be $255 . As of September 30, 2018 and December 31, 2017 , the Company has a long-term liability of $ 3,163 and $ 3,356 , respectively, for the supplemental executive retirement plan.

The Company offers a non-qualified deferred compensation plan which is made up of an executive excess plan and an incentive bonus plan. This plan was designed and implemented to enhance employee savings and retirement accumulation on a tax-advantaged basis, beyond the limits of traditional qualified retirement plans. This plan allows employees to: (1) defer annual compensation from multiple sources; (2) create wealth through tax-deferred investments; (3) save and invest on a pretax basis to meet accumulation and retirement planning needs; and (4) utilize a diverse choice of investment options to maximize returns. Executive awards are expensed when vested. Project Management Incentive Payments and incentive payments are expensed when awarded as they are earned through the course of the performance of the project to which they are related. Other payments are expensed when vested as they are considered to be earned by retention. Unrecognized compensation expense for the non-qualified deferred compensation plan at September 30, 2018 and September 30, 2017 , was $ 1,469 and $ 1,442 , respectively. As of September 30, 2018 , and December 31, 2017 , the Company had a long-term liability of $ 2,883 and $ 1,674 , respectively, for deferred compensation to certain current and former employees.

Note 11. Concentrations

The Company had the following approximate revenue and accounts receivable concentrations, net of allowances, for the periods ended:



	Revenue %								Accounts Receivable %
	Three Months Ended				Nine Months Ended				Accounts Receivable %
	September 30,				September 30,				September 30, 2018		December 31, 2017
	2018		2017		2018		2017		September 30, 2018		December 31, 2017

Interstate Power and Light Company	24.1	%	*		22.6	%	*		17.2	%	*
Trishe Wind Ohio, LLC	*		*		*		*		*		17.0	%
Thunder Ranch Wind Project, LLC	*		24.0	%	*		23.7	%	*		15.0	%
Twin Forks Wind Farm, LLC	*		10.4	%	*		13.8	%	*		*
Bruenning's Breeze Wind Farm, LLC	*		*		*		12.1	%	*		*
EDF Renewable Development, Inc.	*		23.0	%	*		12.6	%	*		11.0	%
Hilltopper Wind Project, LLC	16.7	%	*		12.1	%	*		13.1	%	*
Turtle Creek Wind Farm, LLC	11.7	%	*		*		*		*		*

* Amount was not above 10% threshold

Note 12. Income taxes

The Company’s statutory federal tax rate is 21.00% and 34.00% for the periods ended September 30, 2018 and 2017 , respectively. State tax rates for the same period vary among states and range from approximately 0.75% to 12.00% . A small number of states do not impose an income tax.

The effective tax rates for the three month period ended September 30, 2018 and 2017 were 13.17% and 36.90% , respectively. The effective tax rates for the nine month period ended September 30, 2018 and 2017 were 17.87% and 36.36% , respectively. The difference between the Company’s effective tax rate and the federal statutory rate for the three and nine months ended September 30, 2018, primarily results from current state taxes, offset by a portion of non-deductible transaction costs. There were no changes in uncertain tax positions during the periods ended September 30, 2018 and 2017 .

Note 13. Related party transactions

Credit Support Fees

The Company had debt facilities and other obligations under surety bonds and stand-by letters of credit under the old credit facility that were guaranteed by Oaktree. The Company paid a fee for those guarantees based on the total amount outstanding. For the three months ended September 30, 2018 and 2017 , the Company expense related to these fees was $ 0 and $ 359 , respectively. For the nine months ended September 30, 2018 and 2017 , the Company expense related to these fees was $231 and $1,214 , respectively.

Clinton Lease Agreement

On October 20, 2017, the Company enacted a plan to restructure the ownership of a building and land which resulted in the transfer of ownership of such building and land from its consolidated subsidiary, WCI, to Clinton RE Holdings, LLC (Cayman) (“Cayman Holdings”), a directly owned subsidiary of the Seller. The lease has been classified as an operating lease with monthly payments through 2038. The Company's rent expense related to the lease during the three and nine months ended September 30, 2018 was $153 and $459 , respectively.

Note 14. Subsequent event

On November 2, 2018, IEA Energy Services, an indirect wholly owned subsidiary of the Company, completed its previously announced acquisition of William Charles Construction Group, including Ragnar Benson, pursuant to the terms of the Equity Purchase Agreement, dated October 12, 2018, by and among IEA, William Charles and the owners thereof.

The aggregate amount of the consideration payable pursuant to the Equity Purchase Agreement was approximately $ 85.6 million of cash less $ 13.4 million of debt assumed and 477,621 shares of common stock of the Company. IEA funded the cash portion of the acquisition consideration and certain costs associated with the acquisition through borrowings under the Incremental Term Loan.

The initial accounting for the business combination was not complete at the time the financial statements were issued due to the timing of the acquisition and the filing of this Quarterly Report on Form 10-Q. As a result, disclosures required under ASC 805-10-50, Business Combinations, are not possible at this time.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our MD&A is provided in addition to the accompanying Condensed Consolidated Financial Statements and footnotes to assist readers in understanding IEA’s results of operations, financial condition and cash flows. Statements in this Quarterly Report on Form 10-Q that are not historical statements, are forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are based on information available as of the date hereof and our management's current expectations forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, our ability to maintain the listing of our common stock on Nasdaq; consumer demand; our ability to grow and manage growth profitably; our ability to identify, finance and integrate acquired businesses; the possibility that we may be adversely affected by economic, business, and/or competitive factors; market conditions, technological developments, regulatory changes or other governmental policy uncertainty that affects us or our customers; our ability to manage projects effectively and in accordance with management estimates, as well as the ability to accurately estimate the costs associated with our fixed price and other contracts, including any material changes in estimates for completion of projects; the effect on demand for our services and changes in the amount of capital expenditures by customers due to, among other things, economic conditions, commodity price fluctuations, the availability and cost of financing, and customer consolidation; the timing and extent of fluctuations in geographic, weather and operational factors affecting our customers, projects and the industries in which we operate; the ability of customers to terminate or reduce the amount of work, or in some cases, the prices paid for services, on short or no notice; customer disputes related to the performance of services; disputes with, or failures of, subcontractors to deliver agreed-upon supplies or services in a timely fashion; our ability to replace non-recurring projects with new projects; the impact of U.S. federal, local, state, foreign or tax legislation and other regulations affecting the renewable energy industry and related projects and expenditures; the effect of state and federal regulatory initiatives, including costs of compliance with existing and future safety and environmental requirements; fluctuations in maintenance, materials, labor and other costs; and our beliefs regarding the state of the renewable wind energy market generally. For a description of some of the risks and uncertainties which could cause actual results to differ from our forward-looking statements please refer to this and our other filings with the U.S. Securities & Exchange Commission, and in particular the discussions regarding risks therein. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Throughout this section, unless otherwise noted “IEA,” “Company,” “we,” “us,” and “our” refer to Infrastructure and Energy Alternatives, Inc. and its consolidated subsidiaries. Certain amounts in this section may not foot due to rounding.

“Emerging Growth Company” Status

The Condensed Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect the financial position, results of operations, and cash flows of IEA. IEA qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). For as long as a company is deemed to be an “emerging growth company,” it may take advantage of specified reduced reporting and other regulatory requirements that are generally unavailable to other public companies. The JOBS Act also provides that an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period. Our

financial statements may therefore not be comparable to those of companies that have adopted such new or revised accounting

standards. See Note 2 of the Notes to Condensed Consolidated Financial Statements for more information on “emerging growth company” reduced reporting requirements and when we would cease to be an “emerging growth company.” We continue to monitor our status as an “emerging growth company” and are currently preparing, and expect to be ready, to comply with the additional reporting and regulatory requirements that will be applicable to us when we cease to qualify as an “emerging growth company.”

Overview

We are a leading U.S. provider of infrastructure solutions for the renewable energy, traditional power and civil infrastructure industries. We specialize in providing complete engineering, procurement and construction (‘‘EPC’’) services throughout the U.S. The services we provide include the design, site development, construction, installation and restoration of infrastructure. We are one of three Tier 1 providers in the wind energy industry and have completed more than 200 wind and

solar projects in 35 states. Although we have historically focused on the wind industry, our recent acquisitions have expanded our EPC capabilities in the areas of renewables, environmental remediation and industrial maintenance, heavy civil and rail, creating a diverse national platform of specialty EPC capabilities.

We believe that continuing demand for renewable energy production will help to drive organic growth over the coming years. Industry experts, including the U.S. Department of Energy, are predicting significant growth in renewable energy production capacity over the coming decade. We believe this growth will be driven by macroeconomic factors (including increasing demand for renewable energy from corporations and consumers), broad upgrades to existing transmission infrastructure, increasing proliferation of smart grid technology and the maturation of technologies and services within the renewable energy industry, including increased turbine and photovoltaic efficiencies, a coordinated global supply chain and improved equipment maintenance and reliability. We believe that we have positioned ourselves to expand our market share in renewable energy production (particularly in utility-scale solar power) and have developed in-house capabilities that will provide us with an opportunity to enhance our margins by expanding our self-perform capabilities and, as a result, reduce our use of subcontractors.

Diversification

Our long-term diversification and growth strategy has been to broaden our solar, power generation, and civil infrastructure capabilities and geographic presence and to expand the services we provide within our existing business areas. We took important steps in the last few months by deepening our capabilities and entering new sectors that are synergistic with our existing capabilities and product offerings.

On November 2, 2018, we acquired William Charles Construction Group, including Ragnar Benson ("William Charles"), a leader in engineering and construction solutions for the rail civil infrastructure and heavy civil industries. We believe our acquisition of William Charles will provide IEA with a market leading position in the attractive rail civil infrastructure market and continue to bolster our further growth in the heavy civil and construction footprint across the Midwest and Southwest.

On September 25, 2018 , we acquired CCS, which we believe is a leading provider of environmental and industrial engineering services. The wholly-owned subsidiaries of CCS, Saiia and the ACC Companies generally enter into long-term contracts with both government and non-government customers to provide engineering, procurement and construction services for environmental, heavy-civil and mining projects. We believe our acquisition of Saiia and the ACC Companies will provide IEA with a strong and established presence in the environmental and industrial engineering markets, enhanced civil construction capabilities and an expanded domestic footprint in less-season Southeast, West and Southwest markets.

We believe that through the Merger and the acquisitions above that the Company has transformed its business into a diverse national platform of specialty EPC capabilities with market leadership in niche markets, including renewables, environmental remediation and industrial maintenance services, heavy civil and rail.

Business Combination with M III Acquisition Corp.

On March 26, 2018, we consummated a merger (the “Merger”) pursuant to an Agreement and Plan of Merger, dated November 3, 2017, by and among the Company, IEA Energy Services LLC, a Delaware limited liability company, Wind Merger Sub I, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company, Wind Merger Sub II, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company, Infrastructure and Energy Alternatives, LLC, a Delaware limited liability company, and the other parties thereto, which provided for, among other things, the merger of Merger Sub I with and into IEA Services with IEA Services surviving such merger and, immediately thereafter, merging with and into Merger Sub II with Merger Sub II surviving such merger as an indirect, wholly-owned subsidiary of the Company. Following the Merger, M III Acquisition Corp. changed its name to Infrastructure and Energy Services, Inc. and its common stock and warrants began trading on The Nasdaq Stock Market under the symbols “IEA” and IEAWW”. See Note 3 of the Notes to Condensed Consolidated Financial Statements for more information on the Merger.

Economic, Industry and Market Factors

We closely monitor the effects that changes in economic and market conditions may have on our customers. General economic and market conditions can negatively affect demand for our customers’ products and services, which can lead to reductions in our customers’ capital and maintenance budgets in certain end-markets. In the face of increased pricing pressure, we strive to maintain our profit margins through productivity improvements and cost reduction programs. Other market, regulatory and industry factors could also affect demand for our services, such as:


•	changes to our customers’ capital spending plans;


•	mergers and acquisitions among the customers we serve;


•	access to capital for customers in the industries we serve;


•	new or changing regulatory requirements or other governmental policy uncertainty;


•	economic, market or political developments; and


•	changes in technology, tax and other incentives.

While we actively monitor economic, industry and market factors that could affect our business, we cannot predict the effect that changes in such factors may have on our future results of operations, liquidity and cash flows, and we may be unable to fully mitigate, or benefit from, such changes.

Impact of Seasonality and Cyclical Nature of Business

Our revenue and results of operations are subject to seasonal and other variations. These variations are influenced by weather, customer spending patterns, bidding seasons, fiscal year-ends, project schedules and timing, in particular, for large non-recurring projects and holidays. Typically, our revenue 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.

Our industry is also highly cyclical. 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.

Backlog

For companies in the construction industry, backlog can be an indicator of future revenue streams.

Estimated backlog represents the amount of revenue we expect to realize through 2020 from the uncompleted portions of existing construction contracts, including new contracts under which work has not begun and awarded contracts for which the definitive project documentation is being prepared, as well as revenue from change orders and renewal options. Estimated backlog for work under fixed price contracts and cost-reimbursable contracts is determined based on historical trends, anticipated seasonal impacts, experience from similar projects and estimates of customer demand based on communications with our customers. Cost-reimbursable contracts are included in backlog based on the estimated total contract price upon completion. We expect to realize approximately 18.1% of our current estimated backlog during 2018 , and 81.9% during 2019 and 2020.

As of September 30, 2018 , our total backlog was approximately $1.3 billion , representing an increase of $0.3 billion , or 29.4% , from $1.0 billion as of September 30, 2017 . Based on historical trends in the Company’s backlog, we believe awarded contracts to be firm and that the revenue for such contracts will be recognized over the life of the project. Timing of revenue for construction and installation projects included in our backlog can be subject to change as a result of customer delays, regulatory factors and/or other project-related factors. These changes could cause estimated revenue to be

realized in periods later than originally expected, or not at all. In the past, we have occasionally experienced postponements, cancellations and reductions on construction projects, due to market volatility and regulatory factors. There can be no assurance as to our customers’ requirements or the accuracy of our estimates. As a result, our backlog as of any particular date is an uncertain indicator of future revenue and earnings.

Backlog is not a term recognized under U.S. GAAP, although it is a common measurement used in our industry. Our methodology for determining backlog may not be comparable to the methodologies used by others. See ‘‘ Risk Factors ’’ in our Current Report on Form 8-K filed with the SEC on March 29, 2018 , for a discussion of the risks associated with our backlog.

Understanding our Operating Results

Revenue

We provide engineering, building, installation, maintenance and upgrade services to our customers. We derive revenue from projects performed under fixed price contracts and other service agreements for specific projects or jobs requiring the construction and installation of an entire infrastructure system or specified units within an entire infrastructure system. We recognize a significant portion of our revenue based on the percentage-of-completion method. See ‘‘Critical Accounting Estimates—Revenue Recognition for Percentage-of-Completion Projects.’’

Cost of Revenue

Cost of revenue, consists principally of: salaries, wages and employee benefits; subcontracted services; equipment rentals and repairs; fuel and other equipment expenses, including allocated depreciation and amortization expense; material costs, parts and supplies; insurance; and facilities expenses. Project profit is calculated by subtracting a project’s cost of revenue, including project-related depreciation, from project revenue. Project profitability and corresponding project margins will be reduced if actual costs to complete a project exceed our estimates on fixed price and installation/ construction service agreements. Estimated losses on contracts are recognized immediately when estimated costs to complete a project exceed the remaining revenue to be received over the remainder of the contract. Various factors, some controllable and some not, can impact our margins on a quarterly or annual basis, including:

•

Seasonality and Geographical Factors . Seasonal patterns can have a significant impact on project margins. Generally, business is slower at the beginning of the year. Adverse or favorable weather conditions can impact project margins in a given period. For example, extended periods of rain or snowfall can negatively impact revenue and project margins as a result of reduced productivity from projects being delayed or temporarily halted. Conversely, in periods when weather remains dry and temperatures are accommodating, more work can be done, sometimes with less cost, which can favorably impact project margins. In addition, the mix of business conducted in different geographic areas can affect project margins due to the particular characteristics associated with the physical locations where the work is being performed, such as mountainous or rocky terrain versus open terrain. Site conditions, including unforeseen underground conditions, can also impact project margins.

•

Revenue Mix . The mix of revenues derived from the industries we serve and the types of services we provide within an industry will impact margins, as certain industries and services provide higher margin opportunities. Additionally, changes in our customers’ spending patterns in any of the industries we serve can cause an imbalance in supply and demand and, therefore, affect margins and mix of revenues by industry served.

•

Performance Risk . Overall project margins may fluctuate due to work volume, project pricing and job productivity. Job productivity can be impacted by quality of the work crew and equipment, availability of skilled labor, environmental or regulatory factors, customer decisions and crew productivity. Crew productivity can be influenced by weather conditions and job terrain, such as whether project work is in a right of way that is open or one that is obstructed (either by physical obstructions or legal encumbrances).


•	Subcontracted Resources . Our use of subcontracted resources in a given period is dependent upon activity levels and the amount and location of existing in-house resources and capacity. Project margins on subcontracted work can vary from project margins on self-perform work. As a result, changes in the mix of subcontracted resources versus self-perform work can impact our overall project margins.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist principally of compensation and benefit expenses, travel expenses and related costs for our finance, benefits and risk management, legal, facilities, information services and executive personnel. Selling, general and administrative expenses also include outside professional and accounting fees, expenses associated with information technology used in administration of the business, various forms of insurance, acquisition and transaction expenses.

Interest Expense, Net

Interest expense, net, consists of contractual interest expense on outstanding debt obligations, amortization of deferred financing costs and other interest expense, including interest expense related to financing arrangements, with all such expenses net of interest income.

Critical Accounting Estimates

This management’s discussion and analysis of our financial condition and results of operations is based upon IEA’s condensed consolidated financial statements included in Item 1, which have been prepared in accordance with U.S. 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 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 2—Summary of Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements, included in Item 1.

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 Percentage-of-Completion Projects

Revenue from fixed-price contracts provides for a fixed amount of revenue for the entire project, subject to certain additions for changed scope or specifications. We recognize revenue from these contracts using the percentage-of-completion method. Under this method, the percentage of revenue to be recognized for a given project is measured by the percentage of costs incurred to date on the contract to the total estimated costs for the contract.

The estimation process for revenue recognized under the percentage-of-completion method is based on the professional knowledge and experience of our project managers, engineers and financial professionals. Our management reviews the estimates of contract revenue and costs on an ongoing basis. Changes in job performance, job conditions and management’s assessment of expected settlements of disputes related to contract price adjustments are factors that influence estimates of total contract value and total costs to complete those contracts and, therefore, our profit recognition. Changes in these factors may result in revisions to costs and income, and their effects are recognized in the period in which the revisions are determined, which could materially affect our results of operations in the period in which such changes are recognized. Provisions for losses on uncompleted contracts are made in the period in which such losses are determined to be probable and the amount can be reasonably estimated. The substantial majority of fixed price contracts are completed within one year.

Business Strategy

•

Continue to develop strong relationships with our partners — We believe that we have strong, long-term relationships with each of our partners and have historically worked together with them to meet their needs. Historically, we have provided safe, reliable, and cost-efficient solutions for our partners. We remain focused on anticipating and continuing to assist our partners with their business strategies.

•

Continue to expand self-performing capabilities — We intend to continue to evaluate specific job functions within the construction process to complete in-house. These functions include, but are not limited to electrical, mechanical, concrete and foundation and service road services. We believe expansion of our in-house performance capabilities will allow the Company to retain margin, while better controlling safety and scheduling of projects.

•

Continue to build our solar and civil, industrial & power market share — We plan to expand the Company’s footprint in the solar and civil, industrial & power markets by leveraging our years of experience coupled with our ability to cross-sell these services with our wind customers. There is tremendous growth in these two markets and we believe that our reputation in the industry will allow us to capitalize on future opportunities.


•	Continue to evaluate strategic mergers and acquisitions — We are actively pursuing acquisition opportunities that would enhance the Company’s ability to diversify its revenue base or enhance the market share of relevant areas of our business.

Results of Operations

Three Months Ended September 30, 2018 and 2017

The following table reflects our consolidated results of operations in dollar and percentage of revenue terms for the periods indicated:



	Three Months Ended September 30,
(in thousands)	2018					2017

Revenue	$	279,279		100.0	%	$	177,830		100.0	%
Cost of revenue	252,271			90.3	%	153,526			86.3	%
Gross profit	27,008			9.7	%	24,304			13.7	%
Selling, general and administrative expenses	16,964			6.1	%	9,491			5.3	%
Income from operations	10,044			3.6	%	14,813			8.3	%
Interest expense, net	(1,579		)	(0.6	)%	(690		)	(0.4	)%
Other income (expense)	(1,859		)	(0.7	)%	386			0.2	%
Income from continuing operations before income taxes	6,606			2.4	%	14,509			8.2	%
Provision for income taxes	(870		)	(0.3	)%	(5,354		)	(3.0	)%
Net income	$	5,736		2.1	%	$	9,155		5.1	%

The following discussion and analysis of our results of operations should be read in conjunction with our condensed consolidated financial statements and the notes relating thereto, included in this report.

Revenue . Revenue increased 57.0% , or $101.4 million in the third quarter of 2018 , compared to the same period in 2017 . The increase in revenue is primarily due to the overall strength of the renewable energy project sector and, to a lesser extent a number of renewable energy project starts in the quarter that had been previously postponed due to uncertainty related to federal tax credits.

Cost of revenue. Cost of revenue increased 64.3% , or $98.7 million in the third quarter of 2018 , compared to the same period in 2017 , primarily due to the larger volume of business in the quarter.

Gross profit. Gross profit increased 11.1% , or $2.7 million in the third quarter of 2018 , compared to the same period in 2017 . The increase in gross profit was primarily driven by the higher revenues, partially offset by a larger increase in costs. As a percentage of revenue, gross profit declined and totaled 9.7% in the quarter, as compared to 13.7% in the prior-year period. The decrease in margin was primarily due to a higher number of projects in the early phase of construction (traditionally as projects near completion execution risks diminishes, resulting in higher margins). To a lesser extent, the decrease in margin also reflected early signs of labor and other cost inflation due to increasingly robust construction markets across the country during the third quarter.

Selling, general and administrative expenses. Selling, general and administrative expenses increased 78.7% , or $7.5 million in the third quarter of 2018 , compared to the same period in 2017 . Selling, general and administrative expenses were 6.1% of revenue in the third quarter of 2018 , compared to 5.3% in the same period in 2017 . The increase in selling, general and administrative expenses was primarily driven by $6.9 million of acquisition related expenses, coupled with stock compensation expense of $0.5 million.

Interest expense, net. Interest expense, net increased 128.8% , or $0.9 million in the third quarter of 2018 , compared to the same period in 2017 . This increase was primarily driven by the increased borrowings under our lines of credit and term loan in the second quarter of 2018.

Other income (expense). Other income decreased 581.6% , or $2.2 million in the third quarter of 2018 , compared to the same period in 2017 . The decrease in other income compared to the prior year period was primarily the result of a $1.8 million loss on the extinguishment of debt.

Provision for income taxes. Income tax expense decreased 83.8% , or $4.5 million to an expense of $0.9 million in the third quarter of 2018 compared to an expense of $5.4 million for the same period in 2017 . The effective tax rates for the period ended September 30, 2018 and 2017 were 13.17% and 36.90% , respectively. The lower effective tax rate is primarily attributable to tax law changes which reduced the federal statutory rate. The difference between the Company’s effective tax rate and the federal statutory rate primarily results from permanent adjustments and current state taxes. There were no changes in uncertain tax positions during the periods ended September 30, 2018 and 2017 .

Nine Months Ended September 30, 2018 and 2017

The following table reflects our consolidated results of operations in dollar and percentage of revenue terms for the periods indicated:



	Nine Months Ended September 30,
(in thousands)	2018					2017

Revenue	$	503,487		100.0	%	$	336,128		100.0	%
Cost of revenue	462,765			91.9	%	289,556			86.1	%
Gross profit	40,722			8.1	%	46,572			13.9	%
Selling, general and administrative expenses	43,122			8.6	%	23,953			7.1	%
Income (loss) from operations	(2,400		)	(0.5	)%	22,619			6.7	%
Interest expense, net	(3,960		)	(0.8	)%	(1,404		)	(0.4	)%
Other income (expense)	(1,848		)	(0.4	)%	1,046			0.3	%
Income (loss) from continuing operations before income taxes	(8,208		)	(1.6	)%	22,261			6.6	%
Benefit (provision) for income taxes	1,467			0.3	%	(8,128		)	(2.4	)%
Net income (loss)	$	(6,741	)	(1.3	)%	$	14,133		4.2	%

Revenue . Revenue increased 49.8% , or $167.4 million in the first nine months of 2018 , compared to the same period in 2017 .

The increase in revenue is primarily due to the overall strength of the renewable energy project sector and, to a lesser extent a number of renewable energy project starts in the quarter that had been previously postponed due to uncertainty related to federal tax credits.

Cost of revenue. Cost of revenue increased 59.8% , or $173.2 million in the first nine months of 2018 , compared to the same period in 2017 , primarily due to the larger volume of business in the quarter and, to a lesser extent, inefficiencies caused by work stoppages as a result of unusually severe weather conditions in certain portions of the Midwest and South West regions of the country.

Gross profit. Gross profit decreased 12.6% , or $5.9 million in the first nine months of 2018 , compared to the same period in 2017 . The decrease in 2018 gross profit was driven by an increase in cost of revenue as a percentage of revenue. The gross

profit margin decreased by 5.8%, primarily due to a higher number of projects in the early phase of construction (traditionally as projects near completion execution risks diminishes, resulting in higher margins) and work stoppages due to extreme weather described above. To a lesser extent, the decrease in margin also reflected early signs of labor and other cost inflation due to increasingly robust construction markets across the country during the second quarter. In addition, gross profit continued to be negatively impacted due to the previously disclosed customer dispute, both due to unbilled revenue and costs associated with the project, resulting in a negative impact of approximately $8.5 million for the nine months ended September 30, 2018.

Selling, general and administrative expenses. Selling, general and administrative expenses increased 80.0% , or $19.2 million in the first nine months of 2018 , compared to the same period in 2017 . Selling, general and administrative expenses were 8.6% of revenue in the first nine months of 2018 , compared to 7.1% in the same period in 2017 . The increase in selling, general and administrative expenses was primarily driven by transaction expenses of $8.5 million related to the Merger and $7.6 million of other acquisition costs.

Interest expense, net. Interest expense, net increased 182.1% , or $2.6 million in the first nine months of 2018 , compared to the same period in 2017 . This increase was primarily driven by the increased borrowings under our lines of credit and the term loan in 2018.

Other income (expense). Other income decreased 276.7% , or $2.9 million in the first nine months of 2018 , compared to the same period in 2017 . The decrease in other income compared to the prior year period was primarily the result of a $1.8 million loss on the extinguishment of debt in 2018, coupled with a decrease in the gain on sale of assets period over period.

Benefit (provision) for income taxes. Income tax expense decreased 118.0% , or $9.6 million from an expense of $8.1 million in the first nine months of 2017 compared to a benefit of $1.5 million in the same period in 2018 . The effective tax rates for the first nine months of 2018 and 2017 were 17.87% and 36.36% , respectively. The lower effective tax rate is primarily attributable to tax law changes which reduced the federal statutory rate. The difference between the Company’s effective tax rate and the federal statutory rate primarily results from permanent adjustments and current state taxes. There were no changes in uncertain tax positions during the periods ended September 30, 2018 and 2017 .

Liquidity and Capital Resources

Our primary sources of liquidity are cash flows from operations, our cash balances and availability under the new credit facility, as described below under “Acquisition Credit Facility”. Our primary liquidity needs are for working capital, strategic acquisitions, debt service and interest on our preferred stock, income taxes, capital expenditures, insurance collateral in the form of cash and letters of credit, and cost and equity investee funding requirements and debt service.

We anticipate that our existing cash balances, funds generated from operations and borrowings from the new credit facility will be sufficient to meet our cash requirements for at least the next twelve months.

Capital Expenditures

For the nine months ended September 30, 2018 , we incurred $12.1 million in equipment purchases under capital lease and an additional $2.4 million in cash purchases. We estimate that we will spend approximately two percent of revenue for capital expenditures for 2018 and 2019 . 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.

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. Again, 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.

Generally, we receive 5% to 10% cash payments from our customers upon the inception of the projects. Timing of billing milestones and project close-outs can contribute to changes in unbilled revenue. As of September 30, 2018 , substantially all of our costs in excess of billings and earnings will be billed to customers in the normal course of business within the next twelve months. Net accounts receivable balances, which consist of contract billings as well as costs and earnings in excess of billings and retainage, increased to $ 198.3 million as of September 30, 2018 from $ 61.0 million as of December 31, 2017 , due primarily to higher levels of revenue, timing of project activity, and collection of billings to customers.

Our billing terms are generally net 30 days, and some of our contracts allow our customers to retain a portion of the contract amount (generally, from 5% to 10%) until the job is completed. As part of our ongoing working capital management practices, we evaluate opportunities to improve our working capital cycle time through contractual provisions and certain financing arrangements. Our agreements with subcontractors often contain a ‘‘pay-if-paid’’ provision, whereby our payments to subcontractors are made only after we are paid by our customers.

Sources and Uses of Cash

Sources and uses of cash are summarized below:



	Nine Months Ended September 30,
(in thousands)	2018		2017

Net cash provided by operating activities	31,635		2,271
Net cash used in investing activities	(109,140	)	(3,524	)
Net cash provided by (used in) financing activities	108,239		(855	)

Operating Activities. Net cash provided by operating activities for the nine months ended September 30, 2018 was $ 31.6 million , as compared to $2.3 million over the same period in 2017 . The increase in net cash provided by operating activities reflects the timing of receipts from customers and payments to vendors in the ordinary course of business. The change is primarily attributable to $131.9 million less cash paid for accounts payable, coupled with $29.9 million less cash paid for billings in excess of costs and estimated earnings on uncompleted contracts, partially offset by $61.0 million less cash collected, $49.7 million less cash collected for costs and excess of estimated earnings on billings and a decrease in net income of $20.9 million .

Investing Activities. Net cash used in investing activities for the nine months ended September 30, 2018 was $109.1 million , as compared to $3.5 million over the same period in 2017 . The increase in net cash used by investing activities reflects the cash paid for the acquisition of CCS of $106.6 million .

Financing Activities. Net cash provided by financing activities for the nine months ended September 30, 2018 was $108.2 million , as compared to net cash used by financing activities of $0.9 million over the same period in 2017 . The change of $109.1 million is primarily attributable to net proceeds from debt of $138.9 million offset by a $25.8 million use of cash in connection with the Merger, coupled with an increase in capital lease payments of $3.4 million .

Old Credit Facility

In connection with the closing of the Merger in March 2018, all outstanding indebtedness under our old credit facility was repaid or refinanced using proceeds from the Merger credit facility described below and the old credit facility was terminated.

Merger Credit Facility - March 2018

In connection with the acquisition of CCS in September 2018, all outstanding indebtedness under our Merger credit facility that was entered into in March 2018, was repaid or refinanced using proceeds from the Acquisition credit facility described below and the Merger credit facility was terminated.

Acquisition Credit Facility - September 2018

At closing of the Acquisition, the Company entered into a Credit Agreement, dated September 25, 2018 (the “Credit Agreement”), by and among the Company, as a guarantor thereunder, IEA Intermediate Holdco, LLC (“Intermediate

Holdings”), as a guarantor thereunder, IEA, as borrower, certain subsidiaries of the Company, as guarantors thereunder, Jefferies Finance LLC, as administrative and collateral agent, KeyBank National Association (“KeyBank”), as revolving agent, and certain other parties party thereto as lenders thereunder (together with Jefferies and KeyBank and any other lenders from time to time party thereto, the “Lenders”) (the “Credit Agreement”). The Credit Agreement provides for a term loan facility of $200.0 million (the “Initial Term Loan Facility”), a revolving credit facility of $50.0 million (the “Revolving Credit Facility”) and a delayed-draw term loan facility of $75.0 million (the “Delayed Draw Facility”) (collectively, the Credit Facilities”). On the closing date, $200.0 million was drawn under the term loan and $20.5 under the revolving credit facility to refinance existing indebtedness, to pay a portion of the Acquisition consideration and to pay transaction expenses.

Obligations under the Credit Facilities are guaranteed by the Company and Intermediate Holdings and each existing and future, direct and indirect wholly-owned material domestic subsidiary of the Company (together with IEA, the “Credit Parties”), and are secured by all of the present and future assets of the Credit Parties, subject to customary carve-outs. Borrowings under the Credit Facilities will bear interest at a fluctuating rate equal to, at IEA’s option, LIBOR or the applicable base rate plus a margin calculated as described in the Credit Agreement. Amounts drawn under the Initial Term Loan Facility that are repaid may not be reborrowed. The Initial Term Loan Facility and the Delayed Draw Facility, if funded, will mature six years following the closing date. Revolving loans under the Revolving Credit Facility will mature five years following the closing date.

The Delayed Draw Facility was available from and after the closing date for a period of three months to finance the acquisition of William Charles, subject to the satisfaction of certain conditions to funding. The acquisition of William Charles closed on November 2, 2018, and the Company borrowed $75.0 million under the Delayed Draw Facility.

IEA may from time to time add one or more tranches of term loans to the credit facility (each an “Incremental Term Facility”) and/or increase the aggregate commitments under the Revolving Credit Facility (an “Incremental Revolving Facility” and collectively with each Incremental Term Facility, an “Incremental Facility”) with consent required only from those Lenders that participate in such Incremental Facility; provided that, among other things, (i) the aggregate principal amount of all Incremental Term Facilities may not exceed the sum of (x) the greater of $122.5 million and 100% of Consolidated EBITDA on a pro forma basis for the most recently completed measurement period, (y) certain voluntary prepayments and (z) an unlimited amount subject to meeting certain first lien net leverage ratios and (ii) the aggregate principal amount of all Incremental Revolving Facilities may not exceed $25.0 million. No existing lender shall be under any obligation to provide any commitment to an Incremental Facility, and any such decision whether to provide a commitment to an Incremental Facility shall be in such Lender’s sole and absolute discretion.

On November 2, 2018, IEA Energy Services, an indirect, wholly owned subsidiary of the Company, completed its previously announced acquisition (the “Acquisition”) of William Charles Construction Group, including Ragnar Benson (“William Charles”), pursuant to the terms of the Equity Purchase Agreement, dated October 12, 2018 (the “Agreement”), by and among IEA, William Charles and the owners thereof.

At closing of the Acquisition, the Company entered into an Amended and Restated Credit Agreement, dated November 2, 2018, (the “A&R Credit Agreement”), which amends and restates the Credit Agreement dated September 25, 2018. The A&R Credit Agreement provides for an incremental term loan facility of $25.0 million. On the closing date, $100.0 million was drawn under the delayed draw term loan facility, which included the incremental term loan facility to refinance existing indebtedness, to pay a portion of the Acquisition consideration, to pay transaction expenses and for working capital and other general corporate purposes.

Under the A&R Credit Agreement, the financial covenant to which the credit parties are subject is amended to provide that the First Lien Net Leverage Ratio (as defined therein) may not exceed (i) prior to the fiscal quarter ending December 31, 2020, 3.50:1.0 and (ii) from and after the fiscal quarter ending December 31, 2020, 2.25:1.0. The A&R Credit Agreement also provided for certain amendments to the Company’s affirmative and negative covenants.

Debt Covenants

As described above, under the A&R Credit Agreement, the Credit Parties are subject to a First Lien Net Leverage Ratio In addition, the Credit Parties are subject to affirmative covenants, including requiring (i) delivery of financial statements, budgets and forecasts; (ii) delivery of certificates and other information; (iii) delivery of notices (of any default, material adverse condition, ERISA event, material litigation or material environmental event); (iv) payment of tax obligations; (v) preservation of existence; (vi) maintenance of properties; (vii) maintenance of insurance; (viii) compliance with laws; (ix) maintenance of books and records; (x) inspection rights; (xi) use of proceeds; (xii) covenants to guarantee obligations and give security; and (xiii) compliance with environmental laws.

The Credit Parties are subject to negative covenants, including restrictions (subject to certain exceptions) on (i) liens; (ii) indebtedness (including guarantees and other contingent obligations); (iii) investments (including loans, advances and acquisitions); (iv) mergers and other fundamental changes; (v) sales and other dispositions of property or assets; (vi) payments of dividends and other distributions and share repurchases (provided, that the Credit Agreement permits (x) distributions to the Company or any of its subsidiaries, (y) tax distributions and (z) certain other distributions by the Company (including distributions for customary public company expenses and for payments on preferred equity of the post-combination company subject to terms and conditions set forth in the loan documentation); (vii) changes in the nature of the business; (viii) transactions with affiliates; (ix) burdensome agreements; (x) payments and modifications of certain debt instruments; (xi) changes in fiscal periods; (xii) amendments of organizational documents; (xiii) division/series transactions and; (xiv) sale and lease-back transactions.

Letters of Credit and Surety Bonds

In the ordinary course of business, the Company is 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, the Company would be required to reimburse the issuer, which, depending upon the circumstances, could result in a charge to earnings. As of September 30, 2018 , and December 31, 2017 , the Company was contingently liable under letters of credit issued under its revolving credit facility or its old credit facility, respectively, in the amount of $6,179 and $5,934 , respectively, related to projects. In addition, as of September 30, 2018 and December 31, 2017 , the Company had outstanding surety bonds on projects of $1,085,196 and $535,529 , respectively, including the bonding line of the acquired ACC Companies and Saiia.

Contractual Obligations

The following table sets forth our contractual obligations and commitments for the periods indicated as of September 30, 2018 .



	Payments due by period
(in thousands)	Total		Less than 1 year		1 to 3 years		3 to 5 years		More than 5 years

Debt (1)	235,560		4,438		6,357		34,765		190,000
Capital leases (2)	32,786		11,297		19,407		2,082		—
Operating leases (3)	43,069		12,860		15,727		3,969		10,513
Total	$	311,415	$	28,595	$	41,491	$	40,816	$	200,513

(1)

IEA entered into the new credit facility upon the acquisition of CCS. The acquisition credit facility includes a $200.0 million senior secured first lien term loan facility and $75.0 million delayed draw term loan facility maturing September 25, 2024 , and a $50.0 million asset-based revolving line of credit maturing September 25, 2023 . Excludes the additional debt assumed as a subsequent event to finance the acquisition of William Charles.


(2)	IEA has obligations, exclusive of associated interest, under various capital leases for equipment totaling $29.6 million at September 30, 2018 . The gross property under these capitalized lease agreement at September 30, 2018 , amounted to a net total of $32.3 million.


(3)	IEA leases 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.

For detailed discussion and additional information pertaining to our debt instruments, see Note 9—Debt in the Notes to Condensed Consolidated Financial Statement, included in Item 1.

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 non-cancelable operating leases, letter of credit obligations, surety and performance and payment bonds entered into in the normal course of business, liabilities associated with deferred compensation plans, liabilities associated with certain indemnification and guarantee arrangements. See Note 10—Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements, included in Item 1, for discussion pertaining to our off-balance sheet arrangements. See Note 2—Summary of Significant Accounting Policies and Note 13—Related Parties in the Notes to Condensed Consolidated Financial Statements, included in Item 1, for discussion pertaining to certain of our investment arrangements.

Recently Issued Accounting Pronouncements

See Note 2—Summary of Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements, included in Item 1.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Credit Risk

We are subject to concentrations of credit risk related to our net receivable position with customers, which includes amounts related to billed and unbilled accounts receivable and costs and earnings in excess of billings (‘‘CIEB’’) on uncompleted contracts net of advanced billings with the same customer. We grant credit under normal payment terms, generally without collateral, and as a result, we are subject to potential credit risk related to our customers’ ability to pay for services provided. This risk may be heightened if there is depressed economic and financial market conditions. However, we believe the concentration of credit risk related to billed and unbilled receivables and costs and estimated earnings in excess of billings on uncompleted contracts is limited because of the diversity of our customers.

Interest Rate Risk

Borrowings under the new credit facility and certain other borrowings are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. The outstanding debt balance as of September 30, 2018 was $235.6 million and there was $33.7 million outstanding on the old credit facility as of December 31, 2017 . As of September 30, 2018 , we had no derivative financial instruments to manage interest rate risk. A one hundred basis point change in the LIBOR rate would increase or decrease interest expense by $2.4 million .

Item 4. Control and Procedures

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

As of September 30, 2018 , our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined by Exchange Act rules 13a-15(e) and 15d-15(e)) were not effective due to material weaknesses in our internal control over financial reporting. A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in our annual or interim financial statements will not be prevented or detected on a timely basis.

As of December 31, 2017 and continued through September 30, 2018 , we had four material weaknesses:


1.	IEA has not yet developed an entity level and financial reporting control environment that is designed with appropriate precision, including accounting personnel with an appropriate level of accounting knowledge, experience, and training commensurate with complex accounting issues and financial reporting requirements


2.	IEA has not yet developed adequate procedures to prepare, document and review areas of significant judgments and accounting estimates, revenue recognition, and accruals


3.	IEA has not developed timely and systematic review by management of journal entries.


4.	IEA has not yet developed appropriate segregation of duties related to user access controls for our operating system.

These control deficiencies create an increased possibility that a material misstatement to the consolidated financial statements will not be prevented or detected on a timely basis.

Remediation Plan

We continue to strengthen our internal control over financial reporting. We are committed to ensuring that such controls are designed and operating effectively. With the closing of the Merger on March 26, 2018 , our Board of Directors and management have prioritized developing and implementing a remediation plan, taking the necessary actions to address the root causes that contributed to the material weaknesses identified and establishing and maintaining effective internal controls over financial reporting. Subsequent to the Merger, our Board implemented several actions, including:


•	revised our Board and Committee Charters, which now provide appropriate mechanisms through which to demonstrate that effective oversight over financial reporting processes and internal controls is being properly exercised;


•	implemented an effective annual process to ensure that all employees, as well as members of the Board, and outsourced service providers confirm their compliance with the Company’s Code of Business Conduct;


•	implemented a whistleblower hotline which is available throughout the organization and through an external website and communicated information regarding the whistleblower hotline to all employees; and


•	increased communication and training to all employees and the Board regarding the Company’s ethical values and the requirement to comply with laws, rules, regulations, and the Company’s policies, including our Code of Conduct and Ethics.

Furthermore, the Company remains focused on continuing to implement process and control improvements as evidenced by the following initiatives :


•	revised our organizational structure by hiring dedicated key employees, including senior management, with assigned responsibility and accountability for financial reporting processes and internal controls. Further, we will continue to provide ongoing GAAP and internal controls training for all the employees;


•	implemented an annual financial control risk assessment process as well as a regularly recurring fraud risk assessment process focused on identifying and analyzing risks of financial misstatement due to error and/or fraud, including management override of controls;


•	hired another big four accounting firm as an internal controls resource, to create and develop a risk based internal controls plan. We are also enhancing the business process documentation and management's self-assessment and testing for internal controls;


•	enhancing the information technology control framework to support all business applications and infrastructure. Remediation activities will formalize information technology processes;


•	enhanced the management review controls over the application of GAAP and accounting measurements for significant accounts and transactions by adding resources with the required skills and assigned responsibility and accountability for performing an effective review; and

•

management review controls are being reassessed to provide the appropriate level of precision required to mitigate the potential for a material misstatement. In addition, we are enhancing the design and implementation of and supporting documentation over management review controls to make clear: (i) management’s expectations related to transactions that are subject to such controls; (ii) the level of precision and criteria used for investigation; and (iii) evidence that all outliers or exceptions that should have been identified are investigated and resolved.

We expect the implementation of our remediation plan will result in significant improvements to the overall internal control environment over financial reporting.

Changes in Internal Control over Financial Reporting

Other than changes described under Remediation Plan above, there have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2018 that have materially affected, or are reasonably likely to materially affect the Company.

Part II. Other Information

Item 1A. Risk Factors

At September 30, 2018 , there have been no other material changes from the risk factors previously disclosed in the Company's Current Report on Form 8-K filed with the SEC on March 29, 2018, which is accessible on the SEC's website at www.sec.gov.

Item 6. Exhibits

(a) Exhibits.



Exhibit Number	Description
2.1	Purchase and Sale Agreement dated August 9, 2018, by and among IEA Energy Services LLC, Consolidated Construction Solutions I LLC and Consolidated Construction Investment Holdings LLC (incorporated by reference to the Company's Current Report on Form 8-K/A filed on August 14, 2018).
2.2	Amendment No. 1 to Equity Purchase Agreement, dated October 31, 2018, by and among IEA Energy Services LLC, William Charles Construction Group and the owners thereof (incorporated by reference to the Company's Current Report on Form 8-K/A filed on November 2, 2018).
10.1	Credit Agreement, dated as of September 25, 2018 by and among Infrastructure and Energy Alternatives, Inc., as a Guarantor thereunder, IEA Intermediate Holdco, LLC as Guarantor thereunder, IEA Energy Services LLC, as the Borrower, the subsidiary guarantors party thereto, Jefferies Finance LLC, as Administrative Agent and Collateral Agent, and KeyBank National Association, as Revolving Agent (incorporated by reference to the Company's Current Report on Form 8-K filed on September 26, 2018).
10.2*	Amendment and Restatement Agreement, dated as of November 2, 2018, by and among Infrastructure and Energy Alternatives, Inc., as a Guarantor thereunder, IEA Intermediate Holdco, LLC as Guarantor thereunder, IEA Energy Services LLC, as the Borrower, the subsidiary guarantors party thereto, Jefferies Finance LLC, as Administrative Agent and Collateral Agent, and KeyBank National Association, as Revolving Agent.
10.3 †	Employment Agreement, dated as of July 17, 2018, between IEA Energy Services, LLC and Bharat Shah.
31.1	Certification of the Principal Executive Officer required by Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002
31.2	Certification of the Principal Financial Officer required by Rule 13a-14(a) and Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002
32.1	Certification of the Principal Executive Officer required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
32.2	Certification of the Principal Financial Officer required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any of the omitted schedules or exhibits upon request by the Securities and Exchange Commission.

† Indicates a management contract or compensatory plan or arrangement.

SIGNATURE

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.





	INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.

Dated: November 8, 2018	By:	/s/ JP Roehm
	Name: JP Roehm
	Title: Chief Executive Officer

Dated: November 8, 2018	By:	/s/ Andrew D. Layman
	Name: Andrew D. Layman
	Title: Chief Financial Officer

Dated: November 8, 2018	By:	/s/ Bharat Shah
	Name: Bharat Shah
	Title: Chief Accounting Officer



Table of Contents

Article I Definitions			20
	Section 1.01	Defined Terms	20
	Section 1.02	Other Interpretive Provisions	75
Article II Amount and Terms of Credit			78
	Section 2.01	Amounts and Terms of the Commitments	78
	Section 2.02	Minimum Amount of Each Borrowing	87
	Section 2.03	Notice of Borrowing	88
	Section 2.04	Repayment of Loans	88
	Section 2.05	Disbursement of Funds	89
	Section 2.06	Promissory Notes	90
	Section 2.07	Conversions	90
	Section 2.08	Pro Rata Borrowings	91
	Section 2.09	Interest	91
	Section 2.10	Interest Periods	92
	Section 2.11	Increased Costs, Illegality, etc	93
	Section 2.12	Compensation	95
	Section 2.13	Change of Lending Office	96
	Section 2.14	Replacement of Lenders; Defaulting Lenders	96
	Section 2.15	Incremental Loan Commitments	99
	Section 2.16	Loan Modification Offers	101
	Section 2.17	Refinancing Amendments	105
Article III Fees; Reduction or Termination of Commitments			106
	Section 3.01	Fees	106
	Section 3.02	Termination of Commitments	107
Article IV Prepayments; Payments; Taxes			108
	Section 4.01	Voluntary Prepayments	108
	Section 4.02	Mandatory Repayments	109
	Section 4.03	Method and Place of Payment	113
	Section 4.04	Net Payments	113
Article V Representations and Warranties			116
	Section 5.01	Financial Condition	116
	Section 5.02	No Change	117
	Section 5.03	Existence; Compliance with Law	117
	Section 5.04	Power; Authorization; Enforceable Obligations	117
	Section 5.05	Consents	118
	Section 5.06	No Legal Bar; Approvals	118
	Section 5.07	Litigation	118
	Section 5.08	No Default	118
	Section 5.09	Ownership of Property; Liens; Insurance	118
	Section 5.10	Intellectual Property	119



	Section 5.11	Taxes	119
	Section 5.12	Use of Proceeds; Margin Regulations	119
	Section 5.13	Labor matters	120
	Section 5.14	ERISA	120
	Section 5.15	Investment Company Act	122
	Section 5.16	Subsidiaries	122
	Section 5.17	Environmental Matters	122
	Section 5.18	Accuracy of Information, etc.	123
	Section 5.19	Security Documents	123
	Section 5.20	Solvency	124
	Section 5.21	Patriot Act; OFAC; Anti-Terrorism Laws; Anti-Bribery Laws	124
Article VI Conditions Precedent			125
	Section 6.01	[Reserved]	125
	Section 6.02	Conditions to Credit Extensions After the Restatement Effective Date	126
Article VII Affirmative Covenants			126
	Section 7.01	Financial Statements	126
	Section 7.02	Certificates; Other Information	127
	Section 7.03	Payment of Taxes	129
	Section 7.04	Maintenance of Existence; Compliance	129
	Section 7.05	Maintenance of Property; Insurance	129
	Section 7.06	Inspection of Property; Books and Records; Discussions	130
	Section 7.07	Notices	130
	Section 7.08	Additional Collateral, etc	132
	Section 7.09	Credit Ratings	135
	Section 7.10	Further Assurances	135
	Section 7.11	Designation of Unrestricted Subsidiaries	136
	Section 7.12	Use of Proceeds	136
	Section 7.13	Compliance with Environmental Law	137
	Section 7.14	Lender Conference Calls	137
	Section 7.15	Post-Closing Deliveries	137
	Section 7.16	Anti-Terrorism Law; ANti-Bribery Law; Anti-Money Laundering; Embargoed Persons	138
	Section 7.17	Syndication Amendment	138
Article VIII Negative Covenants			138
	Section 8.01	Indebtedness	139
	Section 8.02	Liens	143
	Section 8.03	Fundamental Changes	146
	Section 8.04	Disposition of Property	148
	Section 8.05	Restricted Payments	150



	Section 8.06	Investments	153
	Section 8.07	Payments and Modifications of Certain Debt Instruments; Modification to Organizational Documents	156
	Section 8.08	Transactions with Affiliates	157
	Section 8.09	Sale Leaseback Transactions	158
	Section 8.10	Changes in Fiscal Periods	158
	Section 8.11	Negative Pledge Clauses	158
	Section 8.12	Lines of Business	160
	Section 8.13	Financial Covenant	161
	Section 8.14	Prohibition on Division/Series Transactions	161
Article IX Guarantee			162
	Section 9.01	The Guarantee	162
	Section 9.02	Obligations Unconditional	162
	Section 9.03	Reinstatement	163
	Section 9.04	No Subrogation	163
	Section 9.05	Remedies	163
	Section 9.06	Continuing Guarantee	164
	Section 9.07	General Limitation on Guaranteed Obligations	164
	Section 9.08	Release of Subsidiary Guarantors and Pledges	164
	Section 9.09	Right of Contribution	165
	Section 9.10	Keepwell	165
	Section 9.11	Independent Obligation	166
Article X Events of Default			166
	Section 10.01	Events of Default	166
	Section 10.02	Action in Event of Default	169
	Section 10.03	Application of Proceeds	169
	Section 10.04	Right to Cure	171
Article XI Administrative Agent and Revolving Agent			172
	Section 11.01	Appointment	172
	Section 11.02	Nature of Duties	172
	Section 11.03	Lack of Reliance on the Administrative Agent	173
	Section 11.04	Certain Rights of the Administrative Agent and the Revolving Agent	175
	Section 11.05	Reliance	175
	Section 11.06	Indemnification	176
	Section 11.07	The Administrative Agent in its Individual Capacity	177
	Section 11.08	Holders	177
	Section 11.09	Resignation by the Administrative Agent and the Revolving Agent	177
	Section 11.10	Collateral and Intercreditor Matters	179
	Section 11.11	Delivery of Information	180



	Section 11.12	Withholding	180
	Section 11.13	Administrative Agent May File Proofs of Claim	180
	Section 11.14	Certain ERISA Matters	181
Article XII Miscellaneous			182
	Section 12.01	Payment of Expenses, etc.	182
	Section 12.02	Right of Setoff	184
	Section 12.03	Notices	185
	Section 12.04	Benefit of Agreement; Assignments; Particpations	185
	Section 12.05	No Waiver; Remedies Cumulative	193
	Section 12.06	Payments of Pro Rata	193
	Section 12.07	Calculations; Computations	194
	Section 12.08	Governing Law; Submission to Jurisdiction; Venue; Waiver of Jury Trial	195
	Section 12.09	Counterparts	196
	Section 12.10	[Reserved]	196
	Section 12.11	Headings Descriptive	196
	Section 12.12	Amendment or Waiver; etc.	196
	Section 12.13	Survival	198
	Section 12.14	Domicile of Loans	199
	Section 12.15	Register	199
	Section 12.16	Confidentiality	200
	Section 12.17	Patriot Act	201
	Section 12.18	Interest Rate Limitations	201
	Section 12.19	Secured Swap Agreements and Secured Cash Management Agreements	202
	Section 12.20	Lender Action	202
	Section 12.21	Press Release	203
	Section 12.22	Other Liens on Collateral; Terms of Intercreditor Agreements; etc.	203
	Section 12.23	Acknowledgment and Consent ot Bail-In of EEA Financial Institutions.	203
	Section 12.24	Amendment and Restatement	208
Schedules
	Schedule I	Lenders and Commitments
	Schedule II	Notice Addresses
	Schedule 5.16	Subsidiaries
	Schedule 5.19(a)	Security Documents
	Schedule 5.19(b)	Owned Real Property
	Schedule 7.08(b)	Initial Mortgaged Properties
	Schedule 7.15	Post-Closing Deliveries
	Schedule 8.01(i)	Existing Indebtedness
	Schedule 8.02(j)	Existing Liens



	Schedule 8.06(k)	Existing Investments
	Schedule 8.08	Existing Affiliate Transactions
Exhibits
	Exhibit A	Form of Assignment and Assumption
	Exhibit B	Form of Compliance Certificate
	Exhibit C	[Reserved]
	Exhibit D	Form of Guarantor Joinder Agreement
	Exhibit E	Form of Security Agreement
	Exhibit F	Form of Notice of Borrowing
	Exhibit G-1	Form of Term Note
	Exhibit G-3	Form of Revolving Note
	Exhibit G-4	Form of Swing Line Note
	Exhibit H	Form of Notice of Conversion/Continuation
	Exhibit I	Form of Non-Bank Certificate
	Exhibit J	Form of Solvency Certificate
	Exhibit K-1	Form of Pari Passu Intercreditor Agreement
	Exhibit K-2	Form of Junior Lien Intercreditor Agreement
	Exhibit L	Form of LC Request
	Exhibit M	Form of Intercompany Note
	Exhibit N	Perfection Certificate


SUBSIDIARY GUARANTORS	WHITE CONSTRUCTION, INC., an Indiana corporation



	JEFFERIES FINANCE LLC, as the Administrative Agent, the Collateral Agent, a 2018 Incremental Term Lender and a Lender
	By: /s/ John Koehler Name: John Koehler Title: Senior Vice President



	KEYBANK NATIONAL ASSOCIATION, as the Revolving Agent, the Issuing Bank, a 2018 Incremental Term Lender and a Lender
	By: /s/ J.E. Fowler Name: J.E. Fowler Title: Managing Director



	FIFTH THIRD BANK, as a Revolving Lender
	By: /s/ Marc Crady Name: Marc Crady Title: Director



	FIFTH THIRD BANK, as a Lender
	By: /s/ Marc Crady Name: Marc Crady Title: Director




Dated: November 8, 2018	By:	/s/ John Paul Roehm
	Name: John Paul Roehm
	Title: Chief Executive Officer