insiderdeltaSEC filings, surfaced and scored

CoverageForm 410-K10-Q8-K13D13G13F

Infrastructure & Energy Alternatives, Inc.

IEACIK 0001652362 · Every Form 4 filed by insiders at this issuer. See financials →

Annual report (10-K)

Latest 10-K filed Mar 7, 2022. Sentiment + YoY language diff vs prior year. Read sections →

Signal:Mild negative shift

Risk Factors:tone -0.0374Δ-0.006275% similar+89/-173 ¶

MD&A:tone -0.0099Δ-0.004765% similar+149/-154 ¶

Sentiment via Loughran-McDonald lexicon · YoY diff via Jaccard similarity + paragraph set difference.

YoY shift: Bearish

Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.54pp more bearish than last year's.

Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.

Tone shift by section

The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.

Risk Factors

-0.62pp

Lean -

Net-tone change vs last year's 10-K.

MD&A

-0.47pp

Lean -

Net-tone change vs last year's 10-K.

Per-snippet highlights

Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.

Top insiders

Most active reporters at Infrastructure & Energy Alternatives, Inc.

Name	Roles	Filings
Ares Management LLC	Director10% Owner	4
Hanson Christopher	Officer	3
Hummer Brian	Officer	3
Roehm John Paul	OfficerDirector	3
Stoecker Michael	Officer	3

Showing 1-5 of 25

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All filings

29 Form 4 / 4-A filings, newest first

Filed	Insider	Top transaction	Shares	Price	Value
Jun 6, 2022	Roehm John Paul President and CEO · Director	FTax	42,023	$8.10	$340,386

Filed		Top transaction	Shares	Price	Value

ITEM 1A. RISK FACTORS

Risks Related to IEA

Our quarterly operating results may fluctuate significantly and constrain liquidity, falling below the expectations of securities analysts and investors, due to multiple factors including seasonality, spending patterns of our customers, adverse weather conditions, supply chain and labor market constraints, inflation and other factors, some of which are beyond our control, and may result in a decline in our stock price.

Our quarterly operating results are generally reduced in the first quarter of each year due to adverse seasonal weather changes and customer reductions in their expenditures and work order requests towards the end of the calendar year. Additionally, our quarterly operating results may generally fluctuate significantly from quarter-to-quarter because of several factors, including:

• weather events, including seasonal adverse conditions and natural catastrophes;

• labor availability and costs;

• supply chain constraints due to labor shortages, COVID-19 impacts, customs and border control orders, other laws and international sanctions, or other worldwide manufacturing and shipping constraints;

• constraints on our subcontractors to deliver equipment and services

• profitability of our products and services, especially in new markets and due to seasonal fluctuations;

• changes in interest rates;

• impairment of goodwill or other long-lived assets;

• macroeconomic conditions, both nationally and locally, such as inflation;

• changes in consumer preferences and competitive conditions;

• expansion to new markets; and

• fluctuations in commodity prices.

The cumulative impact of these factors have impacted our liquidity and financial position in the past. Though we secured access to a significant line of credit in executing our Credit Agreement, there can be no assurances that our liquidity will not be negatively impacted from these factors.

In the future, we may require additional funds for operating purposes and may seek to raise additional funds through debt or equity financing. There is no assurance that this additional financing will be available, or if available, will be on reasonable terms. If our liquidity and capital resources were insufficient to meet our working capital requirements or fund our debt service obligations, we could face substantial liquidity problems, may not be able to generate sufficient cash to service all our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful. In the event we are not able to fund our working capital, we will not be able to implement or may be required to delay all or part of our business plan, and our ability to improve our operations, generate positive cash flows from operating activities and expand the business would be materially affected.

The future effects of the current COVID-19 pandemic and ongoing labor market and supply chain pressures are unknown and evolving, and could result in negative effects on our business, financial condition, results of operations and prospects.

The COVID-19 pandemic is a constantly evolving situation that has adversely impacted economic activity and conditions worldwide. In particular, efforts to control the spread of COVID-19 have led to shutdowns, worker availability constraints, shortages or delays in the global supply chain and related increases in the costs of labor and goods.

The COVID-19 pandemic could continue to affect us in a number of other ways, including:

• Delays in receiving permits resulting in unanticipated changes to construction schedules;

• Inability to obtain bonding from our sureties due to tightening of credit markets;

• Inability to properly staff our construction projects due to labor market shortages, quarantines and local ordinances;

• Inability of customers to timely fund project obligations due to liquidity issues, financial uncertainties, or supply chain disruptions (including supply chain disruptions impacting a significant amount of equipment used in our projects that are sourced from China);

• Inability of, or delays by, our subcontractors to deliver equipment and services; and

Each of the foregoing could cause project delays or terminations, force majeure events and prevent the financing of new projects by our customers, which could negatively impact our ability to recognize revenues, bill our customers for current costs or secure future business. There can be no assurances that our business, financial condition, liquidity or results of operations will not be negatively impacted by the future effects of COVID-19.

Changes in U.S. trade policy, including the imposition of tariffs or bans on imports of certain foreign sourced goods, may have a material adverse effect on our business, financial condition, cash flows and results of operations.

A significant amount of equipment used in our projects is sourced, most often by our customers, from China. Current bans on imports of certain goods from China, particularly of polysilicon covered by the Uyghur Forced Labor Prevention Act, which is a significant input in the production of solar panels, could result in project delays and increased costs to us or our customers. The ban on some imports relating to the production of solar panels, along with tariffs and border controls for materials entering the U.S. from other countries, could make it harder or more costly for our customers to secure products used

in the construction of our projects until alternative supply chain sources are identified and developed, which may in turn impact our results of operations, profitability, cash flows and growth prospects. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional discussion of tariffs and import bans.

Our business may be affected by delays, only some of which may be recovered through claims against project owners, subcontractors, or suppliers, which could increase our costs, reduce profitability and have a material adverse effect on our financial results.

Our projects involve challenging engineering, procurement and construction phases that may involve many parties. Delays on a particular project can arise from a number of events involving the customer, third parties and us, including delays in design and engineering; delays or difficulties in obtaining equipment and materials; schedule changes; failures to timely obtain permits or rights-of-way or to meet other regulatory requirements; delays due to epidemics and pandemics (including COVID-19); weather-related delays; and other governmental, market and political events, many of which are beyond our control.

We perform work under a variety of conditions, including, but not limited to, challenging and hard to reach terrain and difficult site conditions. Some of our contracts require that we assume the risk should actual site conditions vary from those expected, and these projects may be at increased risk for delays.

Delays may result in the cancellation or deferral of project work (including through a customer and or third party’s assertion of force majeure, or our assertion of force majeure), which could lead to a decline in revenue from lost project work, or, for project deferrals, could cause us to incur costs which are not reimbursable by the customer, and may lead to personnel shortages on other projects scheduled to commence at a later date. In some cases, delays and additional costs may be substantial, and we may be required to cancel a project and/or compensate the customer for the delay. We may not be able to recover any of such costs. Any such delays or cancellations or errors or other to meet customer expectations could result in substantially in excess of the revenue associated with a project. or could also impact our reputation or relationships with our customers, which could affect our ability to secure new contracts and our business, financial condition, results of operations, , cash flows and growth prospects.

We occasionally bring claims against project owners for additional costs that exceed the contract price or for amounts not included in the original contract price. Similarly, we present change orders and claims to our subcontractors and suppliers. If we fail to properly document the nature of change orders or claims, or are otherwise unsuccessful in negotiating a reasonable settlement, we could incur reduced profits, cost overruns or a loss on the project. These types of claims can often occur due to matters such as owner-caused delays, changes from the initial project scope and adverse conditions, which result in additional cost, both direct and indirect, or from project or contract terminations. From time to time, these claims can be the subject of lengthy and proceedings, and it is often to accurately predict when these will be fully resolved. When these types of events occur and are pending, we may invest significant working capital in projects to cover cost pending the resolution of the relevant . A to timely recover on these types of could have a material effect on our liquidity and financial results.

Our business is subject to physical hazards that could result in substantial liabilities and weaken our financial condition.

Construction projects undertaken by us expose our employees to heavy equipment, mechanical failures, transportation accidents, adverse weather conditions and the risk of damage to equipment and property. These hazards can cause personal injuries and loss of life, severe damage to or destruction of property and equipment and other consequential damages and could lead to suspension of operations and large damage claims which could, in some cases, substantially exceed the amount we charge for the associated services. In addition, if serious accidents or occur, or if our safety records were to , we may be restricted from bidding on certain work and obtaining new contracts and certain existing contracts could be . Our safety processes and procedures are monitored by various agencies and ratings bureaus and our historical performance has been than industry averages. There is, however, no guarantee that we can maintain this performance in the future. The occurrence of in our business could result in significant liabilities, employee turnover, increase the costs of our projects, or our ability to perform under our contracts or enter into new customer contracts, all of which could materially affect our business, financial condition, results of operations, , cash flows and growth prospects.

We are self-insured against certain potential liabilities.

Although we maintain insurance policies with respect to employer’s liability, general liability, auto and workers compensation claims, those policies are subject to deductibles or self-insured retention amounts of up to $500,000 per

occurrence. We are primarily self-insured for all claims that are less than the amount of the applicable deductible/self-insured retention. In addition, for our employees not part of a collective bargaining agreement, we provide employee health care benefit plans. Our health insurance plans have a self-insurance component up to specified deductibles per individual per year.

Our insurance policies include various coverage requirements, including the requirement to give appropriate notice. If we fail to comply with these requirements, our coverage could be denied.

Projected losses under our insurance programs are accrued based upon our estimates of the ultimate liability for claims reported and an estimate of claims incurred but not reported. Insurance liabilities are difficult to assess and estimate due to unknown factors, including the severity of an injury, the extent of damage, the determination of our liability in proportion to other parties and the number of incidents not reported. The accruals are based upon known facts and historical trends.

Acquisition activity presents certain risks to our business, operations and financial position, and we may not realize the financial and strategic goals contemplated at the time of a transaction.

We expect that the acquisitions will be an important part of our long-term growth strategy. Acquisitions are inherently risky and may not be successful. Successful execution following the closing of an acquisition is essential to achieving the anticipated benefits of the transaction, but is challenging and may result in expected or unexpected operating or compliance challenges, which may require significant expenditures and a significant amount of our management’s attention. The potential difficulties or risks of integrating an acquired company’s business include:

• the effect of the acquisition on our financials, strategy, and our reputation;

• we fail to successfully implement our business plan for the combined business, are unable to obtain the anticipated benefits of the acquisition, including synergies or economies of scale or are unable to complete development and/or integration of acquired technologies;

• the market does not accept the integrated product portfolio, reducing shareholder value;

• challenges in reconciling business practices, in integrating product development activities, logistics or information technology and other systems or in reconciling accounting issues;

• retention risk with respect to key customers, suppliers and employees and challenges in retaining, assimilating and training new employees;

• potential failure of our due diligence processes to identify significant problems, liabilities or other shortcomings or challenges of an acquired company, which could result in unexpected litigation, regulatory exposure, financial contingencies and unknown liabilities; and

• challenges in complying with newly applicable laws and regulations, including obtaining or retaining required approvals, licenses and permits.

Our acquisitions may also result in the expenditure of available cash and expenses, any of which could have a material adverse effect on our operating results or financial condition. All of the foregoing risks may be magnified as the cost, size or complexity of an acquisition or acquired company increases, or where the acquired company’s products, market or business are materially different from or more immature than ours, or where more than one integration is occurring simultaneously or within a short period of time.

In addition, we may require significant financing to complete an acquisition or investment, whether through bank loans, raising of debt, equity offerings, or otherwise. We cannot assure you that such financing options will be available to us on reasonable terms, or at all. If we are not able to obtain such necessary financing, it could have an impact on our ability to consummate a substantial acquisition or investment and execute our growth strategy. Alternatively, we may issue a significant number of shares as consideration for an acquisition, which would have a dilutive effect on our existing stockholders.

If we are unable to attract and retain qualified managers and skilled employees, we will be unable to operate efficiently, which could reduce our revenue, profitability and liquidity.

Our business is labor intensive, and some of our operations experience a high rate of employee turnover. In addition, given the nature of the highly specialized work we perform, many of our employees are trained in, and possess, specialized technical skills that are necessary to operate our business and maintain productivity and profitability. At times of low unemployment rates in the areas we serve, including due to general labor market constraints, it can be difficult for us to find qualified and affordable personnel. We may be unable to hire and retain a sufficiently skilled labor force necessary to support

our operating requirements and growth strategy. Our labor and training expenses may increase as a result of a shortage in the supply of skilled personnel. We may not be able to pass these expenses on to our customers, which could adversely affect our profitability. Additionally, our business is managed by a number of key executive and operational officers and is dependent upon retaining and recruiting qualified management. Labor shortages, increased labor or training costs, or the loss of key personnel could materially adversely affect our business, financial condition, results of operations, profitability, cash flows and growth prospects. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional discussion of labor shortage trends.

The U.S. wind and solar industries benefit from tax and other economic incentives and political and governmental policies. A significant change in these incentives and policies could materially and adversely affect our business, financial condition, results of operations, cash flows and growth prospects.

The PTC and Solar ITC programs, discussed in Item 1. Business , provide material incentives to develop wind energy generation facilities and thereby impact the demand for our products and services. While the increased demand for our products and services resulting from the current credits and incentives may continue, the failure of Congress to extend or renew these incentives could significantly delay the development of wind energy generation facilities and the demand for wind turbines, towers and related components. In addition, we cannot assure you that any subsequent extension or renewal of the PTC or Solar ITC programs would be enacted prior to their expiration. Any delay or failure to extend or renew the PTC or Solar ITC programs in the future could have a material adverse impact on our business, results of operations, financial performance and future development efforts.

State renewable energy portfolio standards generally require state-regulated electric utilities to supply a certain proportion of electricity from renewable energy sources or devote a certain portion of their plant capacity to renewable energy generation. Typically, utilities comply with such standards by qualifying for renewable energy credits evidencing the share of electricity that was produced from renewable sources. Under many state standards, these renewable energy credits can be unbundled from their associated energy and traded in a market system allowing generators with insufficient credits to meet their applicable state mandate. These standards have spurred significant growth in the wind energy industry and a corresponding increase in the demand for our products. Currently, the majority of states and the District of Columbia have renewable energy portfolio standards in place and certain states have voluntary utility commitments to supply a specific percentage of their electricity from renewable sources. The enactment of renewable energy portfolio standards in additional states or any changes to existing renewable energy portfolio standards, or the enactment of a federal renewable energy portfolio standard or imposition of other greenhouse gas regulations may impact the demand for our products. We cannot assure you that government support for renewable energy will continue. The elimination of, or reduction in, state or federal government policies that support renewable energy could have a material adverse impact on our business, financial condition, results of operations, , cash flows and growth prospects.

Many of our customers are regulated by federal and state government agencies, and the addition of new regulations or changes to existing regulations may adversely impact demand for our services and the profitability of those services.

Many of our energy customers are regulated by the Federal Energy Regulatory Commission ("FERC"), and our utility customers are regulated by state public utility commissions. These agencies could change the way in which they interpret the application of current regulations and/or may impose additional regulations. Interpretative changes or new regulations having an adverse effect on our customers and the profitability of the services they provide could reduce demand for our services, which could adversely affect our results of operations, cash flows and liquidity.

Any future restrictions or regulations that might be adopted could lead to operational delays, increased operating costs for our customers in the renewable industry, reduced capital spending and/or delays or cancellations of future renewable infrastructure projects, which could materially and adversely affect our business, financial condition, results of operations, profitability, cash flows and growth prospects.

Our fixed priced contracts and federal, state and local government contracts pose inherent risks, including inaccurate estimations of costs associated with the contracts, lack of funding from government sources, onerous terms and competitive bidding processes, all of which could impair our financial performance.

We derive a significant portion of our revenue from fixed-price contracts. Under these contracts, we typically set the price of our services on a per unit or aggregate basis and assume the risk that certain costs associated with our performance may be greater than what we estimated. In addition, we enter into contracts for specific projects or jobs that may require the installation or construction of an entire infrastructure system or specified units within an infrastructure system, which are priced on a per unit basis. Profitability will be reduced if actual costs to complete each unit exceed our original estimates.

Revenues derived from fixed-price contracts that are recognized as performance obligations are satisfied over time (formerly known as the percentage-of-completion method), measured by the relationship of total cost incurred compared to total estimated contract costs (cost-to-cost input method). Contract revenue and total cost estimates are reviewed and revised on an ongoing basis as the work progresses. If estimated costs to complete the remaining work for the project exceed the expected revenue to be earned, the full amount of any expected loss on the project is recognized in the period the loss is determined. Our profitability is therefore dependent upon our ability to accurately estimate the costs associated with our services and our ability to execute in accordance with our plans. A variety of factors affect these costs, such as lower than anticipated productivity, conditions at work sites differing materially from those anticipated at the time we bid on the contract and higher costs of materials and labor. These variations, along with other risks inherent in performing fixed price contracts, may cause actual project revenue and profits to differ materially from original estimates. If actual costs exceed our estimates, we could have lower margins than anticipated, or losses, which could reduce our business, financial condition, results of operations, , cash flows and growth prospects.

Additionally, we derive a portion of our revenues from contracts with federal, state and local governments and their agencies and departments. These contracts are directly affected by changes in governmental spending and availability of adequate funding. Factors that could affect current and future governmental spending include: policy or spending changes implemented by current administrations, departments or other government agencies; governmental shutdowns, failure to pass budget appropriations, continuing funding resolutions or other budgetary decisions; changes, delays or cancellations of government programs or requirements; adoption of new laws or regulations that affect companies providing services; curtailment of the governments’ outsourcing of services to private contractors; or the level of political instability due to war, conflict, epidemics, pandemics or natural disasters.

Contracts with federal, state and local governments and their agencies and departments are often subject to various uncertainties, rules, restrictions, regulations, oversight audits and profit and cost controls. If we violate a rule or regulation, fail to comply with a contractual or other restriction or do not satisfy an audit, a variety of penalties can be imposed on us including monetary damages, withholding or delay of payments to us and criminal and civil penalties. In “qui tam” actions brought by individuals or the government under the U.S. Federal False Claims Act or under similar state and local laws, treble damages can be awarded. Government contracts may also contain unlimited indemnification obligations. In addition, most of our government clients may modify, delay, curtail, or contracts at their convenience any time prior to their completion.

Government contracts are awarded through a rigorous competitive process. Governments and their agencies have increasingly relied upon multiple-year contracts with multiple contractors that generally require those contractors to engage in an additional competitive bidding process for each task order issued under a contract. This process may result in us facing significant additional pricing pressure and uncertainty and incurring additional costs. Moreover, we may not be awarded government contracts because of existing policies designed to protect small businesses and under-represented minorities. Any of the foregoing events could negatively affect our results of operations, cash flows and liquidity.

Amounts included in our backlog may not result in actual revenue or translate into profits. Our backlog is subject to cancellation and unexpected adjustments and therefore is an uncertain indicator of future operating results.

Our backlog consists of the estimated amount of services to be completed from future work on uncompleted contracts or work that has been awarded with final contracts still being negotiated. Most of our contracts are cancelable on short or no advance notice. Reductions in backlog due to cancellation by a customer, or for other reasons, could significantly reduce the future revenue from contracts in backlog. In the event of a project cancellation, we may be reimbursed for certain costs, but we typically have no contractual right to the total revenues reflected in our backlog.

Backlog amounts are determined based on target price estimates that incorporate historical trends, anticipated seasonal impacts, experience from similar projects and from communications with our customers. These estimates may prove inaccurate, which 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 in expected future work due to changes in our customers’ spending plans, as well as on construction projects, due to market volatility, regulatory and other 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. In addition, contracts included in our backlog may not be profitable. If our backlog fails to result in the recognition of revenue, our business, financial condition, results of operations, profitability, cash flows and growth prospects could be materially and adversely affected.

We could incur substantial costs to comply with environmental, health, and safety laws and regulations and to address violations of or liabilities created under these requirements.

Our operations are subject to a variety of environmental laws and regulations in the jurisdictions in which we operate governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous materials, soil and groundwater contamination, and employee health and safety. We cannot guarantee that we will at all times be in compliance with such laws and regulations and if we fail to comply with these laws and regulations or with permitting and other requirements, we may be required to pay fines or be subject to other sanctions. Also, certain environmental laws can impose costs of investigating and cleaning up a contaminated site, regardless of fault, upon any one or more of a number of parties, including the current or previous owner or operator of the site. These environmental laws also impose liability on any person who arranges for the disposal or treatment of hazardous substances at a contaminated site. Third parties may also make claims against owners or operators of sites and users of disposal sites for personal injuries and property associated with releases of substances from those sites.

Changes in existing environmental laws and regulations, or their application, could cause us to incur additional or unexpected costs to achieve or maintain compliance. The assertion of claims relating to on- or off-site contamination, the discovery of previously unknown environmental liabilities, or the imposition of unanticipated investigation or cleanup obligations, could result in potentially significant expenditures to address contamination or resolve claims or liabilities. Such costs and expenditures could have a material adverse effect on our business, financial condition, results of operations, profitability, cash flows and growth prospects.

We derive a significant portion of our revenue from a concentrated base of customers and rely on a limited number of

suppliers for certain equipment used in our projects. The loss of our significant customers, or reduced demand for our services, or the loss of our significant suppliers could impair our financial performance.

Our business is concentrated among relatively few customers, and a significant proportion of our services are provided on a project-by-project basis. Although we have not been dependent upon any one customer, our revenue could significantly decline if we were to lose a small number of our significant customers, or if a few of our customers elected to perform the work that we provide with in-house teams. In addition, our results of operations, cash flows and liquidity could be negatively affected if our customers reduce the amount of business they provide to us, or if we complete the required work on non-recurring projects and cannot replace them with similar projects. Many of the contracts with our largest customers may be canceled on short or no advance notice. Any of these factors could negatively impact our results of operations, cash flows and liquidity.

Additionally, there are a limited number of available and suitable suppliers for certain equipment used in our projects, including erection cranes. Our ability to secure equipment and the results of our operations, cash flows and liquidity could be negatively impacted if these suppliers cease operations or our relationships with these suppliers are otherwise cancelled or terminated without notice.

In the ordinary course of our business, we may become subject to lawsuits, indemnity or other claims, which could materially and adversely affect our business, financial condition, results of operations, profitability, cash flows and growth prospects.

From time to time, we are subject to various claims, lawsuits and other legal proceedings brought or threatened against us in the ordinary course of our business. These actions and proceedings may seek, among other things, compensation for alleged personal injury, workers’ compensation, employment discrimination and other employment-related damages, breach of contract, property damage, environmental liabilities, multiemployer pension plan withdrawal liabilities, punitive damages and civil penalties or other losses, liquidated damages, consequential damages, or injunctive or declaratory relief. We may also be subject to litigation involving of of the Fair Labor Standards Act and state wage and hour laws. In addition, we generally indemnify our customers for related to the services we provide and actions we take under our contracts, and, in some instances, we may be allocated risk through our contract terms for actions by our customers or other third parties.

When appropriate, we establish reserves for these items that we believe to be adequate in light of current information, legal advice and professional indemnity insurance coverage, and we adjust such reserves from time to time according to developments. From time to time claims may involve material amounts and novel legal theories, and any insurance we carry may not provide adequate coverage to insulate us from material liabilities for these claims. Litigation may result in substantial costs and may divert management’s attention and resources from the operation of our business, which could have a material adverse effect on our business, financial condition, cash flows and results of operations.

Certain of our businesses have employees who are represented by unions and collective bargaining agreements. The use of a unionized workforce and any related obligations could adversely affect our business, financial condition, results of operations, profitability, cash flows and growth prospects.

Certain of our employees are represented by labor unions and collective bargaining agreements. Although all such collective bargaining agreements prohibit strikes and work stoppages, we cannot be certain that strikes or work stoppages will not occur despite the terms of these agreements. Strikes or work stoppages could adversely affect our relationships with our customers and cause us to lose business. Additionally, as current agreements expire, the labor unions may not be able to negotiate extensions or replacements on terms favorable to their members, or at all, or avoid strikes, lockouts or other labor actions from time to time that may affect their members. Therefore, it cannot be assured that new agreements will be reached with employee labor unions as existing contracts expire, or on desirable terms. Any action against us relating to the union workforce we employ could have a material effect on our business, financial condition, results of operations, , cash flows and growth prospects.

Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial condition and results of operations.

We are subject to federal and state income taxes in the United States, and our domestic tax liabilities are subject to the allocation of expenses in differing jurisdictions. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

• changes in the valuation of our deferred tax assets and liabilities;

• expected timing and amount of the release of any tax valuation allowances;

• tax effects of stock-based compensation;

• costs related to intercompany restructurings;

• changes in tax laws, regulations or interpretations thereof; and

• lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates.

In addition, we may be subject to audits of our income, sales and other transaction taxes by U.S. federal and state authorities. Outcomes from these audits could have an adverse effect on our financial condition and results of operations.

We rely on information, communications and data systems in our operations. Systems and information technology interruptions and/or breaches in our data security could adversely affect our ability to operate and our operating results or could result in harm to our reputation.

We are heavily reliant on computer, information and communications technology and related systems. From time to time, we may experience system interruptions and delays. Our operations could be interrupted or delayed, or our data security could be breached, if we are unable to add software and hardware, effectively maintain and upgrade our systems and network infrastructure and/or take other steps to improve the efficiency of and protect our systems. In addition, our computer and communications systems and operations could be damaged or interrupted by natural disasters, power loss, telecommunications failures, computer viruses, acts of war or terrorism, physical or electronic break-ins and similar events or , including by computer hackers and cyber-terrorists. Any of these or other events could cause system , and/or of data including private data, could or prevent operations, including the processing of transactions and reporting of financial results, processing , , or could result in the disclosure of customer or our information, which could affect our operating results, our reputation and result in significant costs, or . Similar risks could affect our customers and vendors, indirectly affecting us. While management has taken steps to address these by implementing network security and internal control measures, there can be no assurance that a system or or data security will not materially affect our financial condition and operating results.

Risks Related to Our Capital Structure

We have a significant amount of debt. Our indebtedness could adversely affect our business, financial condition and results of operations and our ability to meet our payment obligations.

We have a significant amount of debt and debt service requirements. This level of debt, and the covenants and restrictions associated with that debt, could have significant consequences on our future operations, including:

• making it more difficult for us to meet our payment and other obligations;

• our failure to comply with the financial and other restrictive covenants contained in our debt agreements, which could trigger events of default that could result in all of our debt becoming immediately due and payable;

• reducing the availability of our cash flows to fund working capital, capital expenditures, acquisitions or strategic investments and other general corporate requirements, and limiting our ability to obtain additional financing for these purposes;

• subjecting us to increased interest expense related to borrowings under our revolving senior secured credit facility;

• limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to changes in our business, the industry in which we operate and the general economy;

• placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged;

• discouraging potential future acquisitions of us by a third party; and

• preventing us from paying dividends.

Any of the above-listed factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our payment obligations. Our ability to meet our payment and other obligations under our debt instruments depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. We cannot assure you that our business will generate positive cash flow from operations, or that future borrowings will be available to us under our Credit Agreement in an amount sufficient to enable us to meet our payment obligations and to fund other liquidity needs. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital, and some of these activities may be on terms that are unfavorable or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. If we are to implement one or more of these alternatives, we may not be to meet our payment obligations.

Our Senior Unsecured Notes and Credit Agreement impose restrictions on us that may prevent us from engaging in transactions that might benefit us.

Our Senior Secured Notes contain restrictions that, among other things prevent or restrict us in certain circumstances from: incurring additional indebtedness; paying dividends or making other restricted payments; making loans and investments; incurring liens; selling assets; entering into affiliate transactions; entering into certain sale and leaseback transactions; entering into agreements restricting our subsidiaries' ability to pay dividends; and merging, consolidating or amalgamating or selling all or substantially all of our property.

Our Credit Agreement also contains certain standard financial covenants which, if not complied with, could have an adverse effect on our business, financial condition and liquidity. If our results of operations were negatively impacted by unforeseen factors, or impacted to a greater degree than anticipated, we might not be able to maintain compliance with the covenants and restrictions in our Credit Agreement. If we are unable to comply with the financial covenants in the future, and are unable to obtain a waiver or forbearance, it would result in an uncured default under the Credit Agreement, limiting our ability to borrow under it. A default under our Credit Agreement may also be considered a default under certain other of our instruments and contracts, including our Senior Unsecured Notes. If we were unable to borrow under the Credit Agreement, we would need to meet our capital requirements using other sources, if other sources would be available to us on reasonable terms, if at all.

Our variable rate indebtedness related to borrowings under our credit facility subjects us to interest rate risk and the transition away from LIBOR could have an adverse impact on us.

Borrowings under our credit facility are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even if the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. Additionally, financial markets are in the process of transitioning away from the London Interbank Offered Rate (LIBOR) to alternative benchmark rate(s), and such transition is scheduled to be complete by mid-2023. Our Credit Agreement contains LIBOR benchmark replacement provisions. However, at this time, there can be no assurance as to whether any alternative benchmark or resulting interest rates may be more or less favorable than LIBOR or any other unforeseen impacts of the discontinuation of LIBOR. As a result, the proposals or consequences related to this transition could have a material adverse effect on our debt service obligations, financing costs, liquidity, financial condition, results of operations or cash flows and could impair our access to the capital markets.

There may be future sales of our common stock or other dilution of our equity, including as a result of the exercise of our warrants, that could adversely affect the market price of our common stock. We additionally have the option to issue shares of our common stock instead of cash for future acquisitions.

We may agree to issue additional shares in connection with future acquisition or financing transactions, which could have the effect of diluting our earnings per share as well as our existing stockholders’ individual ownership percentages and could lead to volatility in our common stock price. We are not restricted from issuing additional common stock. Additionally, we have warrants may result in additional issuances of common stock. See Note 9. Earnings Per Share for further description on each type of warrant and possible dilution. The issuance of additional shares of our common stock in connection with future acquisitions, convertible securities or other issuances of our common stock, including restricted stock awards, restricted stock units and/or options, or otherwise, will dilute the ownership interest of our holders of our common stock. We cannot predict the effect that future sales of our common stock or other equity-related securities would have on the market price of our common stock.

Our warrant repurchase program may not enhance long-term value and repurchases could increase the price and volatility of our 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 common stock, increase their price volatility and could potentially reduce the market liquidity for our 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.

M III and Mohsin Meghji has significant ability to influence corporate decisions.

Mr. Meghji directly and indirectly through M III Sponsor I LLC (“M III Sponsor”) and other entities, has consent rights, pursuant to the terms of the Third Amended and Restated Investor Rights Agreement, dated as of January 23, 2020 (the "Third A&R Investor Rights Agreement"). M III Sponsor has consent rights over certain matters for so long as M III Sponsor and certain of their permitted transferees and affiliates, directly or indirectly, beneficially own at least fifty percent (50%) of the Common Stock beneficially owned by them as of the closing of our business combination. These rights include entering into, waiving, amending or otherwise modifying the terms of certain transactions or agreements, and increasing or decreasing the size of our Board. Under the Third A&R Investor Rights Agreement, M III Sponsor also has ongoing rights to nominate one director, depending on the ownership interests of M III Sponsor.

Our Certificate of Incorporation also provides that M III Sponsor and its respective partners, principals, directors, officers, members, managers and/or employees, do not have any fiduciary duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the company or any of its subsidiaries.

Accordingly, Mr. Meghji has the ability to influence corporate decisions, whether through a representative on our Board, or rights granted under agreements entered into with Mr. Meghji and M III Sponsor.

The interests of Mr. Meghji and M III Sponsor may not align with the interests of our other stockholders. M III Sponsor is in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with us. M III Sponsor may also pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us.

The Ares Parties may have the ability to influence certain corporate decisions through their significant ownership of Common Stock and the rights granted to them through our Stockholders ’ Agreement with the Ares Parties.

On August 2, 2021, the Company closed an underwritten public offering, in which the following equity transactions were completed with the Ares parties and the Ares parties converted all of their Series A Preferred Stock into 2,132,273 shares of Common Stock; we 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 above; we 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; and the Ares Parties purchased 3,185,039 additional shares of Common Stock as part of the public offering.

We entered into a Stockholders’ Agreement on August 2, 2021 with the Ares Parties (“Stockholders’ Agreement”). 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 more than or equal to 20% of our Common Stock, and one representative for as long as the Ares Parties and their affiliates beneficially own more than or equal to 10% of our Common Stock. Additionally, we agreed the Board would be comprised of a total of nine directors (including the Ares representatives) at IEA’s next annual or special meeting at which directors are elected.

While these are limitations on the Ares Parties rights under the Stockholders’ Agreement, the Ares Parties have the ability to influence corporate decisions, whether through Board representation or its significant holdings in our Common Stock. The interests of the Ares Parties, may not align with the interests of our other stockholders. The Ares Parties are in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with us or may also pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us.

Our Certificate of Incorporation, Bylaws and certain provision of Delaware law contain anti-takeover provisions that could impair a takeover attempt.

As a Delaware corporation, anti-takeover provisions may impose an impediment to the ability of others to acquire control of us, even if a change of control would be of benefit to our stockholders. In addition, certain provisions of our Certificate of Incorporation and our Bylaws, also may impose an impediment or discourage others from a takeover.

These provisions include:

• a staggered board of directors providing for three classes of directors, which limits the ability of a stockholder or group to gain control of our board of directors;

• a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

• a prohibition on stockholders calling a special meeting and the requirement that a special meeting of stockholders may only be called by (i) the chairman of our Board, (ii) our Chief Executive Officer, (iii) a majority of our Board, or (iv) directors designated by M III Sponsor subject to certain conditions set forth in the Third A&R Investor Rights Agreement; and

• the requirement that changes or amendments to certain provisions of our Certificate of Incorporation or Bylaws must be approved by holders of at least two-thirds of the Common Stock and, in some cases under our Bylaws, 80% of the Common Stock. Additionally, M III Sponsor retains certain consent rights prior to our ability to amend our Certificate of Incorporation or bylaws to de-classify our Board or amend our director voting thresholds.

Our stock price has experienced significant volatility.

Our stock price has exhibited substantial volatility in the past and may continue to fluctuate in response to a number of events and factors, including, but not limited to:

• actual or anticipated quarterly operating results;

• new developments and significant transactions;

• the financial projections we provide to the public, and any changes to the projections or failure to meet the projections;

• low daily trading volume;

• impact of significant day trading activity;

• changes in our credit ratings;

• the public’s reaction to our press releases, other public announcements and filings with the SEC;

• changes in financial estimates, recommendations and coverages by securities analysts;

• media coverage of our business and financial performance;

• trends in our industry;

• significant changes in our management;

• lawsuits threatened or filed against us; and

• general economic conditions.

Price volatility over a given period or a low stock price may result in a number of negative outcomes, including, but not limited to:

• creating potential limitations on the ability to raise capital through the issuance of equity or equity linked securities;

• impacting the value of our equity compensation, which affects our ability to recruit and retain employees;

• difficulty complying with the listing standards of Nasdaq; and

• increasing the risk of regulatory proceedings and litigation, including class action securities litigation

If any of these outcomes were to occur, it could materially and adversely affect our business, financial condition, or results of operations, and the value of your investment.

Risks Related to Our Industry and Our Customers’ Industries

Economic downturns could reduce capital expenditures in the industries we serve, which could result in decreased demand for our services.

The demand for our services is cyclical in nature and vulnerable to general downturns in the U.S. economy. During economic downturns, our customers may not have the ability to fund capital expenditures for infrastructure, or may have difficulty obtaining financing for planned projects. In addition, uncertain or adverse economic conditions that create volatility in the credit and equity markets may reduce the availability of debt or equity financing for our customers, causing them to reduce capital spending. This could result in cancellations of projects or deferral of projects to a later date. Such cancellations or deferrals could materially and adversely affect our results of operations, cash flows and liquidity.

In addition, our customers are negatively affected by economic downturns that decrease the need for their services or the profitability of their services. During an economic downturn, our customers also may not have the ability or desire to continue to fund capital expenditures for infrastructure or may outsource less work. A decrease in related project work could negatively impact demand for the services we provide and could materially adversely affect our business, financial condition, results of operations, profitability, cash flows and growth prospects.

Our industry is highly competitive, which may reduce our market share and impact our financial performance.

We compete with other companies, ranging from small independent firms servicing local markets to larger firms servicing regional and national markets. We also face competition from existing and prospective customers that employ in-house personnel to perform some of the services we provide. Most of our customers’ work is awarded through a bid process. Consequently, price is often a principal factor that determines which service provider is selected, especially on smaller, less complex projects. Smaller competitors sometimes win bids for projects due to their lower costs and financial return requirements. Our business, financial condition, results of operations, profitability, cash flows and growth prospects could be materially and adversely affected if we are unsuccessful in bidding for projects or renewing our contracts, or if our ability to win such projects or agreements requires that we accept lower margins.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes to those financial statements included as Item 8 in this Annual Report. This discussion and analysis includes forward-looking statements that are based on current expectations and are subject to uncertainties and unknown or changed circumstances. For further discussion, please see “Forward-Looking Statements” at the beginning of this Annual Report. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those risks inherent with our business as discussed in “Item 1A. Risk Factors.”

Throughout this section, unless otherwise noted, “IEA,” the “Company,” “we,” “us” and “our” refer 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, power delivery, environmental remediation, rail and heavy civil infrastructure industries. Since 2019, we have added large-scale US solar and battery storage capabilities to renewable wind energy capabilities.

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.

2021 Equity and Debt Transactions

Equity Offerings

On February 8, 2021, Infrastructure and Energy Alternatives, LLC, the Company's former Parent, sold 8,853,283 shares of Common Stock in an underwritten public offering. Infrastructure and Energy Alternatives, LLC, and not the Company received total gross proceeds of approximately $148.3 million, before deducting underwriting discounts and commissions.

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

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 7. Debt and Series B Preferred Stock ” in the Notes to Consolidated Financial Statements.

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 capacity 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 7. Debt and Series B Preferred Stock” in the Notes to Consolidated Financial Statements.

Transaction Agreement

• 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 of Common Stock Issued

Shares Outstanding June 30, 2021

Issuance of Common Stock

Issuance of Common Stock - Ares

Issuance of Common Stock for Pre-funded Warrants - Ares

Series B warrants converted to Common Stock - Ares

Series A conversion - Ares

Series A anti dilution shares - Ares and other parties

Other equity activity

Shares Outstanding December 31, 2021

Use of Proceeds ($ in millions)

Proceeds from Equity transaction

Proceeds from Debt transaction

Transaction proceeds

Less: Deferred Fees

Net transaction proceeds

Series B Preferred Stock redemption

Term Loan payoff

Revolver and letter of credit payoff

Total use of proceeds

Loss on Extinguishment of Debt

Series B Preferred Stock - Make Whole Premium

Write-off of deferred fees related to Term Loan

Series B Preferred Stock - write-off of deferred fees and discount

Loss on Extinguishment of Debt

Current Year Financial Highlights

Key financial results for the year ended December 31, 2021 include:

• Consolidated revenues increased 18.6% to $2.1 billion as compared to $1.8 billion for the year ended December 31, 2020, of which 70.3% was attributable to the Renewables segment and 29.7% was attributable to the Specialty Civil segment;

• Operating income increased 9.0%, or $6.8 million, to $82.2 million as compared to $75.4 million for the year ended December 31, 2020;

• Net income decreased $84.5 million, to a net loss of $(83.7) million as compared to $0.7 million for the year ended December 31, 2020, primarily due to the debt and equity transactions mentioned above;

• Backlog increased 40.9%, or $846.6 million to $2.9 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. We believe that with our full-service operations, broad geographic reach, financial position and technical expertise, we are well positioned to mitigate the risks and challenges while continuing 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 programs. 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 . We are experiencing supply chain disruptions in our end markets related to the following issues;

• Labor shortages at suppliers have increased delays of the production of certain materials, including but not limited to machinery, tools, copper, reinforced steel, solar panels and other items;

• Shipping costs have increased significantly due to higher demand for products but fewer delivery options due to a reduction of truck drivers and rail cars;

• Delayed sequencing in our projects related to the inability to determine specific delivery dates for key materials;

• Cost increases for tax, tariffs and border controls for materials entering the U.S. from other countries; and

• Bans on imports of certain goods from China, particularly of polysilicon covered by the Uyghur Forced Labor Prevention Act, which is a significant input in the production of solar panels. These bans could result in project delays and increased costs to us or our customers.

We continue to monitor these supply chain disruptions and other logistical challenges, global trade relationships (e.g., tariffs, sourcing restrictions) and other general market and political conditions (e.g., inflation, Ukraine conflict) with respect to availability and costs of certain materials and equipment necessary for the performance of our business and for materials necessary for our customers’ projects. For example, in the renewable energy market are experiencing supply chain challenges, resulting in delays and shortages of, and increased costs for, materials necessary for the construction of certain renewable energy projects in the near term, including as a result of sourcing restrictions related to solar panels manufactured in China. While we believe many of our renewable energy customers may be able to manage near-term supply chain disruptions better than their smaller competitors, these challenges could delay our customers’ ongoing projects or impact their future project schedules, which in turn could impact the timing of our projects. While these are not anticipated to result in exposure to or commodity risks, such could cause our customers to projects as higher than expected costs impact their project projections which could impact our and cash flow.

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 30 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.

For further discussion of these risks see Item 1A. Risk Factors, Results of Operations and Forward-Looking Statements .

Renewables Segment

During 2021, results of the Renewables segment had the following significant operational trends:

• Revenue increased by 27.9% to $1,461.1 million during the year ended December 31, 2021 as compared to $1,142.8 million for 2020.

• Our consistent, safe and reliable performance with our customers on our wind projects has allowed us to capture further solar opportunities from those same customers in backlog for 2022 and beyond.

• Renewable energy has experienced timing delays in regards to slower delivery times for solar panels and wind turbines. This affected the sequencing on some of our solar projects in 2021 and could impact future projects if the supply chain issues continue to grow.

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:

• 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.

• 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 we do 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

Backlog at 12/31/2020 (2)

New Awards in 2021 (1)

Revenue Recognized in 2021

Backlog at December 31, 2021 (2)

Renewables

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

(2) Backlog may differ from the transaction prices allocated to the remaining performance obligations as disclosed in Note 1. Business, Basis of Presentation and Significant Accounting Policies in Item 8. Such differences relate to the timing of executing a formal contract or receiving a notice to proceed. More specifically, backlog sometimes may include awards for which a contract has not yet been executed or a notice to proceed has not been issued, but for which there are no remaining major uncertainties that the project will proceed (e.g., adequate funding is in place).

Specialty Civil Segment

During 2 021, our results of the Specialty Civil segment had the following significant operational trends:

• Revenue increased by 1.2% to $617.3 million during the year ended December 31, 2021 as compared to $610.1 million for 2020.

◦ 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.

◦ The environmental remediation market continued to grow in 2021 as the Company had more projects and larger projects under construction compared to the prior year.

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

• The FMI 2022 Overview Report published in the first quarter of 2022 projects that nonresidential construction put in place for the United States will be over $500 billion per year from 2022 to 2025.

• Infrastructure Investment and Jobs Act will provide $1.2 trillion of federal spending for infrastructure and other investments, including $550 billion of new spending over the next five years. This bill includes provision for spending in the following areas:

◦ Environmental remediation $21.0 billion

◦ Roads & Bridges $110.0 billion

◦ Passenger & Freight Rail $66.0 billion

• U.S. Environmental Protection Agency ("EPA") has continued to take action on controlling and cleaning up the contamination of coal ash disposal. In January 2022, the EPA alluded to future additional regulations, finalizing a federal permitting program for how companies should safely dispose of coal ash, and establishing regulations for legacy coal ash surface impoundment. These additional regulations could signal a slower market as our customers develop strategies on how to comply with any new guidance put forth by the EPA.

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

(in millions)

Segment

Backlog at 12/31/2020 (2)

New Awards in 2021 (1)

Revenue Recognized in 2021

Backlog at December 31, 2021 (2)

Specialty Civil

(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.

Backlog

Estimated backlog represents the amount of revenue we expect to realize in 2022 and beyond 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. These contracts are included in backlog based on the estimated total contract price upon completion.

The following table summarizes our backlog by segment as of December 31:

(in millions)

Segments

December 31, 2021

December 31, 2020

Renewables

Specialty Civil

Total

We expect to realize approximately 73.8% of our estimated backlog during 2022 and 26.2% during 2023 and beyond.

Based on historical trends in our 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, COVID-19 pandemic, weather 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 and may not result in actual revenue or profits.

Backlog is not a term recognized under U.S. GAAP, although it is a common measurement used in our industry. Backlog also differs from the amount of our remaining performance obligations, which are described in Note 1 - Business, Basis of Presentation and Significant Accounting Policies in the Notes to Consolidated Financial Statements. Additionally, our methodology for determining backlog may not be comparable to the methodologies used by others. See ‘‘ Risk Factors ’’ for a discussion of the risks associated with our backlog. As of December 31, 2021, total backlog differed from the amount of our remaining performance obligations primarily due to the inclusion of contracts that were awarded but not yet fully executed.

Significant Factors Impacting Results

Our revenues, margins and other results of operations can be influenced by a variety of factors in any given period, including those described in Item 1A. Risk Factors and in Results of Operations and Forward-Looking Statements, and those factors have caused fluctuations in our results in the past and are expected to cause fluctuations in our results in the future. Additional information with respect to certain of those factors is provided below.

Seasonality. Typically, our revenues are lowest in the first quarter of the year because cold, snowy or wet conditions can create challenging working environments that are more costly for our customers or cause delays on projects. In addition, infrastructure projects often do not begin in a meaningful way until our customers finalize their capital budgets, which typically occurs during the first quarter. Second quarter revenues are typically higher than those in the first quarter, as some projects begin, but continued cold and wet weather can often impact productivity. Third quarter revenues are typically the highest of the year, as a greater number of projects are underway and operating conditions, including weather, are normally more accommodating. Generally, revenues during the fourth quarter are lower than the third quarter but higher than the second quarter, as many projects are completed and customers often seek to spend their capital budgets before year end. However, the holiday season and inclement weather can sometimes cause delays during the fourth quarter, reducing revenues and increasing costs.

Our revenue and results of operations for our Specialty Civil segment are also effected by seasonality but to a lesser extent as these projects are more geographically diverse and located in less severe weather areas. While the first and second quarter revenues are typically lower than the third and fourth quarter, the geographical diversity has allowed this segment to be less seasonal over the course of the year.

Weather and Natural Disasters. The results of our business in a given period can be impacted by adverse weather conditions, severe weather events or natural disasters, which include, among other things, heavy or prolonged snowfall or rainfall, hurricanes, tropical storms, tornadoes, floods, blizzards, extreme temperatures, wildfires, pandemics and earthquakes, and which may be exacerbated by climate change. 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 98.9% for the year ended December 31, 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 1.1% of consolidated revenue for the year ended December 31, 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 period to period based on a number of factors, including unexpected project difficulties or site conditions; project location, including locations with challenging operating conditions; whether the work is on an open or encumbered right of way; inclement weather or severe weather events; environmental restrictions or regulatory delays; protests, other political activity or legal challenges related to a project; and the performance of third parties.

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

Results of Operations

A discussion of results of operations changes between the years ended December 31, 2021 and 2020 is included below. A discussion of changes between the years ended December 31, 2020 and 2019 can be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 8, 2021.

Comparison of Years Ended December 31, 2021 and 2020

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

Year Ended December 31,

Change

(in thousands, except percentages)

Revenue

Cost of revenue

Gross profit

Selling, general and administrative expenses

Income from operations

Other income (expense), net:

Interest expense, net

Loss on extinguishment of debt

Warrant liability fair value adjustment

Other income (expense)

Income (loss) before income taxes

Provision for income taxes

Net (loss) income

See Segment Results , below, for a discussion of Revenue and Gross profit.

Revenue. Revenue increased by 18.6%, or $325.5 million, during the year ended December 31, 2021 as compared to 2020.

Gross profit. Gross profit increased by 9.2%, or $17.4 million, during the year ended December 31, 2021 as compared to 2020.

Selling, general and administrative expenses. Selling, general and administrative expenses increased by 9.4%, or $10.6 million, during the year ended December 31, 2021 as compared to 2020. Selling, general and administrative expenses were 6.0% of revenue for the year ended December 31, 2021, compared to 6.5% for 2020. The increase in selling, general and administrative expenses was primarily driven by cost increases in 2021 compared to 2020 for:

• Information technology costs of $2.8 million related to software licensing;

• Business travel and training costs of $2.3 million;

• Staff related benefit costs $1.9 million;

• Vehicle and equipment costs of $1.1 million; and

• Stock compensation expense of $1.0 million

Interest expense, net. Interest expense decreased by 27.5%, or $17.0 million, during the year ended December 31, 2021 as compared to 2020. This decrease was driven by the redemption of Series B Preferred Stock, offset by the interest expense related to our Senior Unsecured Notes and prior term loan.

Other income (expense). Other income (expense), which, includes Loss on extinguishment of debt, Warrant liability fair value adjustment and Other income (expense), decreased $109.6 million, during the year ended December 31, 2021 as compared to 2020, primarily the result of increases related to the following:

• Loss on debt extinguishment of $101.0 million;

• Other expense related to transaction costs of $5.1 million; and

• Warrant liability fair market value adjustment of $4.3 million.

Provision for income taxes. Income tax expense decreased by 11.0%, or $1.4 million, during the year ended December 31, 2021, compared to 2020. The effective tax rates for the years ended December 31, 2021 and 2020 were (15.4)% and 94.5%, respectively. The difference in effective tax rate in 2021 was primarily attributable to a significant permanent adjustment of $87.7 million related to the redemption of the Series B Preferred Stock which is not deductible for federal and state income taxes.

Segment Results

We 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:

Year Ended December 31,

(in thousands)

Change

Segment

Revenue

% of Total Revenue

Revenue

% of Total Revenue

Renewables

Specialty Civil

Total revenue

Years ended December 31,

(in thousands)

Change

Segment

Gross Profit

Gross Profit Margin

Gross Profit

Gross Profit Margin

Renewables

Specialty Civil

Total gross profit

Renewables Segment Results

Revenue. Renewables revenue was $1,461.1 million for the year ended December 31, 2021 as compared to $1,142.8 million for 2020, an increase of 27.9%, or $318.3 million. The increase in revenue was primarily due to:

• The average revenue of the 22 wind projects of greater than $5.0 million of revenue was $49.2 million in 2021 compared to $40.7 million related to 25 projects greater than $5.0 million of revenue during 2020; and

• Solar revenue increased $204.6 million for the year ended December 31, 2021 when compared to 2020;

Gross profit. Renewables gross profit was $141.7 million for the year ended December 31, 2021 as compared to $126.9 million for 2020, an increase of 11.7%, or $14.8 million. As a percentage of revenue, gross profit was 9.7% in 2021, as compared to 11.1% in 2020. The decrease in percentage was primarily due to challenges related to supply chain disruption in our solar business that caused inefficiencies in project sequencing on a few large projects.

Specialty Civil Segment Results

Revenue. Specialty Civil revenue was $617.3 million for the year ended December 31, 2021 as compared to $610.1 million for 2020, an increase of 1.2%, or $7.2 million. The increase in revenue was primarily due to:

• Increases in our environmental remediation market due to more projects in 2021 compared to 2020; and

• Decreases in the rail and heavy civil markets, as rail markets continue to experience a decrease in revenue primarily due to delay in project starts for railroads and lower budgets decreasing bidding opportunities.

Gross profit. Specialty Civil gross profit was $64.4 million for the year ended December 31, 2021 as compared to $61.8 million for 2020, an increase of 4.2%, or $2.6 million. As a percentage of revenue, gross profit was 10.4% in 2021, as compared to 10.1% in 2020. The increase in percentage was primarily due to growth in the environmental remediation market and the project mix in 2021 compared to 2020.

Liquidity and Capital Resources

Liquidity is provided by available cash balances, cash generated from operations, availability under our credit facility and access to capital markets. We have a committed line of credit totaling $150.0 million, which may be used for revolving loans, letters of credit and/or general purposes. We believe the cash generated from operations, along with our unused credit capacity of $118.9 million and available cash balances as of December 31, 2021, will be sufficient to fund any working capital needs and plans for cash for the next 12 months and beyond. For information on our material cash requirements from known contractual and other obligations, please refer to “Contractual Obligations” below.

To the extent that cash from operations and borrowings under our revolving credit facility are not sufficient to meet our liquidity needs in the next twelve months, we expect to access other sources of liquidity through alternative sources such as issuance of debt and equity securities, expansions of our credit facility or other sources. There can be no assurance that any such sources will be available or if they are available that we can obtain capital from such sources on commercially reasonable terms.

Working Capital

We require working capital to support seasonal variations in our business, primarily due to the effect of weather conditions on external construction and maintenance work and the spending patterns of our customers, both of which influence the timing of associated spending to support related customer demand. Our business is typically slower in the first quarter of each calendar year. Working capital needs are generally lower during the spring when projects are awarded and we receive down payments from customers. Conversely, working capital needs generally increase during the summer or fall months due to increased demand for our services when favorable weather conditions exist in many of the regions in which we operate. Working capital needs are typically lower and working capital is converted to cash during the winter months. These seasonal trends, however, can be offset by changes in the timing of projects, which can be affected by project delays or accelerations and/or other factors that may affect customer spending.

Sources and Uses of Cash

Sources and uses of cash are summarized below for the periods indicated:

Year Ended December 31,

(in thousands)

Net cash (used in) provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Operating Activities. Net cash used in operating activities for the year ended December 31, 2021 was $10.9 million as compared to net cash provided by operating activities of $57.7 million for 2020. The increase in net cash used in operating

activities reflects the timing of receipts from customers and payments to vendors in the ordinary course of business. Based on the timing of completion on our renewable projects in the current year compared to the prior year we had higher billings of accounts receivable and contract assets, partially offset by lower payments on payables and accrued liabilities.

Investing Activities. Net cash used in investing activities for the year ended December 31, 2021 was $23.5 million as compared $3.1 million for 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 used in financing activities for the year ended December 31, 2021 was $5.6 million as compared to net cash used in financing activities of $37.9 million for 2020. The decrease in net cash used 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.

Capital Expenditures

For the year ended December 31, 2021, we acquired equipment for $26.6 million under finance leases and paid an additional $30.2 million in cash purchases. We estimate that we will spend approximately two percent of revenue for capital expenditures in 2022. Actual capital expenditures may increase or decrease in the future depending upon business activity levels, as well as ongoing assessments of equipment lease versus buy decisions based on short and long-term equipment requirements.

Debt

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

2026 and thereafter

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 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 .

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 anticipation of LIBOR's phase out, our Credit Agreement includes a well-documented transition mechanism for selecting a benchmark replacement rate for LIBOR. 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.

• 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.

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 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.

Series A Preferred Stock

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: 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.

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 in Note 7. Debt and Series B Preferred Stock for further discussion of proceeds and the loss on extinguishment.

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.

The Company 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 was paid at 50% on December 31, 2021. The remaining 50% is required to be paid on December 31, 2022.

Contractual Obligations

The following table sets forth our contractual obligations and commitments for the periods indicated as of December 31, 2021:

Payments due by period

(in thousands)

Total

Thereafter

Debt (principal) (1)

Debt (interest) (2)

Finance leases (3)

Operating leases (4)

Total

(1) Represents the contractual principal payment due dates on our outstanding debt.

(2) Represents interest at the stated rate of 6.625% on the Senior Unsecured Notes and interest at the stated rate on the Company's commercial equipment notes.

(3) We have obligations, including associated interest, recognized under various finance leases for equipment totaling $58.4 million at December 31, 2021. Net amounts recognized within property, plant and equipment, net in the consolidated balance sheet under these financed lease agreements at December 31, 2021 totaled $72.2 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 2039.

Off-Balance Sheet Arrangements

As is common in our industry, we have entered into certain off-balance sheet arrangements in the ordinary course of business. Our significant off-balance sheet transactions include liabilities associated with letter of credit obligations, surety and performance and payment bonds entered into in the normal course of business, liabilities associated with deferred compensation plans and liabilities associated with certain indemnification and guarantee arrangements.

Letters of Credit and Surety Bonds

In the ordinary course of business, we may be required to post letters of credit and surety bonds to customers in support of performance under certain contracts. Such letters of credit are generally issued by a bank or similar financial institution. The letter of credit or surety bond commits the issuer to pay specified amounts to the holder of the letter of credit or surety bond under certain conditions. If the letter of credit or surety bond issuer were required to pay any amount to a holder, we would be required to reimburse the issuer, which, depending upon the circumstances, could result in a charge to earnings. As of December 31, 2021 and 2020, we were contingently liable under letters of credit issued under our respective revolving lines of credit in the amount of $31.1 million and $7.8 million, respectively, related to projects and insurance. In addition, as of December 31, 2021 and 2020, we had outstanding surety bonds on projects with nominal amounts of $3.3 billion and $2.8 billion, respectively. The remaining approximate exposure related to these surety bonds amounted to approximately $353.5 million and $293.1 million, respectively. We anticipate that our current bonding capacity will be sufficient for the next twelve months based on current backlog and available capacity.

See Note 8. Commitments and Contingencies to our consolidated financial statements for further discussion pertaining to certain of our off-balance sheet arrangements.

Critical Accounting Policies and Estimates

This management’s discussion and analysis of our financial condition and results of operations is based upon IEA’s consolidated financial statements included in Item 8, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires the use of estimates and assumptions that affect the amounts reported in our consolidated financial statements and the accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Given that management estimates, by their nature, involve judgments regarding future uncertainties, actual results may differ from these estimates if conditions change or if certain key assumptions used in making these estimates ultimately prove to be inaccurate. For discussion of all of our significant accounting policies, see Note 1. Business, Basis of Presentation and Significant Accounting Policies to our consolidated financial statements.

We believe that the accounting policies discussed below are the most critical in the preparation of our consolidated financial statements as they are important to the portrayal of our financial condition and require significant or complex judgment and estimates on the part of management.

Revenue Recognition for Projects

The Company adopted the requirements of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which is also referred to as Accounting Standards Codification (“ASC”) Topic 606, under the modified retrospective transition approach effective January 1, 2019, with application to all existing contracts that were not substantially completed as of January 1, 2019.

Contracts

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

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

Contract costs include all direct materials, labor and subcontracted costs, as well as indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and the costs of capital equipment. The cost estimation and review process for recognizing revenue over time under the cost-to-cost method is based on the professional knowledge and experience of the Company’s project managers, engineers and financial professionals. Management reviews estimates of total contract transaction price and total project costs on an ongoing basis. Changes in job performance, job conditions and management’s assessment of expected variable consideration are factors that influence estimates of the total contract transaction price, total costs to complete those contracts and profit recognition. Changes in these factors could result in revisions to revenue and costs of revenue in the period in which the revisions are determined on a prospective basis, which could materially affect the Company’s consolidated results of operations for that period. Provisions for losses on uncompleted contracts are recorded in the period in which such losses are determined.

Performance Obligations

A performance obligation is a contractual promise to transfer a distinct good or service to the customer and is the unit of account under Topic 606. The transaction price of a contract is allocated to distinct performance obligations and recognized as revenue when or as the performance obligations are satisfied. The Company’s contracts often require significant integrated services and, even when delivering multiple distinct services, are generally accounted for as a single performance obligation. Contract amendments and change orders are generally not distinct from the existing contract due to the significant integrated service provided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation. With the exception of certain Specialty Civil service contracts, the majority of the Company’s performance obligations are generally completed within one year.

When more than one contract is entered into with a customer on or close to the same date, the Company evaluates whether those contracts should be combined and accounted for as a single contract as well as whether those contracts should be accounted for as more than one performance obligation. This evaluation requires significant judgment and is based on the facts and circumstances of the various contracts, which could change the amount of revenue and profit recognition in a given period depending upon the outcome of the evaluation.

Remaining performance obligations represent the amount of unearned transaction prices for fixed price contracts and open purchase orders for which work is wholly or partially unperformed. As of December 31, 2021, the amount of the Company’s remaining performance obligations was $2,002.5 million. The Company expects to recognize approximately 81.8% of its remaining performance obligations as revenue in 2022, with the remainder recognized primarily in 2023. Revenue recognized from performance obligations satisfied in previous periods was $2.0 million and $(10.0) million for the years ended December 31, 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 transaction price are based on past practices with the customer, specific discussions, correspondence or preliminary negotiations with the customer, legal evaluations and all other relevant information that is reasonably available. The effect of a change in variable consideration on the transaction price of a performance obligation is typically recognized as an adjustment to revenue on a cumulative catch-up basis. To the extent unapproved change orders, claims and liquidated damages reflected in transaction price are not resolved in the Company’s favor, or to the extent incentives reflected in transaction price are not earned, there could be reductions in, or reversals of, previously recognized revenue.

As of December 31, 2021 and 2020, the Company included approximately $94.5 million and $52.6 million, respectively, on unapproved change orders and/or claims in the transaction price for certain contracts that were in the process of being resolved in the normal course of business, including through negotiation, arbitration and other proceedings. These transaction price adjustments are included within Contract Assets or Contract Liabilities as appropriate. The Company actively engages with its customers to complete the final approval process, and generally expects these processes to be completed within one year. Amounts ultimately realized upon final acceptance by customers could be higher or lower than such estimated amounts.

Goodwill

Goodwill represents the excess purchase price paid over the fair value of acquired intangible and tangible assets. Goodwill is assessed annually for impairment on October 1st and tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. The Company may assess its goodwill for impairment initially using a qualitative approach to determine whether conditions exist to indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. If management concludes, based on its assessment of relevant events, facts and circumstances, that it is more likely than not that a reporting unit’s carrying value is greater than its fair value, then a quantitative analysis will be performed to determine if there is any impairment.

The quantitative assessment for goodwill requires us to estimate the fair value of each reporting unit carrying goodwill using a weighted combination of the income and market approaches. The income approach uses a discounted cash flow model, which involves significant estimates and assumptions including preparation of revenue and profitability forecasts, selection of a discount rate and selection of a long-term growth rate. The market approach uses an analysis of stock prices and enterprise values of a set of guideline public companies to arrive at a market multiple that is used to estimate fair value. If the fair value of the respective reporting unit exceeds its carrying amount, goodwill is not considered to be impaired. If the carrying amount of a reporting unit exceeds its fair value, the Company would record an impairment charge equal to the difference, not to exceed the carrying amount of goodwill.

Management performed a qualitative assessment for the goodwill recorded in its Renewables and Specialty Civil reporting units by examining relevant events and circumstances that could have an effect on its fair value, such as macroeconomic conditions, industry and market conditions, entity-specific events, financial performance and other relevant factors or events that could affect earnings and cash flows. Based on evaluation of these qualitative assessments, it was determined that there was no goodwill impairment.

Impairment of Property, Plant and Equipment and Intangibles

We review long-lived assets that are held and used for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared with the asset’s carrying amount to determine if there has been an impairment, which is calculated as the difference between the fair value of an asset and its carrying value. Estimates of future undiscounted cash flows are based on expected growth rates for the business, anticipated future economic conditions and estimates of residual values. Fair values take into consideration management’s estimates of risk-adjusted discount rates, which are believed to be consistent with assumptions that market participants would use in their estimates of fair value. There were no impairments of property, plant and equipment or intangible assets recognized during the years ended December 31, 2021, 2020 and 2019.

Recently Issued Accounting Pronouncements

See Note 1. Business, Basis of Presentation and Significant Accounting Policies to our consolidated financial statements included in this Annual Report on 10-K for disclosures concerning recently issued accounting standards. These disclosures are incorporated herein by reference.

Infrastructure & Energy Alternatives, Inc.

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Risk Factors (Item 1A)

MD&A (Item 7)