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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
☑    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2021

OR

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

COMMISSION FILE NUMBER: 001-37796

Infrastructure & 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
  46278
(Address of Principal Executive Offices)   (Zip Code)
 
Registrant’s telephone number, including area code: (765) 828-2580

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbols(s) Name of exchange on which registered
Common Stock, $0.0001 par value IEA The NASDAQ Stock Market LLC
Warrants for Common Stock IEAWW The NASDAQ Stock Market LLC
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. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☑ 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 ☐ Non-accelerated filer ☑ Smaller reporting company ☑ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☑ No

Number of shares of Common Stock outstanding as of the close of business on November 8, 2021: 47,974,783.


Infrastructure and Energy Alternatives, Inc.
Table of Contents
PART I. FINANCIAL INFORMATION
1
2
3
4
6
27
44
44
Part II. OTHER INFORMATION
45
45
45
45



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, 2021 December 31, 2020
Assets
Current assets:
Cash and cash equivalents $ 158,262  $ 164,041 
Accounts receivable, net 327,406  163,793 
Contract assets 222,659  145,183 
Prepaid expenses and other current assets 22,147  19,352 
        Total current assets 730,474  492,369 
Property, plant and equipment, net 140,512  130,746 
Operating lease assets 37,046  36,461 
Intangible assets, net 20,585  25,434 
Goodwill 37,373  37,373 
Company-owned life insurance 4,793  4,250 
Deferred income taxes —  2,069 
Other assets 771  438 
        Total assets $ 971,554  $ 729,140 
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 199,487  $ 104,960 
Accrued liabilities 196,623  129,594 
Contract liabilities 146,281  118,235 
Current portion of finance lease obligations 24,724  25,423 
Current portion of operating lease obligations 10,196  8,835 
Current portion of long-term debt 2,309  2,506 
          Total current liabilities 579,620  389,553 
Finance lease obligations, less current portion 28,126  32,146 
Operating lease obligations, less current portion 28,332  29,154 
Long-term debt, less current portion 290,630  159,225 
Debt - Series B Preferred Stock —  173,868 
Warrant obligations 18,848  9,200 
Deferred compensation 7,634  8,672 
Deferred income taxes 1,953  — 
         Total liabilities $ 955,143  $ 801,818 
Commitments and contingencies:
Series A Preferred Stock, par value, $0.0001 per share; 1,000,000 shares authorized; 17,483 shares issued and outstanding at December 31, 2020
—  17,483 
Stockholders' equity (deficit):
Common stock, par value, $0.0001 per share; 150,000,000 and 150,000,000 shares authorized; 44,553,902 and 21,008,745 shares issued and 44,553,902 and 21,008,745 outstanding at September 30, 2021 and December 31, 2020, respectively
4  2 
Additional paid in capital 257,259  35,305 
Accumulated deficit (240,852) (125,468)
           Total stockholders' equity (deficit) 16,411  (90,161)
           Total liabilities and stockholders' equity (deficit) $ 971,554  $ 729,140 

See accompanying notes to condensed consolidated financial statements.
1

INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Operations
($ in thousands, except per share data)
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Revenue $ 697,759  $ 522,232  $ 1,534,319  $ 1,360,999 
Cost of revenue 625,589  463,343  1,392,125  1,214,828 
Gross profit 72,170  58,889  142,194  146,171 
Selling, general and administrative expenses 36,539  29,656  92,279  87,214 
Income from operations 35,631  29,233  49,915  58,957 
Other income (expense), net:
Interest expense, net (9,403) (14,975) (38,257) (47,240)
Loss on extinguishment of debt (101,006) —  (101,006) — 
Warrant liability fair value adjustment (17,582) 3,000  (17,216) 171 
Other income (expense) (5,040) 161  (4,798) 257 
Income (loss) before provision for income taxes (97,400) 17,419  (111,362) 12,145 
Provision for income taxes (2,249) (6,153) (4,022) (10,025)
Net income (loss) $ (99,649) $ 11,266  $ (115,384) $ 2,120 
Less: Convertible Preferred Stock dividends (255) (619) (1,587) (1,991)
Less: Net income allocated to participating securities —  (2,854) —  (35)
Net income (loss) available for common stockholders $ (99,904) $ 7,793  $ (116,971) $ 94 
Net income (loss) per common share - basic (2.63) 0.37  (4.09) — 
Net income (loss) per common share - diluted (2.63) 0.32  (4.09) — 
Weighted average shares - basic 38,038,055  20,968,271  28,577,230  20,748,193 
Weighted average shares - diluted 38,038,055  35,336,064  28,577,230  20,748,193 

See accompanying notes to condensed consolidated financial statements.

2

INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Stockholders' Equity (Deficit)
($ in thousands)
(Unaudited)

Common Stock Additional Paid-in Capital Treasury Stock Accumulated Deficit Total Equity (Deficit)
Shares Par Value Shares Cost
Balance at December 31, 2019 20,461  $ 2  $ 17,167  (14) $ (76) $ (126,196) $ (109,103)
Net loss —  —  —  —  —  (12,743) (12,743)
Share-based compensation —  —  1,113  —  —  —  1,113 
Equity plan compensation 240  —  280  (38) (84) —  196 
Series B Preferred Stock - Warrants at close —  —  15,631  —  —  —  15,631 
Series A Preferred dividends —  —  (766) —  —  —  (766)
Balance at March 31, 2020 20,701  $ 2  $ 33,425  (52) $ (160) $ (138,939) $ (105,672)
Net income —  —  —  —  —  3,597  3,597 
Share-based compensation —  —  844  —  —  —  844 
Equity plan compensation 441  —  800  (129) (235) —  565 
Series A Preferred dividends —  —  (606) —  —  —  (606)
Balance at June 30, 2020 21,142  $ 2  $ 34,463  (181) $ (395) $ (135,342) $ (101,272)
Net income —  —  —  —  —  11,266  11,266 
Share-based compensation —  —  1,110  —  —  —  1,110 
Equity plan compensation 23  —  (42) —  —  —  (42)
Retirement of treasury shares (181) —  (395) 181  395  —  — 
Series A Preferred dividends —  —  (619) —  —  —  (619)
Balance at September 30, 2020 20,984  $ 2  $ 34,517  —  $ —  $ (124,076) $ (89,557)
Balance at December 31, 2020 21,009  $ 2  $ 35,305  —  $ —  $ (125,468) $ (90,161)
Net loss —  —  —  —  —  (20,434) (20,434)
Earnout Shares 1,803  —  —  —  —  —  — 
Share-based compensation —  —  727  —  —  —  727 
Equity plan compensation 521  —  (2,909) —  —  —  (2,909)
Exercise of warrants 15  —  —  —  —  —  — 
Series A Preferred dividends —  —  (656) —  —  —  (656)
Balance at March 31, 2021 23,348  $ 2  $ 32,467  —  $ —  $ (145,902) $ (113,433)
Net income —  —  —  —  —  4,699  4,699 
Share-based compensation —  —  1,926  —  —  —  1,926 
Equity plan compensation 249  —  (1,853) —  —  —  (1,853)
Exercise of warrants 1,553  1  200  —  —  —  201 
Series A Preferred dividends —  —  (676) —  —  —  (676)
Balance at June 30, 2021 25,150  $ 3  $ 32,064  —  $ —  $ (141,203) $ (109,136)
Net loss —  —  —  —  —  (99,649) (99,649)
Share-based compensation —  —  1,526  —  —  —  1,526 
Equity plan compensation 78  —  (579) —  —  —  (579)
Issuance of Common Stock 10,548  1  193,480  —  —  —  193,481 
Series A Preferred Stock conversion 2,132  —  23,455  —  —  —  23,455 
Issuance of Anti-Dilution Shares 649  —  7,568  —  —  —  7,568 
Exercise of warrants 5,996  —  —  —  —  —  — 
Series A Preferred dividends —  —  (255) —  —  —  (255)
Balance at September 30, 2021 44,553  4  257,259  —  —  (240,852) 16,411 

See accompanying notes to condensed consolidated financial statements.
3

INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
Nine Months Ended September 30,
2021 2020
Cash flows from operating activities:
Net income (loss) $ (115,384) $ 2,120 
Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation and amortization 34,407  36,566 
   Warrant liability fair value adjustment 17,216  (171)
   Amortization of debt discounts and issuance costs 7,443  9,343 
Loss on extinguishment of debt 101,006  — 
   Share-based compensation expense 4,179  3,067 
   Loss on sale of equipment —  1,251 
   Deferred compensation (1,038) (139)
   Accrued dividends on Series B Preferred Stock —  7,959 
   Deferred income taxes 4,022  9,814 
   Other, net (325) 287 
   Change in operating assets and liabilities:
       Accounts receivable (163,613) 17,327 
       Contract assets (77,476) (37,210)
       Prepaid expenses and other assets (3,130) (3,288)
       Accounts payable and accrued liabilities 165,943  (64,089)
       Contract liabilities 28,046  (41,635)
       Net cash provided by (used in) operating activities 1,296  (58,798)
Cash flow from investing activities:
   Company-owned life insurance (542) 847 
   Purchases of property, plant and equipment (24,013) (6,727)
   Proceeds from sale of property, plant and equipment 3,512  4,151 
       Net cash used in investing activities (21,043) (1,729)
Cash flows from financing activities:
   Proceeds from long-term debt 300,000  72,000 
   Payments on long-term debt (1,934) (83,201)
   Extinguishment of debt (173,345) — 
Extinguishment of Series B Preferred Stock (264,937) — 
   Debt financing fees (11,415) — 
   Payments on finance lease obligations (22,742) (19,301)
Proceeds from issuance of Common Stock 193,481  — 
   Proceeds from issuance of Series B Preferred Stock —  350 
   Proceeds of issuance of employee stock awards —  718 
   Shares for tax withholding on release of restricted stock units (5,341) — 
   Proceeds from exercise of warrants 201  — 
       Net cash provided by (used in) financing activities $ 13,968  $ (29,434)
Net change in cash and cash equivalents (5,779) (89,961)
Cash and cash equivalents, beginning of the period 164,041  147,259 
Cash and cash equivalents, end of the period $ 158,262  $ 57,298 

See accompanying notes to condensed consolidated financial statements.
4


INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
(Continued)
Nine Months Ended September 30,
2021 2020
Supplemental disclosures:
  Cash paid for interest 30,830  30,149 
  Cash paid (received) for income taxes 3,478  (955)
Schedule of non-cash activities:
   Acquisition of assets/liabilities through finance lease 18,562  11,691 
   Acquisition of assets/liabilities through operating lease 8,200  6,028 
   Series A Preferred dividends declared 1,587  1,991 

See accompanying notes to condensed consolidated financial statements.

5

INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
Notes to the Condensed Consolidated Financial Statements
(unaudited)

Note 1. Business, Basis of Presentation and Significant Accounting Policies

Organization and Reportable Segments

    Infrastructure and Energy Alternatives, Inc., a Delaware corporation, is a holding company organized on August 4, 2015 (together with its wholly-owned subsidiaries, “IEA” or the “Company”). On March 26, 2018, we became a public company by consummating a merger (the “Merger”) pursuant to an Agreement and Plan of Merger, dated November 3, 2017, with M III Acquisition Corporation (“M III”).

We segregate our business into two reportable segments: the Renewables segment and the Heavy Civil and Industrial (“Specialty Civil”) segment. See Note 10. Segments for a description of the reportable segments and their operations.

Principles of Consolidation

    The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions for Quarterly Reports on Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in the annual audited consolidated financial statements prepared in accordance with GAAP have been condensed or omitted.
    The unaudited condensed consolidated financial statements include the accounts of IEA and its wholly-owned domestic and foreign subsidiaries. The Company occasionally forms joint ventures with unrelated third parties for the execution of single contracts or projects. The Company assesses its joint ventures to determine if they meet the qualifications of a variable interest entity (“VIE”) in accordance with Accounting Standard Codification (“ASC”) Topic 810, Consolidation. For construction joint ventures that are not VIEs or fully consolidated but for which the Company has significant influence, the Company accounts for its interest in the joint ventures using the proportionate consolidation method, see Note 11. Joint Ventures.
In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) that are necessary to present fairly the results of operations for the interim periods presented. The results of operations for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2020 and notes thereto included in the Company’s 2020 Annual Report on Form 10-K.
Basis of Accounting and Use of Estimates
    
    The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of the condensed consolidated financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Key estimates include: the recognition of revenue and project profit or loss; fair value estimates; valuations of goodwill and intangible assets; asset lives used in computing depreciation and amortization; 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 its 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.

The prior period classification of the warrant liability fair value adjustment has been revised to conform to the current period presentation within the Condensed Consolidated Statements of Operations. This reclassification has no effect on net income or stockholders' equity.

Revenue Recognition
    The Company derives revenue primarily from construction projects performed under contracts for specific projects requiring the construction and installation of an entire infrastructure system or specified units within an infrastructure system. Contracts contain multiple pricing options, such as fixed price, time and materials, or unit price. Generally, renewable energy projects are performed for private customers while Specialty Civil projects are performed for various governmental entities.
6

    Revenue derived from projects billed on a fixed-price basis totaled 99.5% and 98.4% of consolidated revenue from operations for the three months ended September 30, 2021 and 2020, respectively, and totaled 98.8% and 97.6% for the nine months ended September 30, 2021 and 2020, respectively. Revenue and related costs for contracts billed on a time and materials basis are recognized as the services are rendered. Revenue derived from projects billed on a time and materials basis totaled 0.5% and 1.6% of consolidated revenue from operations for the three months ended September 30, 2021 and 2020, respectively, and totaled 1.2% and 2.4% for the nine months ended September 30, 2021 and 2020, respectively.

    Construction contract revenue is recognized over time using the cost-to-cost measure of progress for fixed price contracts. The cost-to-cost measure of progress best depicts the continuous transfer of control of goods or services to the customer. The contractual terms provide that the customer compensates the Company for services rendered.

    Contract costs include all direct materials, labor and subcontracted costs, as well as indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and the costs of capital equipment. The cost estimation and review process for recognizing revenue over time under the cost-to-cost method is based on the professional knowledge and experience of the Company’s project managers, engineers and financial professionals. Management reviews estimates of total contract transaction price and total project costs on an ongoing basis. Changes in job performance, job conditions and management’s assessment of expected variable consideration are factors that influence estimates of the total contract transaction price, total costs to complete those contracts and profit recognition. Changes in these factors could result in revisions to revenue and costs of revenue in the period in which the revisions are determined on a prospective basis, which could materially affect the Company’s results of operations for that period. Provisions for losses on uncompleted contracts are recorded in the period in which such losses are determined.
Performance Obligations
    A performance obligation is a contractual promise to transfer a distinct good or service to the customer and is the unit of account under Accounting Standards Codification (“ASC”) Topic 606. The transaction price of a contract is allocated to distinct performance obligations and recognized as revenue when or as the performance obligations are satisfied. The Company’s contracts often require significant integrated services and, even when delivering multiple distinct services, are generally accounted for as a single performance obligation. Contract amendments and change orders are generally not distinct from the existing contract due to the significant integrated service provided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation. With the exception of certain Specialty Civil service contracts, the majority of the Company’s performance obligations are generally completed within one year.
    When more than one contract is entered into with a customer on or close to the same date, the Company evaluates whether those contracts should be combined and accounted for as a single contract as well as whether those contracts should be accounted for as more than one performance obligation. This evaluation requires significant judgment and is based on the facts and circumstances of the various contracts, which could change the amount of revenue and profit recognition in a given period depending upon the outcome of the evaluation.
    Remaining performance obligations represent the amount of unearned transaction prices for contracts, including approved and unapproved change orders. As of September 30, 2021, the amount of the Company’s remaining performance obligations was $1,686.7 million. The Company expects to recognize approximately 75.5% of its remaining performance obligations as revenue during the next twelve months. Revenue recognized from performance obligations satisfied in previous periods was $(0.7) million and $(0.8) million for the three months ended September 30, 2021 and 2020, respectively, and $(1.1) million and $(4.4) million for the nine months ended September 30, 2021 and 2020, respectively.
Variable Consideration
    Transaction pricing for the Company’s contracts may include variable consideration, such as unapproved change orders, claims, incentives and liquidated damages. Management estimates variable consideration for a performance obligation utilizing estimation methods that best predict the amount of consideration to which the Company will be entitled. Variable consideration is included in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Management’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based on legal opinions, past practices with the customer, specific discussions, correspondence or preliminary negotiations with the customer and all other relevant information that is reasonably available. The effect of a change in variable consideration on the transaction price of a performance obligation is typically recognized as an adjustment to revenue on a cumulative catch-up basis. To the extent unapproved change orders, claims and liquidated damages reflected in the transaction price are not resolved in the Company’s favor, or to the extent incentives reflected in the transaction price are not earned, there could be reductions in, or reversals of, previously recognized revenue.
7

    As of September 30, 2021 and December 31, 2020, the Company included approximately $70.8 million and $52.6 million, respectively, of unapproved change orders and/or claims in the transaction price for certain contracts that were in the process of being resolved in the normal course of business, including through negotiation, arbitration and other proceedings. These transaction price adjustments are included within Contract Assets or Contract Liabilities as appropriate. The Company actively engages with its customers to complete the final change order approval process, and generally expects these processes to be completed within one year. Amounts ultimately realized upon final acceptance by customers could be higher or lower than such estimated amounts.
Disaggregation of Revenue
    The following tables disaggregate revenue by customers and services performed, which the Company believes best depicts the nature, amount, timing and uncertainty of its revenue:
(in thousands) Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Renewables Segment
   Wind $ 416,890  $ 261,754  880,814  $ 827,442 
   Solar 100,282  65,297  241,586  72,617 
$ 517,172  $ 327,051  $ 1,122,400  $ 900,059 
Specialty Civil Segment
   Heavy civil $ 102,046  $ 119,713  229,802  $ 264,656 
   Rail 35,226  52,955  93,266  132,333 
   Environmental 43,315  22,513  88,851  63,951 
$ 180,587  $ 195,181  $ 411,919  $ 460,940 
Concentrations
    The Company did not have any revenue concentrations above 10% for the three and nine months ended September 30, 2021 and 2020, respectively. The Company did not have any accounts recievable concentrations above 10% as of September 30, 2021 and 2020, respectively.

Construction Joint Ventures

Certain contracts are executed through joint ventures. The arrangements are often formed for the execution of single contracts or projects and allow the Company to share risks and secure specialty skills required for project execution.
In accordance with ASC Topic 810, Consolidation, the Company assesses its joint ventures at inception to determine if any meet the qualifications of a VIE. The Company considers a joint venture a VIE if either (a) the total equity investment is not sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) characteristics of a controlling financial interest are missing (either the ability to make decisions through voting or other rights, the obligation to absorb the expected losses of the entity or the right to receive the expected residual returns of the entity), or (c) the voting rights of the equity holders are not proportional to their obligations to absorb the expected losses of the entity and/or their rights to receive the expected residual returns of the entity and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. Upon the occurrence of certain events outlined in ASC 810, the Company reassesses its initial determination of whether the joint venture is a VIE.
The Company also evaluates whether it is the primary beneficiary of each VIE and consolidates the VIE if the Company has both (a) the power to direct the economically significant activities of the entity, and (b) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. The Company considers the contractual agreements that define the ownership structure, distribution of profits and losses, risks, responsibilities, indebtedness, voting rights and board representation of the respective parties in determining whether it qualifies as the primary beneficiary. The Company also considers all parties that have direct or implicit variable interests when determining whether it is the primary beneficiary. When the Company is determined to be the primary beneficiary, the VIE is consolidated. In accordance with ASC 810, management’s assessment of whether the Company is the primary beneficiary of a VIE is performed continuously.
8

Construction joint ventures that do not involve a VIE, or for which the Company is not the primary beneficiary, are evaluated for consolidation under the voting interest model that considers whether the Company owns or controls more than 50% of the voting interest in the joint venture. For construction joint ventures that are not consolidated but for which the Company has significant influence, the Company accounts for its interest in the joint ventures using the proportionate consolidation method, whereby the Company’s proportionate share of the joint ventures’ assets, liabilities, revenue and cost of operations are included in the appropriate classifications in the Company’s consolidated financial statements. See Note 11. Joint Ventures for additional discussion regarding joint ventures.
Recently Adopted Accounting Standards - Guidance Adopted in 2021

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This ASU is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Depending on the amendment, adoption may be applied on the retrospective, modified retrospective, or prospective basis. The Company adopted the standard on January 1, 2021 on a prospective basis, which did not have an impact on our disclosures for income taxes.
Recently Issued Accounting Standards Not Yet Adopted
    
    In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which introduced an expected credit loss methodology for the measurement and recognition of credit losses on most financial assets, including trade accounts receivables. The expected credit loss methodology under ASU 2016-13 is based on historical experience, current conditions and reasonable and supportable forecasts, and replaces the probable/incurred loss model for measuring and recognizing expected losses under current GAAP. The ASU also requires disclosure of information regarding how a company developed its allowance, including changes in the factors that influenced management’s estimate of expected credit losses and the reasons for those changes. The ASU and its related clarifying updates are effective for smaller reporting companies for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years, with early adoption permitted. The Company is still evaluating the new standard but does not expect it to have a material impact on our estimate of the allowance for uncollectible accounts.
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.
COVID-19 Pandemic

    During March 2020, the World Health Organization declared a global pandemic related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). The COVID-19 pandemic has significantly affected economic conditions in the United States and internationally as national, state and local governments reacted to the public health crisis by requiring mitigation measures that have disrupted business activities for an uncertain period of time.

The Company believes that the COVID-19 pandemic did not have a material adverse impact on the Company’s financial results for the period ended September 30, 2021. Currently, most of the Company’s construction services are deemed essential under governmental mitigation orders and all of our business segments continue to operate. The Company has issued several notices of force majeure for the purpose of recognizing delays in construction schedules due to COVID-19 outbreaks on certain of its work sites and has also received notices of force majeure from the owners of certain projects and certain subcontractors. Management does not believe that any delays on projects related to these events of force majeure will have a material impact on the Company's results of operations.

Management’s top priority has been to take appropriate actions to protect the health and safety of the Company's employees, customers and business partners, including adjusting the Company's standard operating procedures to respond to evolving health guidelines. Management believes that it is taking appropriate steps to mitigate any potential impact to the Company; however, given the uncertainty regarding the potential effects of the COVID-19 pandemic, any future impacts cannot be quantified or predicted with specificity.

The effects of the COVID-19 pandemic could affect the Company’s future business activities and financial results, including new contract awards, reduced crew productivity, contract amendments or cancellations, higher operating costs or delayed project start dates or project shutdowns that may be requested or mandated by governmental authorities or others.
9



Note 2. Contract Assets and Liabilities

    The timing of when we bill our customers is generally dependent upon agreed-upon contractual terms, milestone billings based on the completion of certain phases of the work, or when services are provided. Sometimes, billing occurs subsequent to revenue recognition, resulting in unbilled revenue, which is accounted for as a contract asset. Sometimes we receive advance payments or deposits from our customers before revenue is recognized, resulting in deferred revenue, which is accounted for as a contract liability.

    Contract assets in the Condensed Consolidated Balance Sheets represent the following:

•costs and estimated earnings in excess of billings, which arise when revenue has been recorded but the amount has not been billed; and

•retainage amounts for the portion of the contract price billed by us for work performed but held for payment by the customer as a form of security until we reach certain construction milestones or complete the project.

    Contract assets consisted of the following:
(in thousands) September 30, 2021 December 31, 2020
Costs and estimated earnings in excess of billings on uncompleted contracts $ 113,296  $ 51,367 
Retainage receivable 109,363  93,816 
$ 222,659  $ 145,183 

    Contract liabilities consist of the following:
(in thousands) September 30, 2021 December 31, 2020
Billings in excess of costs and estimated earnings on uncompleted contracts $ 146,156  $ 117,641 
Loss on contracts in progress 125  594 
$ 146,281  $ 118,235 
    
    Revenue recognized for the three and nine months ended September 30, 2021 that was included in the contract liability balance at December 31, 2020 was approximately $2.1 million and $114.1 million, respectively, and revenue recognized for the three and nine months ended September 30, 2020 that was included in the contract liability balance at December 31, 2019 was approximately $5.8 million and $114.5 million, respectively.
    
    Activity in the allowance for doubtful accounts for the periods indicated was as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands) 2021 2020 2021 2020
Allowance for doubtful accounts at beginning of period $ —  $ 89  $ —  $ 75 
    Plus: provision for (reduction in) allowance —  —  —  14 
    Less: write-offs, net of recoveries —  —  —  — 
Allowance for doubtful accounts at period end $ —  $ 89  $ —  $ 89 


10


Note 3. Property, Plant and Equipment, Net

    Property, plant and equipment consisted of the following:
(in thousands) September 30, 2021 December 31, 2020
Buildings and leasehold improvements $ 6,263  $ 4,402 
Land 17,600  17,600 
Construction equipment 225,143  192,402 
Office equipment, furniture and fixtures 3,642  3,620 
Vehicles 7,888  7,326 
260,536  225,350 
Accumulated depreciation (120,024) (94,604)
    Property, plant and equipment, net $ 140,512  $ 130,746 

    Depreciation expense of property, plant and equipment was $10,960 and $9,282 for the three months ended September 30, 2021 and 2020, respectively, and was $29,558 and $26,575 for the nine months ended September 30, 2021 and 2020, respectively.


Note 4. Goodwill and Intangible Assets, Net

    The following table provides the changes in the carrying amount of goodwill, by segment:
(in thousands) Renewables Specialty Civil Total
January 1, 2020 $ 3,020  $ 34,353  $ 37,373 
   Adjustments —  —  — 
December 31, 2020 $ 3,020  $ 34,353  $ 37,373 
   Adjustments —  —  — 
September 30, 2021 $ 3,020  $ 34,353  $ 37,373 

    
Intangible assets consisted of the following as of the dates indicated:
September 30, 2021 December 31, 2020
($ in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted Average Remaining Life
Customer relationships $ 26,500  $ (11,320) $ 15,180  4.25 years $ 26,500  $ (8,481) $ 18,019  5 years
Trade name 13,400  (7,995) 5,405  2.25 years 13,400  (5,985) 7,415  3 years
$ 39,900  $ (19,315) $ 20,585  $ 39,900  $ (14,466) $ 25,434 
    
Amortization expense associated with intangible assets for the three months ended September 30, 2021 and 2020, totaled $1.6 million and $3.3 million, respectively, and $4.8 million and $10.0 million for the nine months ended September 30, 2021 and 2020, respectively.

    The following table provides the annual intangible amortization expense currently expected to be recognized for the years 2021 through 2025:
(in thousands) Remainder of 2021 2022 2023 2024 2025
Amortization expense $ 1,616  $ 6,466  $ 5,841  $ 3,785  $ 2,876 
11



Note 5. Fair Value of Financial Instruments

    The Company applies ASC Topic 820, Fair Value Measurement, which establishes a framework for measuring fair value. 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 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 — Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities listed on active market exchanges.
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 liabilities measured at fair value on a recurring basis:    
September 30, 2021 December 31, 2020
(in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Liabilities
Private warrants $ —  $ 348  $ —  $ 348  $ —  $ —  $ —  $ — 
Series B Preferred Stock - Anti-dilution warrants —  —  18,500  18,500  —  —  8,800  8,800 
Series B-1 Preferred Stock - Performance warrants —  —  —  —  —  —  400  400 
Total liabilities $ —  $ 348  $ 18,500  $ 18,848  $ —  $ —  $ 9,200  $ 9,200 
    
The following is a reconciliation of the beginning and ending balances of recurring fair value measurements using Level 3 inputs:
(in thousands) Series B Preferred Stock - Anti-dilution warrants Series B-1 Preferred Stock - Performance warrants
Beginning Balance, December 31, 2020 $ 8,800  $ 400 
Fair value adjustment - loss (gain) recognized in other income 17,268  (400)
Transfer to non-recurring fair value instrument (equity) (7,568) — 
Ending Balance, September 30, 2021
$ 18,500  $ — 

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On August 2, 2021, the Company closed an underwritten public offering. At the closing of the offering, the following equity transactions were completed with ASOF Holdings I, L.P. (“ASOF”) and Ares Special Situations Fund IV, L.P. (“ASSF” and, together with ASOF, “Ares Parties”):

•the Ares Parties converted all of their Series A Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”) (consisting of all of the Company's issued and outstanding shares of Series A Preferred Stock), into 2,132,273 shares of common stock;

•the Company issued to the Ares Parties 507,417 shares of common stock representing shares of common stock underlying warrants that the Ares Parties were entitled to pursuant to anti-dilution rights that are triggered upon conversion of the Series A Preferred Stock described below as a part of the “Series B Preferred Stock - Anti-Dilution Warrants” section;

For further discussion of the equity transaction see Note 8. Earnings Per Share.

    The information below describes the balance sheet classification and the recurring fair value measurement for these requirements:

Private Warrants (recurring) - The Company has 295,000 private warrants that are not actively traded on the public markets and the Company adjusts the fair value at the end of each fiscal period using the price on that date multiplied by the remaining private warrants. The Private warrants were recorded as warrant obligations at the end of the quarter and the fair value adjustment was recorded as Warrant liability fair value adjustment for the three and nine months ended September 30, 2021. For further discussion see Note 8. Earnings Per Share.

    Series B Preferred Stock - Anti-dilution Warrants (recurring) - The number of common shares attributable to the warrants issued to Series B Preferred Stockholders for anti-dilution warrants were as follows;

•upon conversion by Series A Preferred Stockholders and determined on a 30-day volume weighted average. As noted above, these anti-dilution warrants were issued upon the conversion of the Series A Preferred Stock as part of the equity transaction on August 2, 2021 and therefore no liability was recorded at September 30, 2021.

•upon the exercise of any warrant with an exercise price of $11.50 or higher. As of September 30, 2021, the Company had 8,480,000 Merger Warrants to purchase shares of common stock at $11.50 per share. If the Merger Warrants were converted it would result in an additional 2.6 million anti-dilution warrants being issued. As of September 30, 2021, the Company recorded the anti-dilution warrants at fair value, which was estimated using a Monte Carlo simulation based on certain significant unobservable inputs, such as a risk rate premium, volatility of stock, conversion stock price, current stock price and amount of time remaining before expiration of the Merger Warrants. The calculation derived a fair value adjustment of $18.5 million to the liability based on an anti-dilution warrant fair value of $7.27.

Significant unobservable inputs used in the fair value calculation as of the periods indicated were as follows:

September 30, 2021
Stock price $ 11.43 
Conversion stock price $ 11.50 
Time before Merger Warrant expiration 1.49 
Stock volatility 56.95  %
Risk-free interest rate 0.18  %

    Series B-1 Preferred Stock - Performance Warrants (recurring) - The warrant liability was recorded at fair value as a liability, using a Monte Carlo Simulation based on certain significant unobservable inputs, such as a risk rate premium, Adjusted EBITDA volatility, stock price volatility and projected Adjusted EBITDA for the Company. The Company remained above the Adjusted EBITDA threshold for the trailing twelve-month basis from May 31, 2020 through April 30, 2021 and therefore was not required to issue additional warrants.

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    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, approximates fair value due to their floating interest rates.

Note 6. Debt and Series B Preferred Stock

    Debt consisted of the following obligations as of:
(in thousands) September 30, 2021 December 31, 2020
Term loan $ —  $ 173,345 
Senior unsecured notes 300,000  — 
Commercial equipment notes 4,170  5,582 
   Total principal due for long-term debt 304,170  178,927 
Unamortized debt discount and issuance costs (11,231) (17,196)
Less: Current portion of long-term debt (2,309) (2,506)
   Long-term debt, less current portion $ 290,630  $ 159,225 
Debt - Series B Preferred Stock $ —  $ 185,396 
Unamortized debt discount and issuance costs —  (11,528)
  Long-term Series B Preferred Stock $ —  $ 173,868 

Senior Unsecured Notes

On August 17, 2021, IEA Energy Services LLC, a wholly owned subsidiary of the Company (“Services”), issued $300.0 million aggregate principal amount of its 6.625% senior unsecured notes due 2029 (the “Senior Unsecured Notes”), in a private placement. Interest is payable on the Senior Unsecured Notes on each February 15 and August 15, commencing on February 15, 2022. The Senior Unsecured Notes will mature on August 15, 2029. The Senior Unsecured Notes are guaranteed on a senior unsecured basis by the Company and certain of its domestic wholly-owned subsidiaries (the “Guarantors”).

On or after August 15, 2024, the Senior Unsecured Notes are subject to redemption at any time and from time to time at the option of Services, in whole or in part, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest, if redeemed during the twelve-month period beginning on August 15 of the years indicated below:

Year Percentage
2024 103.3  %
2025 101.7  %
2026 and thereafter 100.0  %

Prior to August 15, 2024, Services may also redeem some or all of the Senior Unsecured Notes at the principal amount of the Senior Unsecured Notes, plus a “make-whole premium,” together with accrued and unpaid interest. In addition, at any time prior to August 15, 2024, Services may redeem up to 40.0% of the original principal amount of the Senior Unsecured Notes with the proceeds of certain equity offerings at a redemption price of 106.63% of the principal amount of the Senior Unsecured Notes, together with accrued and unpaid interest.

In connection with the issuance of the Senior Unsecured Notes, Services entered into an indenture (the “Indenture”) with the Guarantors and Wilmington Trust, National Association, as trustee, providing for the issuance of the Senior Unsecured Notes. The terms of the Indenture provides for, among other things, negative covenants that under certain circumstances would limit Services’ ability to incur additional indebtedness; pay dividends or make other restricted payments; make loans and investments; incur liens; sell assets; enter into affiliate transactions; enter into certain sale and leaseback transactions; enter into agreements restricting Services' subsidiaries' ability to pay dividends; and merge, consolidate or amalgamate or sell all or
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substantially all of its property, subject to certain thresholds and exceptions. The Indenture provides for customary events of default that include (subject in certain cases to customary grace and cure periods), among others, nonpayment of principal or interest; breach of other covenants or agreements in the Indenture; failure to pay certain other indebtedness; failure to pay certain final judgments; failure of certain guarantees to be enforceable; and certain events of bankruptcy or insolvency.

Credit Agreement

On August 17, 2021, Services, as the borrower, and certain guarantors (including the Company), entered into a Credit Agreement (the “Credit Agreement”) with a syndicate of lenders and CIBC Bank USA in its capacities as the Administrative and Collateral Agent for the lenders. The Credit Agreement provides for a $150.0 million senior secured revolving credit facility. The Credit Agreement is guaranteed by the Company and certain subsidiaries of the Company (the “Credit Agreement Guarantors” and together with Services, the “Loan Parties”) and is secured by a security interest in substantially all of the Loan Parties’ personal property and assets. Services has the ability to increase available borrowing under the credit facility by an additional amount up to $50.0 million subject to certain conditions.

Services may voluntarily repay and reborrow outstanding loans under the credit facility at any time subject to usual and customary breakage costs for borrowings bearing interest based on LIBOR and minimum amount requirements set forth in the Credit Agreement. The credit facility includes $100.0 million in borrowing capacity for the issuance of letters of credit. The credit facility is not subject to amortization and matures with all commitments terminating on August 17, 2026.

Interest rates on the credit facility are based upon (1) an index rate that is established at the highest of the prime rate or the sum of the federal funds rate plus 0.50%, or (2) at Services’ election, a LIBOR rate, plus in either case, an applicable interest rate margin. The applicable interest rate margins are adjusted on a quarterly basis based upon Services’ first lien net leverage within the range of 1.00% to 2.50% for index rate loans and 2.00% and 3.50% for LIBOR loans. Borrowings under the credit facility shall initially bear interest at a rate per annum equal to LIBOR plus 2.50%. In addition to paying interest on outstanding principal under the credit facility, Services is required to pay a commitment fee to the lenders under the credit facility for unused commitments. The commitment fee rate ranges from 0.30% to 0.45% per annum depending on Services’ First Lien Net Leverage Ratio (as defined in the Credit Agreement).

The credit facility requires Services to comply with a quarterly maximum consolidated First Lien Net Leverage Ratio test and minimum Fixed Charge Coverage ratio as follows:

•Fixed Charge Coverage Ratio - The Loan Parties shall not permit the Fixed Charge Coverage Ratio (as defined in the Credit Agreement) as of the last day of any four consecutive fiscal quarter period ending on the last day of a fiscal quarter to be less than 1.20:1.00, commencing with the period ending September 30, 2021.

•First Lien Net Leverage Ratio – The Loan Parties will not permit the First Lien Net Leverage Ratio (as defined in the Credit Agreement) as of the last day of any four consecutive fiscal quarter period ending on the last day of a fiscal quarter to exceed 1.75:1.00, commencing with the period ending September 30, 2021 (subject to certain increases for permitted acquisitions).

In addition, the Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, limit Services’ ability and the ability of its restricted subsidiaries including the Company to incur indebtedness or guarantee debt; incur liens; make investments, loans and acquisitions; merge, liquidate or dissolve; sell assets, including capital stock of subsidiaries; pay dividends on its capital stock or redeem, repurchase or retire its capital stock; amend, prepay, redeem or purchase subordinated debt; and engage in transactions with affiliates.

The Credit Agreement contains certain customary representations and warranties, affirmative covenants and events of default (including, among others, an event of default upon a change of control). If an event of default occurs, the lenders under the credit facility are entitled to take various actions, including the acceleration of amounts due under the credit facility and all actions permitted to be taken by a secured creditor.

Third A&R Credit Agreement and Term Loan

Prior to entering into the Credit Agreement, we were party to that certain Third A&R Credit Agreement, dated May 15, 2019, as amended (the “Third A&R Credit Agreement”), which governed the terms of our term loan (the “Term Loan”) and provided for revolving credit commitments of up to $75.0 million, upon the terms and subject to the satisfaction of the
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conditions set forth in the Third A&R Credit Agreement. The Term Loan was repaid in full and the Third A&R Credit Agreement has been terminated.

The stated interest rate for the senior notes as of September 30, 2021 was 6.625%. The weighted average interest rate for the Third A&R Credit Agreement term loan as of December 31, 2020 was 7.00%.
Series B Preferred Stock
In 2019, the Company entered into three equity purchase agreements and issued Series B Preferred Stock. The Series B Preferred Stock was a mandatorily redeemable financial instrument under ASC Topic 480 and had been recorded as a liability using the effective interest rate method for each tranche. The mandatory redemption date for all tranches of the Series B Preferred Stock was February 15, 2025.

On August 17, 2021, the Company redeemed all of the shares of Series B Preferred Stock at the Optional Redemption Price per share. The Optional Redemption Price was a price per share of Series B Preferred Stock in cash equal to $1,500, plus all accrued and unpaid dividends thereon since the immediately preceding dividend date calculated through the day prior to such redemption, minus the amount of any Series B preferred cash dividends actually paid. See the table below for further discussion of proceeds and the loss on extinguishment.

Debt and Series B Preferred Stock Extinguishment
The Company used the proceeds from the Senior debt and equity transaction discussed in Note 8. Earnings Per Share and the New Credit Facility discussed above to redeem all of the Series B Preferred Stock and paid off the Term Loan. Below is a summary of the the use of proceeds:

Use of Proceeds ($ in millions)
Proceeds from Equity transaction $ 193.5 
Proceeds from Debt transaction 300.0 
Transaction proceeds 493.5 
Less: Deferred Fees (11.4)
Net transaction proceeds $ 482.1 
Series B Preferred Stock redemption $ (264.9)
Term Loan payoff (173.3)
Revolver and letter of credit payoff (22.4)
Total use of proceeds $ (460.6)
Loss on Extinguishment of Debt
Series B Preferred Stock - Make Whole Premium $ 47.3 
Write-off of deferred fees related to term loan 13.2 
Series B Preferred Stock - write-off of deferred fees and discount 40.5 
Loss on Extinguishment of Debt $ 101.0 

Contractual Maturities

    Contractual maturities of the Company's outstanding principal on debt obligations as of September 30, 2021:
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(in thousands) Maturities
Remainder of 2021 $ 633 
2022 1,952 
2023 838 
2024 442 
2025 239 
Thereafter 300,066 
Total contractual maturities $ 304,170 


Note 7. Commitments and Contingencies

    In the ordinary course of business, the Company enters into agreements that provide financing for its machinery and equipment, facility and vehicle needs. The Company reviews these agreements for potential lease classification, and at inception, determines whether a lease is an operating or finance lease. Lease assets and liabilities, which generally represent the present value of future minimum lease payments over the term of the lease, are recognized as of the commencement date. Under ASC Topic 842, leases with an initial lease term of twelve months or less are classified as short-term leases and are not recognized in the condensed consolidated balance sheets unless the lease contains a purchase option that is reasonably certain to be exercised.
    Lease term, discount rate, variable lease costs and future minimum lease payment determinations require the use of judgment as these are based on the facts and circumstances related to each specific lease. Lease terms are generally based on their initial non-cancelable terms, unless there is a renewal option that is reasonably certain to be exercised. Various factors, including economic incentives, intent, past history and business need are considered to determine if a renewal option is reasonably certain to be exercised. The implicit rate in a lease agreement is used when it can be determined. Otherwise, the Company's incremental borrowing rate, which is based on information available as of the lease commencement date, including applicable lease terms and the current economic environment, is used to determine the value of the lease obligation.
Finance Leases
    
    The Company has obligations, exclusive of associated interest, under various finance leases for equipment totaling $52.8 million and $57.6 million at September 30, 2021 and December 31, 2020, respectively. Gross property under this capitalized lease agreement at September 30, 2021 and December 31, 2020, totaled $144.9 million and $128.0 million, less accumulated depreciation of $70.2 million and $55.1 million, respectively, for net balances of $74.7 million and $72.9 million, respectively. Depreciation expense for assets held under the finance leases is included in cost of revenue in the condensed consolidated statements of operations.

    The future minimum payments of finance lease obligations are as follows:
(in thousands)
Remainder of 2021 $ 6,846 
2022 25,050 
2023 11,125 
2024 6,951 
2025 4,870 
Thereafter 1,721 
Future minimum lease payments 56,563 
Less: Amount representing interest (3,713)
Present value of minimum lease payments 52,850 
Less: Current portion of finance lease obligations 24,724 
Finance lease obligations, less current portion $ 28,126 

Operating Leases
    
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    In the ordinary course of business, the Company enters into non-cancelable operating leases for certain of its facilities, vehicles and equipment. The Company has obligations, exclusive of associated interest, totaling $38.5 million and $38.0 million at September 30, 2021 and December 31, 2020, respectively. Property under these operating lease agreements at September 30, 2021 and December 31, 2020, totaled $37.0 million and $36.5 million, respectively.

    The Company has long-term power-by-the-hour equipment rental agreements with a construction equipment manufacturer that have a guaranteed minimum monthly hour requirement. The minimum guaranteed amount based on the Company's current operations is $3.2 million per year. Total expense under these agreements are listed in the following table as variable lease costs.

    The future minimum payments under non-cancelable operating leases are as follows:
(in thousands)
Remainder of 2021 $ 3,247 
2022 11,983 
2023 9,476 
2024 5,058 
2025 2,285 
Thereafter 18,960 
Future minimum lease payments 51,009 
Less: Amount representing interest (12,481)
Present value of minimum lease payments 38,528 
Less: Current portion of operating lease obligations 10,196 
Operating lease obligations, less current portion $ 28,332 

Lease Information
Three months ended Nine Months Ended
September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020
Finance Lease cost:
   Amortization of right-of-use assets $ 5,855  $ 5,281  $ 17,533  $ 16,836 
   Interest on lease liabilities 758  891  2,364  3,017 
Operating lease cost 3,186  3,340  9,759  10,307 
Short-term lease cost 61,222  49,817  120,450  116,585 
Variable lease cost 2,214  891  6,372  2,835 
Sublease Income (33) (33) (100) (99)
Total lease cost $ 73,202  $ 60,187  $ 156,378  $ 149,481 
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
   Operating cash flows from finance leases $ 758  $ 891  $ 2,363  $ 3,017 
   Operating cash flows from operating leases $ 3,232  $ 3,275  $ 9,656  $ 10,003 
Weighted-average remaining lease term - finance leases 2.84 years 2.55 years
Weighted-average remaining lease term - operating leases 7.55 years 8.16 years
Weighted-average discount rate - finance leases 5.49  % 6.07  %
Weighted-average discount rate - operating leases 6.75  % 6.94  %

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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, 2021, and December 31, 2020, the Company was contingently liable under letters of credit issued under our credit facility, in the amount of $33.7 million and $7.8 million, respectively, related to projects and insurance. In addition, as of September 30, 2021 and December 31, 2020, the Company had outstanding surety bonds on projects with nominal amounts of $3.2 billion and $2.8 billion, respectively. The remaining approximate exposure related to these surety bonds amounted to $400.0 million and $293.1 million, respectively.

Legal Proceedings

The Company is a nominal defendant to a lawsuit, instituted in December 2019 in the Delaware Chancery Court by a purported stockholder of the Company, against the Company’s Board of Directors, Oaktree Capital Management ("Oaktree"), and Ares Management, LLC ("Ares"), from which Ares was subsequently dismissed. The complaint asserts a variety of claims arising out of the sale of Series B Preferred Stock and warrants to Ares and Oaktree in May 2019. The complaint alleges claims for breach of fiduciary duty directly on behalf of putative class of stockholders and derivatively on behalf of the Company, aiding and abetting breach of fiduciary duty both derivatively and directly, and unjust enrichment derivatively on behalf of the Company. The plaintiff is seeking rescission of the transaction, unspecified monetary damages, and fees. On July 28, 2021, the Company and the plaintiff stockholder entered into a memorandum of understanding to settle the lawsuit against all defendants, subject to approval by the Delaware Chancery Court, the terms of which do not require payment of any settlement funds to the plaintiff except that, as they are entitled to do under Delaware law, the plaintiffs are entitled to ask the Court to award them attorneys’ fees in connection with the settlement. The timing of the approval of the settlement, if any, by the Court is unknown at this time but is not expected to occur prior to year-end. The Company has placed its director and officer liability insurance carriers on notice of the lawsuit and the proposed settlement; pursuant to the coverage terms, the Company is subject to a $1.5 million deductible, which the Company has exhausted. Pursuant to agreements entered into in connection with the sale of Series B Preferred Stock, the Company is obligated to indemnify Oaktree and Ares for any legal fees and damages incurred by either of them in connection with this matter.

The Company is involved in a variety of other legal cases, claims and other disputes that arise from time to time in the ordinary course of its business. While the Company believes it has good defense against these cases and intends to defend them vigorously, it cannot provide assurance that it will be successful in recovering all or any of the potential damages it has claimed or in defending claims against the Company. While the lawsuits and claims are asserted for amounts that may be material, should an unfavorable outcome occur, management does not currently expect that any currently pending matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, an unfavorable resolution of one or more of such matters could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows.

Note 8. Earnings Per Share

    The Company calculates earnings (loss) per share (“EPS”) in accordance with ASC Topic 260, Earnings per Share. Basic EPS is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares of common stock outstanding during the period.

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

    Diluted EPS, where applicable, assumes the dilutive effect of (i) Series A cumulative convertible preferred stock, using the if-converted method, (ii) publicly traded warrants, (iii) Series B Preferred Stock - Warrants and (iv) the assumed exercise of in-the-money stock options and the assumed vesting of outstanding restricted stock units (“RSUs”), using the treasury stock method.

    Whether the Company has net income, or a net loss 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 net loss, diluted EPS is computed in the same manner as basic EPS is computed. Similarly, if the Company has net income but its preferred dividend
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adjustment made in computing income available to common stockholders results in a net loss available to common stockholders, diluted EPS would be computed the same as basic EPS.

Public Offering

On August 2, 2021, the Company closed an underwritten public offering of 10,547,866 shares of common stock, par value $0.0001 per share (the “Common Stock”), at a public offering price of $11.00 per share and pre-funded warrants (the “Pre-Funded Warrants”) to purchase an additional 7,747,589 shares of Common Stock at a price of $10.9999 per Pre-Funded Warrant (the “Offering”).

The Pre-Funded Warrants to purchase 7,747,589 shares of our Common Stock were issued to ASOF in connection with the closing of the Offering. The Pre-Funded Warrants have an exercise price of $0.0001 per share and do not expire and are exercisable at any time after their original issuance. The Pre-Funded Warrants may not be exercised by the holder to the extent that the holder, together with its affiliates that report together as a group under the beneficial ownership rules, would beneficially own, after such exercise more than 32.0% of our issued and outstanding Common Stock.

At the closing of the Offering the Ares Parties completed the following equity transactions:

•converted all of their Series A Preferred Stock into 2,132,273 shares of Common Stock;

•the Company issued to the Ares Parties 507,417 shares of Common Stock representing shares of Common Stock underlying warrants that the Ares Parties were entitled to pursuant to anti-dilution rights that are triggered upon conversion of the Series A Preferred Stock described in Note 5. Fair value of financial instruments; and

•the Company issued to the Ares Parties 5,996,310 shares of Common Stock for the exercise of warrants that were issued to the Ares Parties in connection with their original purchases of Series B Preferred Stock (the “Series B Preferred Stock - Warrants”).

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The calculations of basic and diluted EPS, are as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
($ in thousands, except per share data) 2021 2020 2021 2020
Numerator:
  Net income (loss) $ (99,649) $ 11,266  (115,384) 2,120 
  Less: Convertible Preferred Stock dividends (255) (619) (1,587) (1,991)
  Less: Net income allocated to participating securities
—  (2,854) —  (35)
    Net income (loss) available to common stockholders (99,904) 7,793  (116,971) 94 
Denominator:
  Weighted average common shares outstanding - basic 38,038,055  20,968,271  28,577,230  20,748,193 
   Series B Preferred Stock - Warrants(3)
—  7,683,903  —  — 
   Convertible Series A Preferred Stock —  4,758,887  —  — 
   Merger Warrants —  —  —  — 
   Options —  —  —  — 
   RSUs(4)
—  1,925,003  —  — 
  Weighted average common shares outstanding - diluted 38,038,055  35,336,064  28,577,230  20,748,193 
Anti-dilutive:
  Convertible Series A Preferred Stock (1)
—  —  —  6,920,305 
  Merger Warrants (2)
536,719  —  1,435,878  — 
  Series B Preferred Stock - Warrants (3)
135,259  —  135,259  7,680,981 
  Pre-Funded Warrants(4)
7,747,589  —  7,747,589  — 
  Options (5)
59,284  —  94,665  — 
  RSUs (6)
1,667,430  —  1,728,764  1,825,123 
Basic EPS (2.63) 0.37  (4.09) — 
Diluted EPS (2.63) 0.32  (4.09) — 

(1)     On August 2, 2021 the Series A Preferred Stock was converted into common shares and therefore has been excluded from the anti-dilutive section above for the three and nine months ended September 30, 2021.

(2)    For the three months and nine months ended September 30, 2020, Merger Warrants to purchase 8,480,000 shares of common stock at $11.50 per share were not considered as dilutive as the warrants’ exercise price was not greater than the average market price of the common stock during the period. For the three and nine months ended September 30, 2021, these warrants were calculated using the treasury stock method and were anti-dilutive.

(3)     Series B Preferred Stock - Warrants are considered as participating securities because the holders are entitled to participate in any distributions similar to that of common shareholders. On August 2, 2021, the Company issued to the Ares Parties 5,996,310 shares of Common Stock for the exercise of warrants that were issued to the Ares Parties in connection with their original purchases of Series B Preferred Stock. As of the three and nine month ended September 30, 2021, there were 135,259 Series B Preferred Stock - Warrants that were considered anti-dilutive.

(4)    On August 2, 2021 the Company issued 7,747,589 Pre-Funded Warrants to ASOF that are considered participating because the holders are entitled to participate in any distributions similar to that of common shareholders.
    
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(5)    As of September 30, 2020, there were 504,214 of vested and unvested options not considered dilutive as the respective exercise price or average stock price required for vesting of such awards was greater than the average market price of the common stock during the period.

(6)    As of September 30, 2021 and 2020, 116,867 and 611,166 unvested RSUs, respectively. These awards were not considered dilutive as the respective performance targets were not achieved.
Merger Warrants

On August 4, 2015, M III formed a Special Purpose Acquisition Corporation and issued public and private warrants before the Merger with the Company. As of September 30, 2021, the Company had 16,925,160 Merger Warrants outstanding, of which 295,000 are considered private warrants. Two Merger Warrants will be exercisable for one share of our common stock at $11.50 per share until the expiration on March 26, 2023. For further discussion about the valuation of the private warrants see Note 5. Fair Value of Financial Instruments.

Series B Preferred Stock Anti-dilution Warrants

The Company also had potential outstanding warrants related to the Series B Preferred Stock issuance. Additional warrants would be issued if the exercise of any warrant with an exercise price of $11.50 or higher. See Note 5. Fair value of financial instruments for further discussion.

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

    The fair value of the RSUs was based on the closing market price of our common stock on the date of the grant. Stock compensation expense for the RSUs is being amortized using the straight-line method over the service period. For the three months ended September 30, 2021 and 2020, we recognized $1.5 million and $1.1 million in compensation expense, respectively, and $4.2 million and $3.1 million for the nine months ended September 30, 2021 and 2020, respectively.


Note 9. Income Taxes

    The Company’s statutory federal tax rate was 21.00% for the periods ended September 30, 2021 and 2020, respectively. State tax rates for the same period vary among states and range from approximately 0.8% to 11.5%. A small number of states do not impose an income tax.

    The effective tax rates for the three months ended September 30, 2021 and 2020 were (2.3)% and 35.3%, respectively, and were (3.6)% and 82.5% for the nine months ended September 30, 2021 and 2020, respectively. The difference between the Company’s effective tax rate and the federal statutory rate primarily results from permanent differences related to the interest and other expenses accrued for the Series B Preferred Stock and executive compensation, which is not deductible for federal and state income taxes. There were no changes in uncertain tax positions during the periods ended September 30, 2021 and 2020.

    On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted by the US Government in response to the COVID-19 pandemic to provide employment retention incentives. We do not believe that these relief measures materially affected the consolidated financial statements for the year ended December 31, 2020.

The Company has also made use of the payroll deferral provision to defer social security tax of approximately $13.6 million through December 31, 2020. Half of this amount is required to be paid on December 31, 2021 and the other half by December 31, 2022.

Note 10. Segments

    We operate our business as two reportable segments: the Renewables segment and the Specialty Civil segment. Each of our reportable segments is comprised of similar business units that specialize in services unique to their respective markets. The classification of revenue and gross profit for segment reporting purposes can at times require judgment on the part of
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management. Our segments may perform services across industries or perform joint services for customers in multiple industries. To determine reportable segment gross profit, certain allocations, including allocations of shared and indirect costs, such as facility costs, equipment costs and indirect operating expenses, were made based on segment revenue.

    Separate measures of the Company’s assets, including capital expenditures and cash flows by reportable segment are not produced or utilized by management to evaluate segment performance. A substantial portion of the Company’s fixed assets are owned by and accounted for in our equipment department, including operating machinery, equipment and vehicles, as well as office equipment, buildings and leasehold improvements, and are used on an interchangeable basis across our reportable segments. As such, for reporting purposes, total under/over absorption of equipment expenses consisting primarily of depreciation is allocated to the Company's two reportable segments based on segment revenue.
    
The following is a brief description of the Company's reportable segments:

Renewables Segment

    The Renewables segment operates throughout the United States and specializes in a range of services for the power delivery, solar, wind and battery storage markets that includes design, procurement, construction, restoration, and maintenance.

Specialty Civil Segment

    The Specialty Civil segment operates throughout the United States and specializes in a range of services that include:

•Heavy civil construction services such as road and bridge construction, specialty paving, sports field development, industrial maintenance, outsourced contract mining and heavy hauling.

•Environmental remediation services such as site development, environmental site closure, and coal ash management.
•Rail infrastructure services such as planning, design, procurement, construction and maintenance of major railway and intermodal facilities.


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Segment Revenue

    Revenue by segment was as follows:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2021 2020 2021 2020
Segment Revenue % of Total Revenue Revenue % of Total Revenue Revenue % of Total Revenue Revenue % of Total Revenue
Renewables $ 517,172  74.1  % $ 327,051  62.6  % $ 1,122,400  73.2  % $ 900,059  66.1  %
Specialty Civil 180,587  25.9  % 195,181  37.4  % 411,919  26.8  % 460,940  33.9  %
  Total revenue $ 697,759  100.0  % $ 522,232  100.0  % $ 1,534,319  100.0  % $ 1,360,999  100.0  %

Segment Gross Profit

    Gross profit by segment was as follows:
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2021 2020 2021 2020
Segment Gross Profit Gross Profit Margin Gross Profit Gross Profit Margin Gross Profit Gross Profit Margin Gross Profit Gross Profit Margin
Renewables $ 51,867  10.0  % $ 37,371  11.4  % $ 106,930  9.5  % $ 100,183  11.1  %
Specialty Civil 20,303  11.2  % 21,518  11.0  % 35,264  8.6  % 45,988  10.0  %
  Total gross profit $ 72,170  10.3  % $ 58,889  11.3  % $ 142,194  9.3  % $ 146,171  10.7  %


Note 11. Joint Ventures

As of September 30, 2021, the Company did not have any VIEs but did have one joint venture that used the proportionate consolidation method at 25% ownership. The following balances were included in the condensed consolidated financial statements:

(in thousands) September 30, 2021
Assets
Cash $ 7,939 
Accounts receivable 847 
Contract assets 2,412 
Liabilities
Accounts payable $ 2,569 
Contract liabilities 6,394 
Three Months Ended Nine Months Ended
September 30, 2021 September 30, 2021
Revenue $ 5,835  $ 15,425 
Cost of revenue 3,599  13,189 
Selling, general and administrative expenses (450) — 


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Note 12. Related Party Transactions

On August 2, 2021, as part of the equity transactions the Company entered into the Stockholders’ Agreement with the Ares Parties. Pursuant to the Stockholders’ Agreement:

•The Ares Parties are entitled to designate two members of our Board for so long as the Ares Parties and their affiliates beneficially own less than 20% but more than or equal to 10% of our Common Stock, and no representatives if the Ares Parties and their affiliates beneficially own less than 10% of our Common Stock. The Stockholders’ Agreement also requires us to take any and all necessary action to reduce the number of directors on the Board to nine and to cause the Board to be comprised of a total of nine directorships (in each case, including (or assuming) both of the Ares representatives are members of the Board) immediately following the first annual or special meeting at which directors are elected following the closing of the Offering.

•The Ares Parties agreed not to transfer any equity securities acquired in the Offering (including Common Stock, Pre-Funded Warrants and shares of Common Stock issuable upon exercise of the Pre-Funded Warrants) until twelve months following the initial closing of the Offering; provided, however, that certain transfers in connections with consolidations and reorganizations, tender or exchange offers, exercises of registration rights and certain distributions are permitted.

•The Ares Parties agreed, with respect to themselves and their controlled affiliates acting on their behalf, for a period of time up to the earlier of the thirty-month anniversary of the date of closing of the Offering, or the earlier occurrence of the date in which the Ares Parties and their affiliates beneficially own less than 10% of our outstanding Common Stock, a change of control transaction, a material breach of the Stockholders’ Agreement by us, an event of default by us with respect to the our senior notes or credit agreements or other indebtedness exceeding $50.0 million, or any winding up, dissolution or liquidation or bankruptcy (subject to certain permitted exceptions):

◦not to transfer its Common Stock to competitors (as defined in the Stockholders’ Agreement) or any person that would beneficially own more than 20% of our Common Stock, subject to certain permitted exceptions;

◦not to take, or permit their controlled affiliates acting on their behalf to take, certain actions, subject to certain permitted exceptions, including, but not limited to:

◦making any public announcement, proposal or offer, with respect to (a) acquisitions of additional Common Stock, (b) any restructuring, recapitalization, liquidation or similar transaction, (c) the election of directors other than the Ares Parties’ designees or (d) changes to the Board and calling of special meetings;

◦publicly seek a change in the composition or size of the Board;

◦deposit any voting securities into a voting trust;

◦acquire any voting securities or beneficial ownership thereof greater than the Ares Parties’ beneficial ownership following closing of the Offering and 37.8% of the Common Stock on an Adjusted Outstanding Basis (as defined therein);

◦call for, or initiate, propose or requisition a call for any general or special meeting;

◦publicly state an intention, plan or arrangement to do any of the foregoing; or

◦intentionally and knowingly instigate, facilitate, encourage or assist any third party to do any of the foregoing; and

•to cause all voting securities to be present at any annual or special meeting in which directors are to be elected, to vote such securities either as recommended by the Board, or in the same proportions as votes cast by other voting securities with respect to director nominees or other nominees and in favor of any director
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nominee of the Ares Parties, not to vote in favor of a change of control transaction pursuant to which the Ares Parties would receive consideration that is different in amount or form from other stockholders unless approved by the Board; and

•the Ares Parties are afforded reasonable access to our books and records for so long as the Ares Parties have a right to designate a director to the Board.

Note 13. Subsequent Events

On October 3, 2021, ASOF exchanged 3,420,267 non-voting Pre-Funded Warrants for 3,420,236 shares of the Company's Common Stock in a cashless exercise. ASOF may not exercise the balance of the pre-funded warrants if it would cause them to exceed a 32% ownership percentage.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

    This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements can be identified by the use of forward-looking terminology including “may,” “should,” “likely,” “will,” “believe,” “expect,” “anticipate,” “estimate,” “forecast,” “seek,” “target,” “continue,” “plan,” “intend,” “project,” or other similar words. All statements, other than statements of historical fact included in this Quarterly Report, regarding expectations for the impact of the COVID-19 pandemic, future financial performance, business strategies, expectations for our business, future operations, liquidity positions, availability of capital resources, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives and beliefs of management are forward-looking statements.

    These forward-looking statements are based on information available as of the date of this Quarterly Report and our management’s current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurance that such expectations will prove correct. 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. Factors that could cause actual results to differ include:

•potential risks and uncertainties relating to COVID-19, including the geographic spread, the severity of the disease, the scope and duration of the COVID-19 pandemic, actions that may be taken by governmental authorities to contain the COVID-19 pandemic or to treat its impact, and the potential negative impacts of COVID-19 on permitting and project construction cycles, the U.S. economy and financial markets;
•availability of commercially reasonable and accessible sources of liquidity and bonding;
•our ability to generate cash flow and liquidity to fund operations;
•the timing and extent of fluctuations in geographic, weather and operational factors affecting our customers, projects and the industries in which we operate;
•our ability to identify acquisition candidates and integrate acquired businesses;
•our ability to grow and manage growth profitably;
•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 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 equipment, fuel, materials, labor and other costs;
•our beliefs regarding the state of the renewable wind energy market generally; and
•the “Risk Factors” described in our Annual Report on Form 10-K for the year ended December 31, 2020 (“Annual Report”, and in our quarterly reports, other public filings and press releases.
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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.

Overview

    We are a leading diversified infrastructure construction company with specialized energy and heavy civil expertise throughout the United States. We specialize in providing complete engineering, procurement and construction services throughout the United States for the renewable energy, traditional power and civil infrastructure industries. These services include the design, site development, construction, installation and restoration of infrastructure. We have completed more than 240 wind and solar projects in 40 states and construct one of every five gigawatts put in to place throughout the U.S. in any given year. Although the Company has historically focused on the renewable industry, but its recent focus on further expansion into the solar market and acquisitions expanding its construction capabilities and geographic footprint in the areas of environmental remediation, industrial maintenance, specialty paving, heavy civil and rail infrastructure construction, has created a diverse national platform of specialty construction capabilities. We believe we have the ability to continue to expand these services because we are well-positioned to leverage our expertise and relationships in the wind energy business to provide complete infrastructure solutions in all areas.

    We have two reportable segments: the Renewables (“Renewables”) segment and the Heavy Civil and Industrial (“Specialty Civil”) segment. See Segment Results for a description of the reportable segments and their operations.

Recent Developments

Public Equity Offering

As previously disclosed, on August 2, 2021, the Company closed an underwritten public offering of 10,547,866 shares of common stock, par value $0.0001 per share (the “Common Stock”) at a public offering price of $11.00 per share and pre-funded warrants (the “Pre-Funded Warrants”) to purchase an additional 7,747,589 shares of Common Stock at a price of $10.9999 per Pre-Funded Warrant, resulting in gross proceeds to us of approximately $193.5 million.

Senior Notes Offering

As previously disclosed, on August 17, 2021, IEA Energy Services LLC, a wholly owned subsidiary of the Company (“Services”), issued $300.0 million aggregate principal amount of its 6.625% senior unsecured notes due 2029 (the “Senior Unsecured Notes”), in a private placement, resulting in gross proceeds of approximately $288.6 million. For a description of the terms and conditions of the Senior Unsecured Notes, please see “Note 6 – Debt and Series B Preferred Stock” in the notes to our Condensed Consolidated Financial Statements.

Credit Agreement

As previously disclosed, on August 17, 2021, Services, as the borrower, and certain guarantors (including the Company), entered into a Credit Agreement (the “Credit Agreement”) with a syndicate of lenders and CIBC Bank USA in its capacities as the Administrative and Collateral Agent for the lenders. The Credit Agreement provides for a $150 million senior secured revolving credit facility, is guaranteed by the Company and certain subsidiaries of the Company and is secured by a security interest in substantially all their personal property and assets. For a description of the terms and conditions of the Credit Agreement, please see “Note 6 – Debt and Series B Preferred Stock” in the notes to our Condensed Consolidated Financial Statements.

Transaction Agreement

As previously disclosed, on July 28, 2021, the Company entered into a Transaction Agreement (the “Transaction Agreement”) with Ares Special Situations Fund IV, L.P. (“ASSF”) and ASOF Holdings I, L.P. (“ASOF” and, together with ASSF, the “Ares Parties”). The Transaction Agreement resulted in, among other things:

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•The redemption by us of all of our Series B Preferred Stock, par value $0.0001 per share (“Series B Preferred Stock”) using proceeds from our offering of Senior Unsecured Notes, Common Stock and Pre-Funded Warrants;

•The repayment of the term loan (“Term Loan”) under our Third A&R Credit Agreement, dated May 15, 2019, as amended (the “Third A&R Credit Agreement”), using proceeds from our offering of Senior Unsecured Notes, Common Stock and Pre-Funded Warrants;

•The Ares Parties converting all of their Series A Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”) (consisting of all of our issued and outstanding shares of Series A Preferred Stock), into 2,132,273 shares of Common Stock;

•The issuance to the Ares Parties of 507,417 and other parties of 141,651 shares of Common Stock for certain anti-dilution rights triggered upon conversion of the Series A Preferred Stock described above; and

•The issuance to the Ares Parties of 5,996,310 shares of Common Stock in connection with their exercise of warrants that were issued to the Ares Parties in connection with their original purchases of Series B Preferred Stock.

The following tables illustrate the changes in our outstanding common stock and the use of proceeds from the transactions described above.

Shares Issued
Shares Outstanding June 30, 2021 25,150,306 
Issuance of Common Stock 7,362,827 
Issuance of Common Stock - Ares 3,185,039 
Series B warrants converted to Common Stock - Ares 5,996,310 
Series A conversion - Ares 2,132,273 
Series A anti dilution shares - Ares and other parties 649,068 
Other equity activity 78,079 
Shares Outstanding September 30, 2021 44,553,902 
Use of Proceeds ($ in millions)
Proceeds from Equity transaction $ 193.5 
Proceeds from Debt transaction 288.6 
Total proceeds $ 482.1 
Series B Preferred Stock payoff $ (264.9)
Term Loan payoff (173.3)
Revolver and letter of credit payoff (22.4)
Total use of proceeds $ (460.6)

Current Quarter Financials

Key financial results for the quarter ended September 30, 2021 include:

•Consolidated revenues increased 33.6% to $697.8 million as compared to $522.2 million for the quarter ended September 30, 2020, of which 74.1% was attributable to the Renewables segment and 25.9% was attributable to the Specialty Civil segment;

•Operating income increased $6.4 million, to $35.6 million as compared to income of $29.2 million for the quarter ended September 30, 2020;
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•Completed equity offering and debt transactions mentioned above in the current quarter that redeemed all Series B Preferred Stock and the extinguishment of our previous term loan, which resulted in debt extinguishment costs of $101.0 million and fair value adjustment of warrant liability of $18.5 million;

•Net income decreased $110.9 million, to a loss of $99.6 million as compared to income of $11.3 million for the quarter ended September 30, 2020 due to the debt and equity transactions mentioned above; and

•Backlog increased 30.3%, or $627.8 million to $2.7 billion as compared to $2.1 billion for the year ended December 31, 2020.

Trends and Future Opportunities

Business Environment

We believe there are long-term growth opportunities across our industries, and we continue to have a positive long-term outlook. Although not without risks and challenges, including those discussed in “Significant Factors Impacting Results”
and in “Forward-Looking Statements” and items referred to in Item 1A. Risk Factors disclosed in the Company's Annual Report. We believe that with our full-service operations, broad geographic reach, financial position and technical expertise, we are well positioned to mitigate these risks and continue to capitalize on opportunities and trends in our industries.

Labor Shortage. We continue to address the longer-term need for additional labor resources in our markets, as our customers continue to seek additional specialized labor resources to address an aging workforce and longer-term labor availability issues, increasing pressure to reduce costs and improve reliability, and increasing duration and complexity of their capital programs. We believe these trends will continue, possibly to such a degree that demand for labor resources will outpace supply. Furthermore, the cyclical nature of the Renewable and to a certain extent parts of our Specialty Civil segment can create shortages of qualified labor in those markets during periods of high demand. Our ability to capitalize on available opportunities is limited by our ability to employ, train and retain the necessary skilled personnel, and therefore we are taking proactive steps to develop our workforce, including through strategic relationships with universities, the military and unions and the expansion and development of our training facility and postsecondary educational institution. Although we believe these initiatives will help address workforce needs, meeting our customers’ demand for labor resources could remain challenging.

Additionally, we believe that labor costs will increase given the recent escalated inflationary environment in the United States. Our labor costs are typically passed through in our contracts, and the portion of our workforce that is represented by labor unions typically operate under multi-year collective bargaining agreements, which provide some visibility into future labor costs. As a result, while we continue to monitor our labor markets, we do not currently believe this environment will present a material risk to our profitability and would expect to be able to adjust contract pricing with customers to the extent wages and other labor costs increase, whether due to renegotiation of collective bargaining agreements or market conditions.

Supply Chain Disruption. The world’s biggest solar panel manufacturers have recently been warning of panel shortages amid disruptions in the supply chain and rising material prices. These manufactures have stated that output will be constrained because key component suppliers will be running at less than full capacity in the near future. The reduction in supply is also coupled with the Department of Commerce considering 50% to 250% tariffs on imported solar panels from Southwest Asia. A majority of the United States crystalline silicon solar module imports in the first half of 2021 came from this geographic location. We believe that these disruptions and material price increases could cause a delay in construction schedules for 2022, inefficiencies in our build schedules and fluctuations to our revenue projections.

Regulatory Challenges. The regulatory environment creates both challenges and opportunities for our business, and in recent years heavy civil and rail construction have been impacted by regulatory and permitting delays in certain periods, particularly with respect to regulatory and environmental permitting processes continue to create uncertainty for projects and negatively impact customer spending, and delays have increased as the COVID-19 pandemic has impacted regulatory agency operations.

However, we believe that there are also several existing, pending or proposed legislative or regulatory actions that may alleviate certain regulatory and permitting issues and positively impact long-term demand, particularly in connection with infrastructure and renewable energy spending. For example, regulatory changes affecting siting and
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right-of-way processes could potentially accelerate construction for transmission projects, and state and federal reliability standards are creating incentives for system investment and maintenance. Additionally, as described above, we consider renewable energy, including solar and wind generation facilities, to be an ongoing opportunity; however, policy and economic incentives designed to support and encourage such projects can create variability of project timing.

Renewables Segment

The Renewables segment was impacted by the following significant operational trends:

•Revenue increased 58.1% to $517.2 million for the quarter ended September 30, 2021 as compared to $327.1 million.

•Revenues increased primarily due to wind projects that started later in 2021 compared to 2020. Further, higher demand persists in our solar market as projects continue to increase due to our consistent, safe and reliable performance with our customers on our wind projects, that has allowed us to capture further solar opportunities in backlog for 2021 and beyond.

We have maintained a heavy focus on construction of renewable power production capacity as renewable energy, particularly from wind and solar, has become widely accepted within the electric utility industry and has become a cost-effective solution for the creation of new generating capacity. We believe that this shift coupled with the below, will continue to drive opportunity in this segment over the long-term:

•The current administration has a goal of investing $2 trillion in modern, sustainable, and clean energy infrastructure.

•Renewable energy power generation has reached a level of scale and maturity that permits these technologies to now be cost-effective competitors to more traditional power generation technologies, including on an unsubsidized basis. The most significant changes have been related to increased turbine sizes and better battery storage methods.

•Over 40 states and the District of Colombia have adopted renewable portfolio standards for clean energy.

•In December 2020, there was a one year extension of the PTC at 60% for projects that begin construction prior to December 31, 2021 and a two year extension of 26% Solar Investment Tax Credit (“ITC”) to 2022 (22% credit extended through 2023).

•On June 29, 2021, the IRS issued a notice which provides that projects that began construction in 2016-2019 have six years, and projects that began construction in 2020 have five years from the date construction began to be placed-in-service to qualify for the PTC or ITC that was in effect when construction began. This new rule effectively extends the amount of time that many projects will be eligible for PTC to 2025.

As a result, wind and solar power are among the leading sources of new power generation capacity in the U.S., and the Company does not anticipate this trend to change in the near future as we are continuing to see growth through new awards in our backlog:

(in millions)
Segment December 31, 2020
New Awards in 2021(1)
Revenue Recognized in 2021
Backlog at September 30, 2021(2)
Renewables $ 1,513.4  $ 1,382.9  $ 1,122.4  $ 1,773.9 

(1) New awards consist of the original contract price of projects added to our backlog plus or minus subsequent changes to the estimated total contract price of existing contracts.

(2) Backlog may differ from the transaction prices allocated to the remaining performance obligations as disclosed in Note 1. Business, Basis of Presentation and Significant Accounting Policies included in Part I, Item 1 of this Quarterly Report.
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Such differences relate to the timing of executing a formal contract or receiving a notice to proceed. More specifically, backlog sometimes may include awards for which a contract has not yet been executed or a notice to proceed has not been issued, but for which there are no remaining major uncertainties that the project will proceed (e.g., adequate funding is in place).

Specialty Civil Segment

The Specialty Civil segment was impacted by the following significant operational trends:

•Revenue decreased 7.5% to $180.6 million for the quarter ended September 30, 2021 as compared to $195.2 million. The revenue decrease for the three months ended is primarily due to challenges in the following end markets:

◦The heavy civil construction market has seen increased competition in a few of our end markets.

◦The rail market has been negatively impacted by the COVID-19 pandemic and the reduction of spending budgets of some of our customers, which has led to further delays on portions of our large rail jobs. However, we have recently seen increased bidding opportunities.

◦All of our end markets in this segment have experienced delays in timing related to obtaining governmental approvals and environmental permitting that have affected the start and bidding opportunities of certain projects.

•Despite the delays in project starts mentioned above we continued to see a strong bidding environment in the heavy civil construction and environmental remediation end markets for 2021 and had significant awarded projects related to:

◦The environmental remediation market continues to provide opportunities for growth and the Company has been awarded a very significant project that started in 2021, coupled with the Company being short listed on some very significant projects with anticipated start dates in 2022.

◦The heavy civil construction market continues to be consistent year over year for awarded projects.

◦The rail market has started to see a small turnaround in bidding as our customer's spending budgets have increased. This has increased the number of larger rail jobs available for 2022 construction.

We believe that our business relationships with customers in these sectors are excellent and the strong reputation that our companies have built has provided us with the right foundation to continue to grow our revenue base. The drivers to further growing this segment are as follows:

•The FMI 2021 Overview Report published in the first quarter of 2021 projects that nonresidential construction put in place for the United States will be over $500 billion per year from 2021 to 2024.

•Fast Act extension and highway trust fund infusion of $13.6 billion for the highway and transit account.

•According to the American Coal Ash Association, coal combustion residuals “CCRs” or “coal ash” are produced by coal-fired power plants and represent one of the largest categories of industrial waste in the U.S., as 78.6 million tons of CCRs were produced in 2019. The Company anticipates this could be a $50.0 billion industry over the next ten years.

Additionally, there is significant overlap in labor, skills and equipment needs between our Renewables segment and our Specialty Civil segment, which we expect will continue to provide us with operating efficiencies as we continue to expand this sector. The Company continues to cross leverage these two segments and continues to see future growth through new awards in our backlog:

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(in millions)
Segment December 31, 2020
New Awards in 2021(1)
Revenue Recognized in 2021
Backlog at September 30, 2021(2)
Specialty Civil $ 556.1  $ 779.2  $ 411.9  $ 923.4 

(1) New awards consist of the original contract price of projects added to our backlog plus or minus subsequent changes to the estimated total contract price of existing contracts.

(2) Backlog may differ from the transaction prices allocated to the remaining performance obligations as disclosed in Note 1. Business, Basis of Presentation and Significant Accounting Policies included in Part I, Item 1 of this Quarterly Report. Such differences relate to the timing of executing a formal contract or receiving a notice to proceed. More specifically, backlog sometimes may include awards for which a contract has not yet been executed or a notice to proceed has not been issued, but for which there are no remaining major uncertainties that the project will proceed (e.g., adequate funding is in place).

Backlog

    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 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.

The following table summarizes our backlog by segment as of September 30, 2021 and December 31, 2020:

(in millions)
Segments September 30, 2021 December 31, 2020
Renewables $ 1,773.9  $ 1,513.4 
Specialty Civil 923.4  556.1 
  Total $ 2,697.3  $ 2,069.5 
    
The Company expects to recognize 61.6% of revenue related to its backlog in the next twelve months.

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 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 ‘‘Item 1A. Risk Factors’’ in our Annual Report on Form 10-K filed with the SEC on March 8, 2021 for a discussion of the risks associated with our backlog.

Significant Factors Impacting Results

Our revenues, margins and other results of operations can be influenced by a variety of factors in any given period, including those described in Results of Operations and Forward Looking Statements, and those factors have caused fluctuations in our results in the past and are expected to cause fluctuations in our results in the future. Additional information with respect to certain of those factors is provided below.

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Seasonality. Typically, our revenues are lowest in the first quarter of the year because cold, snowy or wet conditions can create challenging working environments that are more costly for our customers or cause delays on projects. In addition, infrastructure projects often do not begin in a meaningful way until our customers finalize their capital budgets, which typically occurs during the first quarter. Second quarter revenues are typically higher than those in the first quarter, as some projects begin, but continued cold and wet weather can often impact productivity. Third quarter revenues are typically the highest of the year, as a greater number of projects are underway and operating conditions, including weather, are normally more accommodating. Generally, revenues during the fourth quarter are lower than the third quarter but higher than the second quarter, as many projects are completed and customers often seek to spend their capital budgets before year end. However, the holiday season and inclement weather can sometimes cause delays during the fourth quarter, reducing revenues and increasing costs.
Our revenue and results of operations for our Specialty Civil segment are also affected by seasonality but to a lesser extent as these projects are more geographically diverse and less impacted by severe weather. While the first and second quarter revenues are typically lower than the third and fourth quarter, we believe this geographical diversity has allowed this segment to be less seasonal over the course of the year.

Weather and Natural Disasters. The results of our business in a given period can be impacted by adverse weather conditions, severe weather events or natural disasters, which include, among other things, heavy or prolonged snowfall or rainfall, hurricanes, tropical storms, tornadoes, floods, blizzards, extreme temperatures, wildfires, pandemics and earthquakes. These conditions and events can negatively impact our financial results due to the termination, deferral or delay of projects, reduced productivity and exposure to significant liabilities.

Cyclical demand. Fluctuations in end-user demand within the industries we serve, or in the supply of services within those industries, can impact demand for our services. As a result, our business may be adversely affected by industry declines or by delays in new projects. Variations in project schedules or unanticipated changes in project schedules, in particular, in connection with large construction and installation projects, can create fluctuations in revenue, which may adversely affect us in a given period. In addition, revenue from master service agreements, while generally predictable, can be subject to volatility. The financial condition of our customers and their access to capital, variations in project margins, regional, national and global economic, political and market conditions, regulatory or environmental influences, and acquisitions, dispositions or strategic investments can also materially affect quarterly results. Accordingly, our operating results in any particular period may not be indicative of the results that can be expected for any other period.

Revenue mix. The mix of revenues based on the types of services we provide in a given period will impact margins, as certain industries and services provide higher-margin opportunities. Revenue derived from projects billed on a fixed-price basis totaled 99.5% for the three months ended September 30, 2021. Revenue and related costs for construction contracts billed on a time and materials basis are recognized as the services are rendered. Revenue derived from projects billed on a time and materials basis totaled 0.5% of consolidated revenue for the three months ended September 30, 2021.

Size, scope and complexity of projects. Larger or more complex projects with design or construction complexities; more difficult terrain requirements; or longer distance requirements typically yield opportunities for higher margins as we assume a greater degree of performance risk and there is greater utilization of our resources for longer construction timeframes. Furthermore, smaller or less complex projects typically have a greater number of companies competing for them, and competitors at times may more aggressively pursue available work. A greater percentage of smaller scale or less complex work also could negatively impact margins due to the inefficiency of transitioning between a larger number of smaller projects versus continuous production on fewer larger projects. Also, at times we may choose to maintain a portion of our workforce and equipment in an underutilized capacity to ensure we are strategically positioned to deliver on larger projects when they move forward.

Project variability and performance. Margins for a single project may fluctuate period to period due to changes in the volume or type of work performed, the pricing structure under the project contract or job productivity. Additionally, our productivity and performance on a project can vary from period to period based on a number of factors, including unexpected project difficulties or site conditions; project location, including locations with challenging operating conditions; whether the work is on an open or encumbered right of way; inclement weather or severe weather events; environmental restrictions or regulatory delays; protests, other political activity or legal challenges related to a project; and the performance of third parties.

Subcontract work and provision of materials. Work that is subcontracted to other service providers generally yields lower margins, and therefore an increase in subcontract work in a given period can decrease margins. Our customers are usually responsible for supplying the materials for their projects; however, under some contracts we agree to procure all or part of the required materials. Margins may be lower on projects where we furnish a significant amount of materials, including projects where we provide engineering, procurement and construction ("EPC") services, as our markup on materials is generally lower
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than our markup on labor costs. Furthermore, fluctuations in the price of materials we procure, including as a result of changes in U.S. or global trade relationships or other economic or political conditions, may impact our margins. In a given period, an increase in the percentage of work with higher materials procurement requirements may decrease our overall margins. See further discussion above in "Business Environment".

Coronavirus Pandemic Update

    The COVID-19 pandemic continues to significantly impact the United States and the world. Since the start of the COVID-19 pandemic, we have been focused on the safety of our employees and ensuring that our construction sites are managed by taking all reasonable precautions to protect on-site personnel.

    We are actively monitoring the COVID-19 pandemic, including disease and variant progression, vaccine response and availability, federal, state and local government actions, the Center for Disease Control (“CDC”) and World Health Organization (“WHO”) responses, supplier and supply chain risks, and prevention and containment measures to maintain business operations. As the COVID-19 pandemic and the responses by federal, state and local governments continue to evolve, we continue to make adjustments to our practices and policies to protect the health of our employees and those we work with at our projects and office locations, while continuing to provide our essential construction services to our clients.

    We believe that the foregoing actions have significantly reduced the Company’s exposure to the effects of COVID-19, including our workforce’s exposure to infection from COVID-19. As of today, we have had a low incidence of infection in our workforce. As vaccines become increasingly available to our workforce, clients and their families, we are evaluating and redoing protocols as management deems appropriate and based on federal, state and local government recommendations and policies.

We have noticed an impact of COVID-19 in adding new projects to our backlog. Our bidding activity continues at very high levels, but the final approval process for some projects, especially in our Specialty Segment, has been slowed due to COVID-19. Despite that, we were able to increase total backlog for September 30, 2021 compared to December 31, 2020.

We are unable to predict whether COVID-19 will continue to negatively impact the construction business and the degree of such impact as more of the population becomes vaccinated. We do not believe that COVID-19 is having a negative impact on our liquidity. We could see a change in this status if we experience future work stoppages at our projects due to significant supply chain or production disruptions, which would prevent us from billing customers for new work performed. Additionally, we could experience a change if we experience future work stoppages, shortages or disruptions as a result of seeking to comply with forthcoming federal vaccine mandate rules from the Occupational Safety and Health Administration. If the federal, state and local governments proceed with more restrictive measures, and our customers determine to stop work or terminate projects, these actions would negatively impact our business, results of operations, liquidity and prospects. In addition, the Company is unable to predict any changes in the market for bonding by our sureties.

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Results of Operations

Three Months Ended September 30, 2021 and 2020

    The following table reflects our condensed consolidated results of operations in dollar and percentage of revenue terms for the periods indicated:
Three Months Ended September 30,
(in thousands) 2021 2020
Revenue $ 697,759  100.0  % 522,232  100.0  %
Cost of revenue 625,589  89.7  % 463,343  88.7  %
Gross profit 72,170  10.3  % 58,889  11.3  %
Selling, general and administrative expenses 36,539  5.2  % 29,656  5.7  %
Income from operations 35,631  5.1  % 29,233  5.6  %
Interest expense, net (9,403) (1.3) % (14,975) (2.9) %
Loss on extinguishment of debt (101,006) (14.5) % —  —  %
Warrant liability fair value adjustment (17,582) (2.5) % 3,000  0.6  %
Other income (expense) (5,040) (0.7) % 161  —  %
Income from continuing operations before income taxes (97,400) (14.0) % 17,419  3.3  %
Provision for income taxes (2,249) (0.3) % (6,153) (1.2) %
Net income $ (99,649) (14.3) % 11,266  2.2  %
    
For a detailed discussion of Revenue and Gross profit see Segment Results, below.

Revenue. Revenue increased 33.6%, or $175.5 million, in the third quarter of 2021, compared to the same period in 2020.

Gross profit. Gross profit increased 22.6%, or $13.3 million, in the third quarter of 2021, compared to the same period in 2020. As a percentage of revenue, gross profit was 10.3% in the quarter, as compared to 11.3% in the prior-year period.

Selling, general and administrative expenses. Selling, general and administrative expenses increased 23.2%, or $6.9 million, in the third quarter of 2021, compared to the same period in 2020. Selling, general and administrative expenses were 5.2% of revenue in the third quarter of 2021, compared to 5.7% in the same period in 2020. The increase in selling, general and administrative expenses was primarily driven by:

•Staff related benefit costs of $1.9 million;
•Business travel costs of $1.5 million;
•Information technology costs of $1.1 million related to software licensing;
•Stock compensation expense of $0.4 million; and
•Other miscellaneous selling, general and administrative costs of $2.0 million.

Interest expense, net. Interest expense, net decreased by $5.6 million, in the third quarter of 2021, compared to the same period in 2020. This decrease was primarily driven by the redemption of Series B Preferred Stock in August 2021 resulting in less interest in the current quarter compared to prior year.

Other income (expense). Other income (expense), for discussion, includes Loss on extinguishment of debt, Warrant liability fair value adjustment and Other income (expense) decreased by $126.8 million, to expense of $123.6 million in the third quarter of 2021 compared to income of $0.2 million for the same period in 2020. This decrease was primarily the result of increases in the following:

•Loss on debt extinguishment of $101.0 million;
•Warrant liability fair market value increase of $17.6 million; and
•Other expense related to transaction costs of $5.1 million.
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See further discussion in Note 5. Fair Value of Financial Instruments and Note 6. Debt and Series B Preferred Stock included in Item 1 of this Quarterly Report on Form 10-Q.

Provision for income taxes. Provision for income taxes decreased $3.9 million, to $2.2 million in the third quarter of 2021, compared to $6.2 million for the same period in 2020. The effective tax rates for the period ended September 30, 2021 and 2020 were (2.3)% and 35.3%, respectively. The lower effective tax rate in the third quarter of 2021 was primarily attributable to lower permanent differences related to interest and other expenses accrued for the Series B Preferred Stock and executive compensation, which are not deductible for federal and state income taxes. There were no changes in uncertain tax positions during the periods ended September 30, 2021 and 2020.

Segment Results

The Company operated our business as two reportable segments: the Renewables segment and the Specialty Civil segment. Each of our reportable segments is comprised of similar business units that specialize in services unique to the respective markets that each segment serves. The classification of revenue and gross profit for segment reporting purposes can at times require judgment on the part of management. Our segments may perform services across industries or perform joint services for customers in multiple industries. To determine reportable segment gross profit, certain allocations, including allocations of shared and indirect costs, such as facility costs, equipment costs and indirect operating expenses, were made based on segment revenue.

The following table sets forth segment revenues and gross profit for the years indicated, as well as the dollar and percentage change from the prior year:

Three Months Ended September 30,
(in thousands) 2021 2020
Segment Revenue % of Total Revenue Revenue % of Total Revenue
Renewables $ 517,172  74.1  % $ 327,051  62.6  %
Specialty Civil 180,587  25.9  % 195,181  37.4  %
  Total revenue $ 697,759  100.0  % $ 522,232  100.0  %
Segment Gross Profit Gross Profit Margin Gross Profit Gross Profit Margin
Renewables $ 51,867  10.0  % $ 37,371  11.4  %
Specialty Civil 20,303  11.2  % 21,518  11.0  %
  Total gross profit $ 72,170  10.3  % $ 58,889  11.3  %


Renewables Segment Results

Revenue. Renewables revenue was $517.2 million for the quarter ended September 30, 2021 as compared to $327.1 million for the same period in 2020, an increase of 58.1%, or $190.1 million. The increase in revenue was primarily due to:

•The Company had 17 wind projects of greater than $5.0 million of revenue in the third quarter of 2021 compared to 20 wind projects during the same period in 2020;
•The average revenue of the 17 wind projects was $28.5 million in 2021 compared to $15.5 million related to the 20 wind projects during the same period in 2020; and
•Solar revenue increased $35.0 million for the quarter ended September 30, 2021 when compared to the same period for 2020.

Gross profit. Renewables gross profit was $51.9 million for the quarter ended September 30, 2021 as compared to $37.4 million for 2020, an increase of 38.8%, or $14.5 million. As a percentage of revenue, gross profit was 10.0% in 2021, as compared to 11.4% in 2020. The decrease in percentage was primarily due to challenges related to hurricane-related rainfall coupled with supply chain disruption in our solar business that caused inefficiencies in project sequencing on a few large projects.
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Specialty Civil Segment Results

Revenue. Specialty Civil revenue was $180.6 million for the quarter ended September 30, 2021 as compared to $195.2 million for 2020, a decrease of 7.5%, or $14.6 million. The decrease in revenue was primarily due to:

•Heavy civil and rail markets had less construction projects and a lower average value of projects in the third quarter of 2021 compared to 2020; and
•Offsetting the decrease in revenue was a slight increase in our environmental remediation market due to larger projects in the third quarter of 2021.

Gross profit. Specialty Civil gross profit was $20.3 million for the quarter ended September 30, 2021 as compared to $21.5 million for 2020, a decrease of 5.6%, or $1.2 million. As a percentage of revenue, gross profit was 11.2% in 2021, as compared to 11.0% in 2020. The increase in percentage was primarily due to growth in the environmental remediation market and the project mix compared to prior year.

Results of Operations

Nine Months Ended September 30, 2021 and 2020

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

Nine Months Ended September 30,
(in thousands) 2021 2020
Revenue $ 1,534,319  100.0  % $ 1,360,999  100.0  %
Cost of revenue 1,392,125  90.7  % 1,214,828  89.3  %
Gross profit 142,194  9.3  % 146,171  10.7  %
Selling, general and administrative expenses 92,279  6.0  % 87,214  6.4  %
Income from operations 49,915  3.3  % 58,957  4.3  %
Interest expense, net (38,257) (2.5) % (47,240) (3.5) %
Loss on extinguishment of debt (101,006) (6.6) % —  —  %
Warrant liability fair value adjustment (17,216) (1.1) % 171  —  %
Other income (expense) (4,798) (0.3) % 257  —  %
Loss from continuing operations before income taxes (111,362) (7.3) % 12,145  0.9  %
Provision for income taxes (4,022) (0.3) % (10,025) (0.7) %
Net loss $ (115,384) (7.5) % $ 2,120  0.2  %

For a detailed discussion of Revenue and Gross profit see Segment Results, below.

Revenue. Revenue increased 12.7%, or $173.3 million, in the first nine months of 2021, compared to the same period in 2020.

Gross profit. Gross profit decreased 2.7%, or $4.0 million, in the first nine months of 2021, compared to the same period in 2020. As a percentage of revenue, gross profit was 9.3%, as compared to 10.7% in the prior-year period.

Selling, general and administrative expenses. Selling, general and administrative expenses increased 5.8%, or $5.1 million, in the first nine months of 2021, compared to the same period in 2020. Selling, general and administrative expenses were 6.0% of revenue in the first nine months of 2021, compared to 6.4% in the same period in 2020. The increase in selling, general and administrative expenses was primarily driven by:

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•Information technology costs of $2.3 million related to software licensing;
•Business travel costs of $1.7 million; and
•Stock-based compensation of $1.1 million.

Interest expense, net. Interest expense, net decreased by $9.0 million in the first nine months of 2021, compared to the same period in 2020. This decrease was primarily driven by the redemption of Series B Preferred Stock.
Other income (expense). Other income (expense), for discussion, includes Loss on extinguishment of debt, Warrant liability fair value adjustment and Other income (expense) decreased by $123.4 million, to expense of $(123.0) million in the first nine months of 2021 compared to income of $0.3 million for the same period in 2020. This decrease was primarily the result of increases in the following:

•Loss on debt extinguishment of $101.0 million;
•Warrant liability fair market value increase of $17.2 million; and
•Other expense related to transaction costs of $5.1 million.

See further discussion in Note 5. Fair Value of Financial Instruments and Note 6. Debt and Series B Preferred Stock included in Item 1 of this Quarterly Report on Form 10-Q.

Provision for income taxes. Provision for income taxes decreased $6.0 million, to $4.0 million in the first nine months of 2021, compared to $10.0 million for the same period in 2020. The effective tax rates for the first nine months of 2021 and 2020 were (3.6)% and 82.5%, respectively. The lower effective tax rate in the first nine months of 2021 was primarily attributable to lower permanent differences related to interest and other expenses accrued for the Series B Preferred Stock and executive compensation, which are not deductible for federal and state income taxes. There were no changes in uncertain tax positions during the periods ended September 30, 2021 and 2020.

Segment Results

The following table sets forth segment revenues and gross profit for the years indicated, as well as the dollar and percentage change from the prior year:

Nine Months Ended September 30,
(in thousands) 2021 2020
Segment Revenue % of Total Revenue Revenue % of Total Revenue
Renewables $ 1,122,400  73.2  % $ 900,059  66.1  %
Specialty Civil 411,919  26.8  % 460,940  33.9  %
  Total revenue $ 1,534,319  100.0  % $ 1,360,999  100.0  %
Segment Gross Profit Gross Profit Margin Gross Profit Gross Profit Margin
Renewables $ 106,930  9.5  % $ 100,183  11.1  %
Specialty Civil 35,264  8.6  % 45,988  10.0  %
  Total gross profit $ 142,194  9.3  % $ 146,171  10.7  %

Renewables Segment Results

Revenue. Renewables revenue was $1,122.4 million for the first nine months of 2021 as compared to $900.1 million for the same period in 2020, an increase of 24.7%, or $222.3 million. The increase in revenue was primarily due to:

•Solar revenue increased $169.0 million for the first nine months of 2021 when compared to the same period for 2020; and
•Wind revenue increased $53.3 million for the first nine months of 2021 when compared to the same period for 2020, due to a 4% larger average value of project.

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Gross profit. Renewables gross profit was $106.9 million for the first nine months of 2021 as compared to $100.2 million for 2020, an increase of 6.7%, or $6.7 million. As a percentage of revenue, gross profit was 9.5% in 2021, as compared to 11.1% in 2020. The decrease in percentage was primarily due to challenges related to hurricane-related rainfall coupled with supply chain disruption in our solar business caused inefficient working conditions on a few large projects.

Specialty Civil Segment Results

Revenue. Specialty Civil revenue was $411.9 million for the first nine months of 2021 as compared to $460.9 million for 2020, a decrease of 10.6%, or $49.0 million. The decrease in revenue was primarily due to:

•Rail markets continue to experience a decrease in revenue primarily due to delay in project starts for railroads and lower budgets decreasing bidding opportunities;
•Heavy civil market had less construction projects and a lower average value of projects in the first nine months of 2021 compared to 2020; and
•Offsetting the decrease in revenue was a slight increase in our environmental remediation market due to more projects in the first nine months of 2021 compared to 2020.

Gross profit. Specialty Civil gross profit was $35.3 million for the first nine months of 2021 as compared to $46.0 million for 2020, a decrease of 23.3%, or $10.7 million. As a percentage of revenue, gross profit was 8.6%, as compared to 10.0% during the same period in 2020. In the first nine months of 2021, the Company had less projects under construction in the heavy civil and rail markets, which contributed to lower utilization of labor and equipment fixed costs, partially offset by increases in the environmental remediation market.

Liquidity and Capital Resources

Overview

    Our primary sources of liquidity are cash flows from operations, our cash balances and availability under our new Credit Agreement. Our primary liquidity needs are for working capital, debt service, income taxes, capital expenditures, insurance collateral, and strategic acquisitions. As of September 30, 2021, we had approximately $158.3 million in cash, and $116.3 million availability under our Credit Agreement.

We anticipate that our existing cash balances, funds generated from operations, and borrowings will be sufficient to meet our cash requirements for the next twelve months. No assurance can be given, however, that these sources will be sufficient, because there are many factors which could affect our liquidity, including some that are beyond our control. Please see “Item 1A. Risk Factors” in Part I of our Annual Report for a discussion of the risks associated with our liquidity.

Capital Expenditures

    For the nine months ended September 30, 2021, we incurred $22.7 million in finance lease payments and an additional $24.0 million in cash purchases for equipment. We estimate that we will spend approximately two percent of revenue for capital expenditures for 2021. 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. 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 our Renewable projects. Timing of billing milestones and project close-outs can contribute to changes in unbilled revenue. As of September 30, 2021,
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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 $550.1 million as of September 30, 2021 from $309.0 million as of December 31, 2020, due primarily to 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 may 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) 2021 2020
Net cash used in operating activities 1,296  (58,798)
Net cash used in investing activities (21,043) (1,729)
Net cash used in financing activities 13,968  (29,434)
    
Operating Activities. Net cash provided by operating activities for the nine months ended September 30, 2021 was $1.3 million, as compared to net cash used in operating activities of $58.8 million over the same period in 2020. 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 was primarily attributable to lower payments on payables and accrued liabilities partially offset by lower collections of accounts receivable and contract assets due to the timing of projects.

Investing Activities. Net cash used in investing activities for the nine months ended September 30, 2021 was $21.0 million, as compared to $1.7 million over the same period in 2020. The increase in net cash used by investing activities was primarily attributable to an increase in purchases of property, plant and equipment.

Financing Activities. Net cash provided by financing activities for the nine months ended September 30, 2021 was $14.0 million, as compared to net cash used in financing activities of $29.4 million over the same period in 2020. The increase in net cash provided by financing activities was primarily attributable to proceeds from the debt and equity offerings, offset by the extinguishment of the term loan and Series B Preferred Stock.

Deferred Taxes - COVID-19

The CARES Act was enacted on March 27, 2020, in response to the COVID-19 emergency. The CARES Act includes many measures to assist companies, including temporary changes to income and non-income-based tax laws. Some of the key income tax-related provisions of the CARES Act include:

•Eliminating the 80% of taxable income limitation by allowing corporate entities to fully utilize net operating losses (“NOLs”) to offset taxable income in 2018, 2019 or 2020.

•Allowing NOLs originating in 2018, 2019 or 2020 to be carried back five years.

•Increasing the net interest expense deduction limit to 50% of adjusted taxable income from 30% for tax years beginning 1 January 2019 and 2020.

•Allowing taxpayers with alternative minimum tax (“AMT”) credits to claim a refund in 2020 for the entire amount of the credit instead of recovering the credit through refunds over a period of years, as originally enacted by the Tax Cuts and Jobs Act (“TCJA”).

•Payroll tax deferral.

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IEA has also made use of the payroll deferral provision to defer the 6.2% social security tax, or approximately $13.6 million, through December 31, 2020. This amount is required to be paid at 50% on December 31, 2021 and December 31, 2022.

Credit Agreement

On August 17, 2021, Services, as the borrower, and certain guarantors (including the Company), entered into the Credit Agreement. The Credit Agreement provides for a $150 million senior secured revolving credit facility, and is guaranteed by the Company and certain subsidiaries of the Company and is secured by a security interest in substantially all of their personal property and assets. For a description of the terms and conditions of the Credit Agreement, please see “Note 6 – Debt and Series B Preferred Stock” in the notes to our Condensed Consolidated Financial Statements.

In connection with the Senior Unsecured Notes offering, we repaid the Term Loan in full and the Third A&R Credit Agreement was terminated.

Contractual Obligations

    The following table sets forth our contractual obligations and commitments for the periods indicated as of September 30, 2021.
Payments due by period
(in thousands) Total Remainder of 2021 2022 2023 2024 2025 Thereafter
Debt (principal) (1)
304,170  633  1,952  838  442  239  300,066 
Debt (interest) (2)
159,407  185  20,002  19,933  19,901  19,884  79,502 
Finance leases (3)
56,563  6,846  25,050  11,125  6,951  4,870  1,721 
Operating leases (4)
51,009  3,247  11,983  9,476  5,058  2,285  18,960 
Total $ 571,149  $ 10,911  $ 58,987  $ 41,372  $ 32,352  $ 27,278  $ 400,249 
(1)Represents the contractual principal payment due dates on our outstanding debt.
(2)Represents interest at the stated rate of 6.625%.
(3)We have obligations, inclusive of associated interest, recognized under various finance leases for equipment totaling $56.6 million at September 30, 2021. Net amounts recognized within property, plant and equipment, net in the condensed consolidated balance sheet under these financed lease agreements at September 30, 2021 totaled $74.7 million.
(4)We lease real estate, vehicles, office equipment and certain construction equipment from unrelated parties under non-cancelable leases. Lease terms range from month-to-month to terms expiring through 2038.

    For detailed discussion and additional information pertaining to our debt instruments, see Note 6. Debt and Series B Preferred Stock and Note 7. Commitments and Contingencies in the notes to our condensed consolidated financial statements, included in Part I, 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 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.

    As of September 30, 2021 and December 31, 2020, the Company was contingently liable under letters of credit issued under our credit facility in the amount of $33.7 million and $7.8 million, respectively, related to projects and insurance.

    As of September 30, 2021 and December 31, 2020, the Company had outstanding surety bonds on projects with nominal amounts of $3.2 billion and $2.8 billion, respectively. The remaining approximate exposure related to these surety bonds amounted to approximately $400.0 million and $293.1 million, respectively.




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Recently Issued Accounting Pronouncements

    See Note 1. Business, Basis of Presentation and Summary of Significant Accounting Policies in the notes to our condensed consolidated financial statements, included in Part I, Item 1.

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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 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 lack of concentration and the high credit rating of our customers.

Item 4. Control and Procedures

    Attached as exhibits to this Quarterly Report on Form 10-Q are certifications of IEA’s Chief Executive Officer and Chief Financial Officer that are required in accordance with Rule 13a-14 of the Exchange Act of 1934. This section includes information concerning the controls and controls evaluation referred to in the certifications, and it should be read in conjunction with the certifications.

Evaluation of Disclosure Controls and Procedures

    Our management has established and maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. The disclosure controls and procedures are also designed to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

    As of the end of the period covered by this Quarterly Report, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Exchange Act. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based on this evaluation, these officers have concluded that, as of September 30, 2021, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2021, there has been no change in our internal control over financial reporting, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Part II. OTHER INFORMATION
Item 1. Legal Proceedings

For information regarding legal proceedings, see Note 7. Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements included in Item 1. Financial Statements of Part I of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

Item 1A. Risk Factors

    At September 30, 2021, there have been no other material changes, except as mentioned below, from the risk factors previously disclosed in the Company's Annual Report on Form 10-K filed with the SEC on March 8, 2021, which is accessible on the SEC's website at www.sec.gov, except as described below.

Our Repurchase Program may not enhance long-term value and repurchases, if any, could increase the price and volatility of our warrants and common stock, and diminish our cash reserves.

On November 4, 2021, the Company’s Board of Directors authorized a repurchase program for the Company’s publicly traded warrants to purchase common stock, which trade on the NASDAQ under the symbol IEAWW. This repurchase program allows the Company to purchase up to $25.0 million of warrants, at prevailing prices, in open market or negotiated transactions, subject to market conditions and other considerations, beginning November 11, 2021, and it will end no later than the expiration of the warrants on March 26, 2023. The repurchase program does not obligate the Company to make any repurchases and it may be suspended at any time.

The timing and actual number of warrants repurchased depend on a variety of factors including price, corporate and regulatory requirements, available cash, and other market conditions. Warrant repurchases may not enhance shareholder value, as any warrants repurchased could affect the price of our warrants and common stock, increase their price volatility and could potentially reduce the market liquidity for our warrants and common stock. Additionally, repurchases under this repurchase program will diminish our cash reserves, which impacts our ability to support our operations and pursue possible future opportunities and acquisitions.

Item 5. Other Information

On November 4, 2021, the Company’s Board of Directors authorized a repurchase program for the Company’s publicly traded warrants to purchase common stock, which trade on the NASDAQ under the symbol IEAWW. This repurchase program allows the Company to purchase up to $25.0 million of warrants, at prevailing prices, in open market or negotiated transactions, subject to market conditions and other considerations, beginning November 11, 2021, and it will end no later than the expiration of the warrants on March 26, 2023. This repurchase program does not obligate the Company to make any repurchases and it may be suspended at any time.


Item 6. Exhibits

(a)    Exhibits.
    
Exhibit Number Description
2.1#
45

2.2
2.3
2.4
2.5
2.6
2.7
2.8#
2.9
3.1
46

3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
4.2
4.3
4.4
4.5
4.6
4.7
47

4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20
4.21
4.22*
48

10.1
10.2
10.3
10.4#
31.1*
31.2*
32.1**
32.2**
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
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.INS)
*Filed herewith.
**Furnished herewith
† Indicates a management contract or compensatory plan or arrangement.
# Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. We will furnish the omitted schedules to the Securities and Exchange Commission upon request by the Commission.

49


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, 2021 By: /s/ Peter J. Moerbeek
  Name: Peter J. Moerbeek
  Title:   Executive Vice President, Chief Financial Officer
  Principal Financial and Accounting Officer


Exhibit 4.22

PRE-FUNDED WARRANT TO PURCHASE COMMON STOCK
 
Number of Shares: 4,327,322
(subject to adjustment)
 
Warrant No. W-34 Original Issue Date: August 2, 2021
Infrastructure and Alternatives, Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, ASOF Holdings I, L.P., the registered holder hereof or its registered permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company a total of 4,327,322 shares of Common Stock of the Company, par value $0.0001 per share (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”), at an exercise price per share equal to $0.0001 per share (as adjusted from time to time as provided in Section 9 below and subject to the minimum price described therein, the “Exercise Price”), upon surrender of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”) at any time and from time to time on or after August 2, 2021 (the “Original Issue Date”), which 4,327,322 Warrant Shares represents the balance of the Warrant Shares to which the Holder is entitled to purchase following the partial exercise of Warrant No. W-33 on October 3, 2021 (following which such Warrant No. W-33 was cancelled and this Warrant was issued), subject to the following terms and conditions:
 
1. Definitions. For purposes of this Warrant, the following terms shall have the following meanings:
 
(a) “Affiliate” means any Person directly or indirectly controlled by, controlling or under common control with, a Holder, but only for so long as such control shall continue. For purposes of this definition, “control” (including, with correlative meanings, “controlled by,” “controlling” and “under common control with”) means, with respect to a Person, possession, direct or indirect, of (a) the power to direct or cause direction of the management and policies of such Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), or (b) at least 50% of the voting securities (whether directly or pursuant to any option, warrant or other similar arrangement) or other comparable equity interests. Notwithstanding the foregoing, with respect to any Holder that is an Ares Party (as defined in the Stockholders Agreement), the term “Affiliate” shall only include other Ares Parties (each as defined in the Stockholders Agreement) and their Reporting Affiliates (as defined in the Stockholders Agreement).

(b) “Ares Party” has the meaning set forth in the Stockholders Agreement.
 
(c) “Capital Stock” means (a) any shares, interests, participations or other equivalents (however designated) of capital stock of a corporation; (b) any ownership interests in a Person other than a corporation, including membership interests, partnership interests, joint venture interests and beneficial interests; and (c) any warrants, options, convertible or exchangeable securities, subscriptions, rights (including any preemptive or similar rights), calls or other rights to purchase or acquire any of the foregoing.

(d) “Commission” means the United States Securities and Exchange Commission.
 
(e) “Common Stock” means the Company’s common stock, par value $0.0001 per share.

(f) “Closing Sale Price” means, for any security as of any date, the last trade price for such security on the Principal Trading Market for such security, as reported by Bloomberg Financial Markets, or, if such Principal Trading Market begins to operate on an extended hours basis and does not designate the last trade price, then the last trade price of such security prior to 4:00 P.M., New York City time, as reported by Bloomberg Financial Markets, or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg Financial Markets. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then the Board of Directors of the Company shall use its good faith judgment to determine the fair market value. The Board of Directors’
{N4460521.1}    1        



determination shall be binding upon all parties absent demonstrable error. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.
 
(g) “Principal Trading Market” means the national securities exchange or other trading market on which the Common Stock is primarily listed on and quoted for trading, which, as of the Original Issue Date, is the Nasdaq Capital Market.
 
(h) “Registration Statement” means the Company’s Registration Statement on Form S-3 (File No. 333-251148), declared effective on December 18, 2020.

(i) “Reported Outstanding Share Number” means the number of issued and outstanding shares of Common Stock as reflected in the Company’s records as of the applicable date. As of the Original Issue Date, the Reported Outstanding Share Number shall include any shares of Common Stock issued on the Original Issue Date pursuant to the Registration Statement in a concurrent offering of Common Stock and otherwise issued to the Holder.
 
(j) “Securities Act” means the Securities Act of 1933, as amended.

(k) “Stockholders’ Agreement” means the Stockholders’ Agreement, dated August 2, 2021, by and among the Company, Ares Special Situations Fund IV, L.P. and ASOF Holdings I, L.P.

(l) “Trading Day” means any weekday on which the Principal Trading Market is normally open for trading.

(n) “Transfer Agent” means Continental Stock Transfer & Trust Company, the Company’s transfer agent and registrar for the Common Stock, and any successor appointed in such capacity.
 
2. Issuance of Securities; Registration of Warrants. The Warrant, as initially issued by the Company, is offered and sold pursuant to the Registration Statement. As of the Original Issue Date, the Warrant Shares are issuable under the Registration Statement. Accordingly, the Warrant and, assuming issuance pursuant to the Registration Statement or an exchange meeting the requirements of Section 3(a)(9) of the Exchange Act as in effect on the Original Issue Date, the Warrant Shares, are not “restricted securities” under Rule 144 promulgated under the Securities Act. The Company shall register ownership of this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder (which shall include the initial Holder or, as the case may be, any assignee to which this Warrant is assigned hereunder) from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
 
3. Registration of Transfers. This Warrant and all rights hereunder are transferable, without charge to the holder hereof (except for transfer taxes, if any), and subject to compliance with all applicable securities laws, the Company shall, or will cause its Transfer Agent to, register the transfer of all or any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, and payment for all applicable transfer taxes (if any). Upon any such registration or transfer, a new warrant to purchase Common Stock in substantially the form of this Warrant (any such new warrant, a “New Warrant”) evidencing the portion of this Warrant so transferred shall be issued to the transferee, and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations in respect of the New Warrant that the Holder has in respect of this Warrant. The Company shall, or will cause its Transfer Agent to, prepare, issue and deliver at the Company’s own expense any New Warrant under this Section 3. Until due presentment for registration of transfer, the Company may treat the registered Holder hereof as the owner and holder for all purposes, and the Company shall not be affected by any notice to the contrary.
 
4. Exercise and Duration of Warrants.
 
(a) All or any part of this Warrant shall be exercisable by the registered Holder in any manner permitted by this Warrant at any time and from time to time on or after the Original Issue Date, subject to the restrictions set forth in Section 11 hereof.
 
{N4460521.1}    2        



(b) The Holder may exercise this Warrant by delivering to the Company (i) an exercise notice, in the form attached as Schedule 1 hereto (the “Exercise Notice”), completed and duly signed, and (ii) payment of the Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised (which may take the form of a “cashless exercise” if so indicated in the Exercise Notice pursuant to Section 10 below), and the date on which the last of such items is delivered to the Company (as determined in accordance with the notice provisions hereof) is an “Exercise Date.” The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares, if any. The aggregate exercise price of this Warrant, except for the Exercise Price, was pre-funded to the Company on or before the Original Issue Date, and consequently no additional consideration (other than the Exercise Price) shall be required by to be paid by the Holder to effect any exercise of this Warrant. The Holder shall not be entitled to the return or refund of all, or any portion, of such pre-funded exercise price under any circumstance or for any reason whatsoever.
 
5. Delivery of Warrant Shares.
 
(a) Upon exercise of this Warrant, the Company shall promptly (but in no event later than three (3) Trading Days after the Exercise Date), upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with The Depository Trust Company (“DTC”) through its Deposit or Withdrawal at Custodian system or if the certificates are required to bear a legend regarding restriction on transferability, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise (or to make a notation in book entry for uncertificated shares). The Holder, or any natural person or legal entity (each, a “Person”) so designated by the Holder to receive Warrant Shares, shall be deemed to have become the holder of record of such Warrant Shares as of the Exercise Date, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares, as the case may be.  The Company agrees to use its commercially reasonable efforts to maintain a transfer agent that is a participant in the Fast Automated Securities Transfer Program (the “FAST Program”) so long as this Warrant remains outstanding and exercisable.
 
(b) If by the close of the third (3rd) Trading Day after the Exercise Date, the Company fails to deliver to the Holder a certificate representing the required number of Warrant Shares in the manner required pursuant to Section 5(a) or fails to credit the Holder’s balance account with DTC for such number of Warrant Shares to which the Holder is entitled, and if after such third (3rd) Trading Day and prior to the receipt of such Warrant Shares, the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall, within three (3) Trading Days after the Holder’s request and in the Holder’s sole discretion, either (1) pay in cash to the Holder an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased, at which point the Company’s obligation to deliver such certificate (and to issue such Warrant Shares) shall terminate or (2) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Warrant Shares and pay cash to the Holder in an amount equal to the excess (if any) of Holder’s total purchase price (including brokerage commissions, if any) for the of shares of Common Stock so purchased in the Buy-In over the product of (A) the number of shares of Common Stock purchased in the Buy-In, times (B) the Closing Sale Price of a share of Common Stock on the Exercise Date.
 
(c) To the extent permitted by law and subject to Section 5(b), the Company’s obligations to issue and deliver Warrant Shares in accordance with and subject to the terms hereof (including the limitations set forth in Section 11 below) are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance that might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Subject to Section 5(b), nothing herein shall limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief
{N4460521.1}    3        



with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
 
6. Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, transfer agent fee or other incidental tax or expense (excluding any applicable stamp duties) in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or the Warrants in a name other than that of the Holder or an Affiliate thereof. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.
 
7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction (in such case) and, in each case, a customary and reasonable indemnity and surety bond, if requested by the Company. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe. If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.
 
8. Reservation of Warrant Shares. The Company covenants that it will, at all times while this Warrant is outstanding, reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares that are issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens, and charges with respect to the issuance thereof, other than those arising under the Stockholders’ Agreement. The Company will take all such action as may be reasonably necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any securities exchange or automated quotation system upon which the Common Stock may be listed. The Company further covenants that it will not, without the prior written consent of the Holder, take any actions to increase the par value of the Common Stock at any time while this Warrant is outstanding.
 
9. Minimum Exercise Price; Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9.
 
(a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock issued and outstanding on the Original Issue Date and in accordance with the terms of such stock on the Original Issue Date or as amended, as described in the Registration Statement, that is payable in shares of Common Stock, (ii) subdivides its outstanding shares of Common Stock into a larger number shares of Common Stock, (iii) combines its outstanding shares of Common Stock into a smaller number of shares of Common Stock or (iv) issues by reclassification any additional shares of Common Stock of the Company, then in each such case the Exercise Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately before such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, provided, however, that if such record date shall have been fixed and such dividend is not fully paid on the date fixed therefor, the Exercise Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Exercise Price shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends. Any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.
  
{N4460521.1}    4        



(b) Fundamental Transactions. If, at any time while this Warrant is outstanding (i) the Company effects any merger or consolidation of the Company with or into another Person, in which the Company is not the surviving entity and in which the stockholders of the Company immediately prior to such merger or consolidation do not own, directly or indirectly, at least 50% of the voting power of the surviving entity immediately after such merger or consolidation, (ii) the Company effects any sale to another Person of all or substantially all of its assets in one transaction or a series of related transactions, (iii) pursuant to any tender offer or exchange offer (whether by the Company or another Person), holders of capital stock tender shares representing more than 50% of the voting power of the capital stock of the Company and the Company or such other Person, as applicable, accepts such tender for payment, (iv) the Company consummates a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement but not including any underwritten offering, registered direct offering, private placement or other transaction with the primary purpose of financing or fund raising for the Company) with another Person whereby such other Person acquires more than the 50% of the voting power of the capital stock of the Company (except for any such transaction in which the stockholders of the Company immediately prior to such transaction maintain, in substantially the same proportions, the voting power of such Person immediately after the transaction), or (v) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock covered by Section 9(a) above) (in any such case, a “Fundamental Transaction”), then upon such Fundamental Transaction the Holder shall have the right to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant without regard to any limitations on exercise contained herein (the “Alternate Consideration”). The Company shall not effect any Fundamental Transaction in which the Company is not the surviving entity or the Alternate Consideration includes securities of another Person unless (i) the Alternate Consideration is solely cash and the Company provides for the simultaneous “cashless exercise” of this Warrant pursuant to Section 10 below or (ii) prior to or simultaneously with the consummation thereof, any successor to the Company, surviving entity, ultimate parent (if the Company is a subsidiary of another Person) or other Person (including any purchaser of assets of the Company) shall assume the obligation to deliver to the Holder such Alternate Consideration as, in accordance with the foregoing provisions, the Holder may be entitled to receive, and the other obligations under this Warrant. The provisions of this paragraph (c) shall similarly apply to subsequent transactions analogous of a Fundamental Transaction type.
 
(c) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to Section 9, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the increased or decreased number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.
 
(e) Calculations. All calculations under this Section 9 shall be made to the nearest one-thousandth of one cent or the nearest share, as applicable.
 
(f) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will, at the written request of the Holder, promptly compute such adjustment, in good faith, in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s Transfer Agent.
 
(g) Notice of Corporate Events. If, while this Warrant is outstanding, the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including, without limitation, any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then, except if such notice and the contents thereof shall be deemed to constitute material non-public information, the Company shall deliver to the Holder a notice of such transaction at least ten (10) days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or
{N4460521.1}    5        



vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice. In addition, if while this Warrant is outstanding, the Company authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction contemplated by Section 9(c), other than a Fundamental Transaction under clause (iii) of Section 9(c), the Company shall deliver to the Holder a notice of such Fundamental Transaction at least thirty (30) days prior to the date such Fundamental Transaction is consummated. Holder agrees to maintain any information disclosed pursuant to this Section 9(g) in confidence until such information is publicly available, and shall comply with applicable law with respect to trading in the Company’s securities following receipt any such information.
 
10. Payment of Exercise Price. Notwithstanding anything contained herein to the contrary, the Holder may, in its sole discretion, satisfy its obligation to pay the Exercise Price through a “cashless exercise”, in which event the Company shall issue to the Holder the number of Warrant Shares in an exchange of securities effected pursuant to Section 3(a)(9) of the Securities Act, as determined as follows:
 
X = Y [(A-B)/A]
 
where:
 
“X” equals the number of Warrant Shares to be issued to the Holder;
 
“Y” equals the total number of Warrant Shares with respect to which this Warrant is then being exercised;
 
“A” equals the Closing Sale Prices of the Common Stock (as reported by Bloomberg Financial Markets) as of the Trading Day on the date immediately preceding the Exercise Date; and
 
“B” equals the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a “cashless exercise” transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the Original Issue Date (provided that the Commission continues to take the position that such treatment is proper at the time of such exercise). In the event that the Registration Statement or another registration statement registering the issuance of Warrant Shares is, for any reason, not effective at the time of exercise of this Warrant, then the Warrant may only be exercised through a cashless exercise, as set forth in this Section 10. Except as set forth in Section 5(b) (Buy-In remedy) and Section 12 (payment of cash in lieu of fractional shares), in no event will the exercise of this Warrant be settled in cash.
 
11. Limitations on Exercise.
 
(a) Notwithstanding anything to the contrary contained herein (other than this Section 11), the Holder shall not be entitled to exercise this Warrant for a number of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect to such exercise, would result in (i) the aggregate number of shares of Common Stock beneficially owned by the Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock is aggregated with the Holder’s on Holder’s Schedule 13D, to exceed 32% (the “Maximum Percentage”) of the Reported Outstanding Share Number, or (ii) the combined voting power of the securities of the Company beneficially owned by the Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock is aggregated with the Holder’s on Holder’s Schedule 13D to exceed the Maximum Percentage of the voting power of the Reported Outstanding Share Number.

If the Company receives an Exercise Notice from the Holder that would cause the Holder’s beneficial ownership, as determined pursuant to this Section 11(a), to exceed the Maximum Percentage, the Company shall (i) notify the Holder in writing of (A) such fact, (B) the Reported Outstanding Share Number and (C) a reduction in the number of Warrant Shares that may be purchased pursuant to such Exercise Notice without exceeding the Maximum Percentage (the number of shares by which such purchase is reduced, the “Reduction Shares”), and (ii) as soon as reasonably practicable, the Company shall return to the Holder any exercise price paid by the Holder for the Reduction Shares.
{N4460521.1}    6        




Upon the written request of the Holder that provides the number of shares of Common Stock beneficially owned by the Holder as of such date, the Company shall within three (3) Trading Days confirm in writing or by electronic mail to the Holder the Reported Outstanding Share Number and the Reported Outstanding Share Number. By written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other percentage specified in such notice not in excess of 32%; provided that any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the Company.

For purposes of this Section 11(a), the aggregate number of shares of Common Stock or voting securities beneficially owned by the Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock is aggregated with the Holder’s on Holder’s Schedule 13D and to be specified in the Exercise Notice shall be calculated in accordance with Section 13 of the Exchange Act (and shall not include Common Stock issuable upon the exercise of this Warrant, but shall include any and all other unexercised or non-converted securities of the Company that may be exercised or converted into Common Stock within 60 days at the option of the Holder and its Affiliates and any other Person whose beneficial ownership is aggregated with the Holder’s on Holder’s Schedule 13D).

Additionally, the Holder shall not be entitled to exercise this Warrant for a number of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect to such exercise, would result any required filing and clearance under the Hart-Scott-Rodino Antitrust Improvements Act (the “HSR Act”) if one has not been made and pre-approval obtained. If a filing and clearance under the HSR Act would be required in connection with the exercise of this Warrant, the Holder and the Company shall make such filings promptly and to seek early termination, and only exercise such Warrants after applicable approvals are obtained.
 
(b) Notwithstanding anything to the contrary in this Warrant (including Section 11(a)) but subject to applicable law, Section 11 shall not restrict (i) any exercise (including a conditional exercise) of this Warrant that would be effective as of immediately prior to a Fundamental Transaction or (ii) the number of shares of Common Stock which a Holder may receive or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event of a Fundamental Transaction as contemplated in Section 9(c) of this Warrant.
 
12. No Fractional Shares. No fractional Warrant Shares will be issued in connection with any exercise of this Warrant. In lieu of any fractional shares that would otherwise be issuable, the number of Warrant Shares to be issued shall be rounded down to the next whole number and the Company shall pay the Holder in cash the fair market value (based on the Closing Sale Price) for any such fractional shares.
 
13. Notices. Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile or e-mail at the facsimile number or e-mail address specified in the books and records of the Transfer Agent prior to 5:30 P.M., New York City time, on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or \e-mail at the facsimile number or e-mail address specified in the books and records of the Transfer Agent on a day that is not a Trading Day or later than 5:30 P.M., New York City time, on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service specifying next business day delivery, or (iv) upon actual receipt by the Person to whom such notice is required to be given, if by hand delivery.
 
If to the Company: Infrastructure and Energy Alternatives, Inc.
  6325 Digital Way, Suite 460
 
Indianapolis, Indiana 46278
Attn: Erin J. Roth
Email: Erin.Roth@iea.net
Phone: (765) 828-3513
 
{N4460521.1}    7        



With copy (which shall not constitute notice):

Jones Walker LLP
 
201 St. Charles Avenue, Suite 5100
New Orleans, Louisiana 70170
 
Attn: Clint Smith
Email: csmith@joneswalker.com
Phone: (504) 582-8429

14. Warrant Agent. The Company shall initially serve as warrant agent under this Warrant. Upon thirty (30) days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or stockholder services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.

15. Distribution Rights; Purchase Rights.

(a) In addition to any adjustments pursuant to Section 9 above, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property, options, evidence of indebtedness or any other assets by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of Warrant Shares acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage or the other limitations set forth in Section 11) immediately before the date on which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution.

(b) In addition to any adjustments pursuant to Section 9 above, if at any time the Company grants, issues or sells any Capital Stock or rights to purchase Capital Stock or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without limitation, the Maximum Percentage or the other limitations set forth in Section 11) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issuance or sale of such Purchase Rights.

16. Fundamental Transactions. In the event that (i) the Company submits any proposal to be voted upon by stockholders relating to any Fundamental Transaction or in furtherance of a potential Fundamental Transaction (a “Fundamental Transaction Proposal”), (ii) such Fundamental Transaction Proposal is approved by such vote and (iii) the margin of approval of such vote is such that the Fundamental Transaction Proposal would not have been approved by a majority of votes cast if all outstanding 2021 Offering Warrants (as defined below) had been converted in full into Warrant Shares immediately prior to the close of business on the record date fixed for determination of stockholders entitled to vote on such Fundamental Transaction Proposal and all such Warrant Shares had been voted against such Fundamental Transaction Proposal (such vote, the “Hypothetical Meeting”), then the Company shall not consummate the transactions relating to such Fundamental Transaction Proposal without the prior written approval of Holders of 2021 Offering Warrants corresponding to a number of such Warrant Shares that, if voted in favor of such Fundamental Transaction Proposal at such Hypothetical Meeting, would have resulted in approval of such Fundamental Transaction Approval if the remainder of such Warrant Shares had been voted against such Fundamental Transaction Proposal at such Hypothetical Meeting. For purposes of this Warrant, “2021 Offering
{N4460521.1}    8        



Warrants” means the aggregate of 7,747,589 Warrants sold in the public offering of Warrants completed by the Company pursuant to the Company’s final prospectus supplement dated July 29, 2021.

17. Miscellaneous.
 
(a) Rights as a Stockholder. Except as set forth in this Warrant (including Sections 9, 15 and 16), the Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be entitled to vote or be deemed the holder Common Stock of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, amalgamation, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.
 
(b) Authorized Shares.

(i) Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate or articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant. Notwithstanding anything herein to the contrary, if after the sixty (60) calendar day anniversary of the Original Issue Date, the Holder is not permitted to exercise this Warrant in full for any reason (other than pursuant to restrictions set forth in Section 11 hereof), the Company shall use its best efforts to promptly remedy such failure, including, without limitation, obtaining such consents or approvals as necessary to permit such exercise.
 
(ii) Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
 
(c) Successors and Assigns. Subject to restrictions on transfer set forth in this Warrant and compliance with applicable securities laws, this Warrant may be assigned by the Holder. This Warrant may not be assigned by the Company without the written consent of the Holder, except to a successor in the event of a Fundamental Transaction. This Warrant shall be binding on and inure to the benefit of the Company and the Holder and their respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Holder, or their successors and assigns.
 
(d) Amendment and Waiver. Except as otherwise provided herein, the provisions of the Warrants may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holder.
 
(e) Acceptance. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.
 
{N4460521.1}    9        



(f) Governing Law; Jurisdiction. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE STATE OF DELAWARE , FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PERSON AT THE ADDRESS IN EFFECT FOR NOTICES TO IT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. EACH OF THE COMPANY AND THE HOLDER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.
 
(g) Headings. The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.
 
(h) Severability. In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby, and the Company and the Holder will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
{N4460521.1}    10        



IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer.

INFRASTRUCTURE AND ENERGY
ALTERNATIVES, INC.


By:    /s/ Erin J. Roth                    
Name:    Erin J. Roth
Title:    Executive Vice President, General Counsel,
    Corporate Secretary and Chief Compliance Officer
 
 
 
{N4460521.1}    [Signature Page to Pre-Funded Warrant]
        


SCHEDULE 1
 
FORM OF EXERCISE NOTICE
 
[To be executed by the Holder to purchase shares of Common Stock under the Warrant]
 
Ladies and Gentlemen:
 
(1) The undersigned is the Holder of Warrant No. __ (the “Warrant”) issued by Infrastructure and Energy Alternatives, Inc., a Delaware corporation (the “Company”). Capitalized terms used herein and not otherwise defined herein have the respective meanings set forth in the Warrant.
 
(2) The undersigned hereby exercises its right to purchase Warrant Shares pursuant to the Warrant.
 
(3) The Holder intends that payment of the Exercise Price shall be made as (check one):
 
  [  ] Cash Exercise
 
  [  ] “Cashless Exercise” under Section 10 of the Warrant
 
(4) If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $_____________ in immediately available funds to the Company in accordance with the terms of the Warrant.
 
(5) Pursuant to this Exercise Notice, the Company shall deliver to the Holder Warrant Shares determined in accordance with the terms of the Warrant.
 
(6) By its delivery of this Exercise Notice, the undersigned represents and warrants to the Company that in giving effect to the exercise evidenced hereby the Holder, the Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock is aggregated with the Holder’s on Holder’s Schedule 13D beneficially own an aggregate of _________________ shares of Common Stock, as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and under Section 11(a) of the Warrant to which this notice relates.
 
Dated:  
   
Name of Holder:  
   
By:  
Name:  
Title:  
 
(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)
 
 
 


{N4460521.1}            

Exhibit 31.1
CERTIFICATION PURSUANT TO
Section 302 of the Sarbanes-Oxley Act of 2002

I, John Paul Roehm, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Infrastructure and Energy Alternatives, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.



   
Dated: November 8, 2021 By: /s/ John Paul Roehm
Name: John Paul Roehm
Title:   Chief Executive Officer

Exhibit 31.2
CERTIFICATION PURSUANT TO
Section 302 of the Sarbanes-Oxley Act of 2002

I, Peter Moerbeek, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Infrastructure and Energy Alternatives, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
   
  INFRASTRUCTURE AND ENERGY ALTERNATIVES, INC.
   
Dated: November 8, 2021 By: /s/ Peter J. Moerbeek
  Name: Peter J. Moerbeek
  Title:   Chief Financial Officer

Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    In connection with the Quarterly Report of Infrastructure and Energy Alternatives, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer's knowledge:

    (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
    (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
   
Dated: November 8, 2021 By: /s/ John Paul Roehm
Name: John Paul Roehm
Title:   Chief Executive Officer



Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

    In connection with the Quarterly Report of Infrastructure and Energy Alternatives, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer's knowledge:

    (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
    (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
   
Dated: November 8, 2021 By: /s/ Peter J. Moerbeek
  Name: Peter J. Moerbeek
  Title:   Chief Financial Officer