HOUSTON, Dec. 07, 2020 (GLOBE NEWSWIRE) -- IES Holdings, Inc. (NASDAQ: IESC) today announced financial results for the quarter and fiscal year ended September 30, 2020.

Fourth Quarter 2020 Highlights

• Revenue of $330 million for the fourth quarter of fiscal 2020, an increase of 13% compared with $294 million for the fourth quarter of fiscal 2019
• Operating income of $14.4 million for the fourth quarter of fiscal 2020, an increase of 4% compared with $13.9 million for the same quarter of fiscal 2019. Operating income for 2020 included a goodwill impairment charge of $7.0 million and executive severance charges of $1.8 million
• Net income attributable to IES of $14.6 million, or $0.68 per diluted share, for the fourth quarter of fiscal 2020, compared with $9.9 million, or $0.46 per diluted share, for the same quarter of fiscal 2019. Net income attributable to IES for the fourth quarter of fiscal 2020 includes goodwill impairment (net of noncontrolling interest) and executive severance charges of $5.7 million and $1.8 million, respectively, as well as a tax benefit of $3.3 million from the release of a valuation allowance on state deferred tax assets
• Adjusted net income attributable to IES (a non-GAAP financial measure, as defined below) increased 78% to $22.2 million, or $1.05 per diluted share, for the fourth quarter of fiscal 2020, compared with $12.5 million, or $0.58 per diluted share, for the fourth quarter of fiscal 2019
• Remaining performance obligations, a GAAP measure of future revenue to be recognized from current contracts with customers, of approximately $505 million as of September 30, 2020
• Backlog (a non-GAAP financial measure, as defined below) of approximately $602 million as of September 30, 2020

Fiscal Year 2020 Highlights

• Revenue of $1.2 billion for fiscal 2020, an increase of 11% compared with $1.1 billion for fiscal 2019
• Operating income of $50.1 million for fiscal 2020, an increase of 20% compared with $41.9 million for fiscal 2019. Operating income for 2020 included a goodwill impairment charge of $7.0 million and executive severance charges of $1.8 million
• Net income attributable to IES of $41.6 million, or $1.94 per diluted share, for fiscal 2020, compared with $33.2 million, or $1.55 per diluted share, for fiscal 2019. Net income attributable to IES for fiscal 2020 includes goodwill impairment (net of noncontrolling interest) and executive severance charges of $5.7 million and $1.8 million, respectively, as well as tax benefits of $3.2 million related to the recognition of previously unrecognized tax benefits and $3.3 million from the release of a valuation allowance on state deferred tax assets. Net income attributable to IES for fiscal 2019 includes a tax benefit of $4.0 million associated with the recognition of previously unrecognized tax benefits
• Adjusted net income attributable to IES increased 41% to $54.2 million, or $2.57 per diluted share, for fiscal 2020, compared with $38.4 million, or $1.79 per diluted share, for fiscal 2019

Overview of Results

"I continue to be impressed with the commitment to safety and to our customers the entire IES team has shown in the face of the COVID-19 pandemic," said Jeffrey Gendell, Chairman and Chief Executive Officer. “Despite this challenging economic environment, our fiscal 2020 financial performance was strong, with consolidated revenue increasing 11% over the prior year, led by significant growth in our Communications and Residential businesses. Inclusive of charges for goodwill impairment and executive severance, our operating income still increased 20% for fiscal 2020 compared with fiscal 2019."

For fiscal 2020, the Communications segment reported revenue of $395.1 million, a 23% increase from fiscal 2019, driven primarily by increased demand from data center and distribution center customers, while operating income increased 63% to $40.4 million. Reflecting increased activity in both the single-family and multi-family housing markets, the Residential segment's revenue was $411.8 million and operating income was $30.1 million in fiscal 2020, representing increases of 31% and 68%, respectively, year-over-year. Revenue in the Infrastructure Solutions segment decreased 6% to $128.4 million in fiscal 2020, primarily reflecting the timing of project schedules at certain large customers as well as reduced demand for motor repair services caused by temporary COVID-19 related facility shutdowns by certain customers. Despite this decrease in revenue, operating income increased 17% in fiscal 2020 to $14.6 million.

The Commercial & Industrial segment reported fiscal 2020 revenue of $255.5 million, a decline of 16% compared to 2019. Although the business has maintained its focus on operating improvements and cost reductions, its performance continued to be affected by the ongoing COVID-19 pandemic and other market factors. This resulted in delays in awarding new projects and decreased demand for new construction in sectors such as retail, office and hospitality, which, in turn, negatively impacted its revenue, operating income and backlog. As a result of this increasingly competitive and uncertain environment and the financial performance of the segment, the Company recorded a non-cash goodwill impairment charge of $7.0 million in the fourth quarter of fiscal 2020.

Tracy McLauchlin, Chief Financial Officer, added, “We generated $77 million of operating cash flow during fiscal 2020 and ended the year with a cash balance of $54 million and no outstanding borrowings on our revolving credit facility, while investing an aggregate of $41 million in acquisitions, capital expenditures and share repurchases. Subsequent to the end of our fiscal year, we successfully completed the acquisitions of K.E.P. Electric, Inc. and Wedlake Fabricating, Inc., using cash on hand while still maintaining ample liquidity. This liquidity, combined with a fiscal year-end backlog of $602 million, an increase of $65 million from a year ago, positions us well for growth in fiscal 2021."

Net Operating Loss Carryforwards

The Company estimates that it has available Net Operating Loss Carryforwards (NOLs) for U.S. federal income tax purposes of approximately $217.3 million at September 30, 2020, including approximately $128.0 million resulting from net operating losses on which a deferred tax asset is not recorded. The Company's common stock is subject to a Rights Plan dated November 8, 2016, which is intended to assist in limiting the number of 5% or more owners of the Company’s common stock and thereby reduce the risk of a possible “change in ownership” under Section 382 of the Internal Revenue Code of 1986, as amended. Any such “change in ownership” under these rules would limit or eliminate the ability of the Company to use its existing NOLs for federal income tax purposes. There is no guarantee that the Rights Plan will achieve the objective of preserving the value or realization of the NOLs.

Stock Buyback Plan

In 2015, the Company’s Board of Directors authorized and announced a stock repurchase program for purchasing up to 1.5 million shares of our common stock from time to time, and on May 2, 2019, authorized the repurchase of up to an additional 1.0 million shares. During the quarter ended September 30, 2020, the Company repurchased 38,201 shares at an average price of $28.97 per share, and for year-to-date fiscal 2020, the Company repurchased 263,160 shares at an average price of $23.29 per share. The Company had 993,825 shares remaining under its stock repurchase authorization at September 30, 2020.

Non-GAAP Financial Measures and Other Adjustments

This press release includes adjusted net income attributable to IES, adjusted earnings per share attributable to IES, and backlog, and, in the non-GAAP reconciliation tables included herein, adjusted EBITDA and adjusted net income before taxes, each of which is a financial measure not calculated in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Management believes that these measures provide useful information to our investors by, in the case of adjusted net income attributable to IES, adjusted earnings per share attributable to IES, adjusted EBITDA and adjusted net income before taxes, distinguishing certain nonrecurring events such as litigation settlements or significant expenses associated with leadership changes, or noncash events, such as impairment charges or our valuation allowances release and write-down of our deferred tax assets, or, in the case of backlog, providing a common measurement used in IES's industry, as described further below, and that these measures, when reconciled to the most directly comparable GAAP measures, help our investors to better identify underlying trends in the operations of our business and facilitate easier comparisons of our financial performance with prior and future periods and to our peers. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures, which has been provided in the financial tables included in this press release.

Remaining performance obligations represent the unrecognized revenue value of our contract commitments. While backlog is not a defined term under GAAP, it is a common measurement used in IES’s industry and IES believes this non-GAAP measure enables it to more effectively forecast its future results and better identify future operating trends that may not otherwise be apparent. IES’s remaining performance obligations are a component of IES’s backlog calculation, which also includes signed agreements and letters of intent which we do not have a legal right to enforce prior to work starting. These arrangements are excluded from remaining performance obligations until work begins. IES’s methodology for determining backlog may not be comparable to the methodologies used by other companies.

For further details on the Company’s financial results, please refer to the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2020, to be filed with the Securities and Exchange Commission (“SEC”) by December 7, 2020, and any amendments thereto.

About IES Holdings, Inc.
IES is a holding company that owns and manages operating subsidiaries that design and install integrated electrical and technology systems and provide infrastructure products and services to a variety of end markets, including data centers, residential housing, and commercial and industrial facilities. Our more than 5,000 employees serve clients in the United States. For more information about IES, please visit www.ies-co.com.