IES Holdings, Inc. (IESC) research, news, and more from GeoInvesting

Company description

Thu, 07 Sep 2023 17:29:11 GMT

IES Holdings Inc owns and manages subsidiaries that design and installs integrated electrical and technology systems and provide infrastructure products and services. It has four business segments. The Communications segment is a nationwide provider of technology infrastructure services to large corporations and independent businesses. The Residential segment is a regional provider of electrical installation services for single-family housing and multi-family apartment complexes. The Commercial and Industrial segment provides electrical design, construction, and maintenance services to the commercial and industrial markets in various regional markets and nationwide. The Infrastructure Solutions segment provides electrical and mechanical solutions to domestic and international customers.

Comments & Business Outlook

Fri, 06 Dec 2019 16:24:12 GMT

IES Holdings Inc (NASDAQ:IESC) ($21.8; $463.0M market cap), a holding company that owns and manages diverse operating subsidiaries across a range of infrastructure-related end markets, announced Q4 2019 results:

Sales of $294.0 million vs $240 million in the prior year
Non-GAAP EPS of $0.58 vs $0.46 in the prior year

“Since joining IES in March, I’ve been very impressed with the culture, dedication and caliber of the IES team and believe that there is tremendous value that we can create together. In particular, we are pursuing growth in core markets where we have scale and expertise, such as housing, data centers and industrial facilities, while focusing on margin improvement opportunities, ranging from procurement initiatives to project selection. At the same time, we are continuing to invest in our people with an eye on hiring, training and retaining key talent at all levels of IES. Lastly, we will remain committed to a disciplined capital allocation strategy focused on both completing strategic acquisitions and returning capital to our shareholders...

..While our Commercial & Industrial segment increased revenue by 11% and generated $2.1 million of operating income, margins were affected by inefficiencies on several projects. We are addressing both processes and costs to improve the margins of this segment. Looking ahead to fiscal 2020, our growth momentum, improved backlog and strong balance sheet have us well-positioned to continue to build shareholder value.”

Research

Thu, 07 Mar 2019 17:33:22 GMT

IES Holdings Inc (NASDAQ:IESC) ($18.45, $390.0M market cap), a holding company that owns and manages diverse operating subsidiaries across a range of infrastructure-related end markets recently appointed Gary Matthews as CEO.

“Prior to joining IES, Mr. Matthews spent twelve years as Managing Director and Operating Partner of Morgan Stanley Capital Partners, the private equity business of Morgan Stanley, where he oversaw numerous portfolio companies. Prior to that role, he led several private equity-backed manufacturing companies, as well as business units of several public companies. Mr. Matthews also held senior management positions in strategic planning at PepsiCo after working as a Senior Engagement Manager at McKinsey & Company.”

Yesterday, the company filed an 8-K with an employee agreement for Mr. Matthews. He was awarded 260,000 shares via restricted stock grants. What we find interesting is that the stock grants are tied to the performance of the stock reaching much higher levels, with the shares vesting at prices between $35 and $50:

Tranche 1: 40,000 shares with a Vesting Stock Price of $35 per share;
Tranche 2: 40,000 shares with a Vesting Stock Price of $40 per share;
Tranche 3: 40,000 shares with a Vesting Stock Price of $45 per share;
Tranche 4: 40,000 shares with a Vesting Stock Price of $50 per share.

IESC reported strong Q1 2019 results in early February with sales and adjusted EPS up 23% and 263%, respectively.

We have been monitoring IESC for some time as a U.S infrastructure play and are certainly intrigued by this development, especially given the background of the new CEO and the positive financial performance of the company over the past few quarters.

We have been looking for a new infrastructure play to add to our portfolio after the success we had with a few names in the space, including NVEE.

Comments & Business Outlook

Fri, 07 Dec 2018 15:50:48 GMT

IES Holdings Inc (NASDAQ:IESC) ($16.57, $351.0M market cap), a holding company that owns and manages diverse operating subsidiaries across a range of infrastructure-related end markets, reported Q4 2018 results:

Sales of $240.3 million vs $206.6 million in the prior year
Non-GAAP EPS of $0.46 vs $0.28 in the prior year

“We are pleased with our fiscal 2018 results and our prospects for 2019. We increased revenue, gross profit and operating income as compared to fiscal 2017, and in particular we experienced continued improvements in each of our segments during the second half of the year. Looking forward, we are entering 2019 with $482 million in backlog, an increase of 46% compared to the prior year, and believe that the capital we reinvested into our segments and completed acquisitions have us well-positioned to execute on this backlog, increase our market share and continue to capitalize on opportunities available to all four of our segments.

During the year we invested $22 million in working capital in support of accelerating growth, $7 million in bolt-on acquisitions, and $2 million to repurchase our common stock. We believe that our strong balance sheet and available liquidity, as well as expected cash flow from both our legacy and acquired businesses, will support our growth strategy.”

The stock is currently trading a trailing non-GAAP P/E of 14.2 based on the trailing twelve month non-GAAP EPS of $1.16.

Research

Mon, 06 Aug 2018 15:09:43 GMT

IES Holdings Inc (NASDAQ:IESC) ($18.85, $400M market cap), a holding company that owns and manages diverse operating subsidiaries across a range of infrastructure-related end markets, reported its fiscal third quarter results on Friday, posting adjusted EPS of $0.42 vs. $0.17 and revenue that rose 11.6%. The company’s backlog also rose to $392 million as of June 30, 2018, as compared to approximately $343 million as of March 31, 2018. Despite this, the stock didn’t react as well as we would have liked to the most recent quarterly report. We’re now revisiting the story.

IESC is one of the stocks from our infrastructure overhaul screen that includes a handful of stocks we started to track due to the government’s passage of a House bill that approved the spending of billions of dollars to fix the United States’ aging bridges and roadways. Here’s the current valuation of IESC as we’ve calculated it:

Research

Thu, 16 Mar 2017 15:24:43 GMT

IESC ($18.90) announced it has acquired Freeman Enclosure Systems, a manufacturer of custom generator enclosures that are primarily used by data centers and large commercial and industrial facilities. The press release did not discuss details on the size of the company or structure of the deal.

Research

Thu, 09 Feb 2017 15:09:05 GMT

IESC ($18.60) reported Q1 2017 results:

Sales of $192.2 million vs $150.8 million in the prior year
EPS of $0.18 vs $0.27 in the prior year. Last years number includes a tax benefit of $900k were this quarter the company paid $2.6 million in taxes.
Without taxes, income from continuing operations would have been $6.6 million vs $4.9 million in the prior year
Backlog of $328 million vs $289 million in the prior year

Quotes from management:

“We are pleased with our first quarter results and how the entire organization continues to execute against our growth strategy. Our legacy business units continue to show strong organic growth, which, combined with the accretive acquisitions completed to date, resulted in a 37% improvement in operating income compared to the first quarter of the prior year. Looking ahead, we remain optimistic in our ability to execute our stated growth strategy of improving margins, completing accretive acquisitions, maintaining a strong balance sheet and utilizing our NOLs.”

Research

Wed, 14 Dec 2016 16:24:41 GMT

IESC ($21.65) - S-3 filing shows a large stakeholder Tontine Capital Partners looking to sell 12.4 million shares, which represents the funds full position. This was the main caveat we discussed in ouroriginal note from November 11, 2016. We are looking into the details a bit closer, as we also see headlines that show the shelf registration is for up to 7.93 million shares at a maximum price of $20.48. The possible exit of Tontine could be good for shareholder diversification, however, could be an overhang on the stock for sometime. We may look to add on significant pullback, as non-dilutive offerings tend to be non-effect in the end.

Research

Mon, 12 Dec 2016 17:21:03 GMT

**Growth & Value Stock of The Day

On Friday, we added a Growth & Value “stock of the day” portion to our email. We touch on $SMDM on Friday (see our note here). As a quick reminder, here is a recap of the growth + value theme:

We have been talking about “growth + value” strategies over the last year. Our co-founder, Maj Soueidan, touched on the topic at length in his presentation at the Micro Cap Conference in April of 2016. You can review a full summary of that presentationhere. Many investors think that you need to sacrifice value in order to pay for growth - or that you must sacrifice growth to get companies at attractive valuations. We look for the unique opportunities where companies match both criteria.

Our recent research has also been focusing on “growth at a reasonable price” (GARP), which is a common theme among “growth plus value” seekers. When we come across companies in our research which are low P/E stocks with strong growth outlooks - ones that represent what we believe to be GARP opportunities worth noting - we will highlight them if they stand out.

Early in his full-time Investing career and still today, Maj applied some of Peter Lynch’s GARP criteria as part of his strategy:

Trailing P/E of less than 25
Forward P/E of less than 15
Debt to Equity of less than 35%
EPS Growth >15% to <30%

The growth criteria used today as part of Geo’s strategy includes:

Sales growth equal to or greater than 10%
EPS growth equal to or greater than the range of 20% to 30%
Pretax margins equal to or greater than 10%

Today’s focus is on $IESC ($21.25). IESC meets some of my GARP requirements, although margins are well below my preference. One of my goals in the coming days will be to determine if IESC has an opportunity to expand its margins.

IESC comes right out our infrastructure screen along with two other top performing commercial/electrical construction stocks, $NVEE and $WLDN. The stock is selling at a trailing P/E of 18 and a forward P/E of less than 15 on some of my 2017 EPS targets.. The company owns and manages diverse operating subsidiaries, comprised of providers of industrial infrastructure services to a variety of end markets. We briefly touched on IESC in our November 11, 2016 email. You can see our original note here. Look for our follow up research coming soon.

Research

Fri, 11 Nov 2016 17:06:13 GMT

IESC ($17.10) - We are adding IESC to our Infrastructure screen. IESC is a holding company that owns and manages subsidiaries operating across a variety of end markets. Our operations are currently organized into four principal business segments, based upon the nature of our current services:

Communications – Nationwide provider of technology infrastructure services to large corporations and independent businesses.
Residential – Regional provider of electrical installation services for single-family housing and multi-family apartment complexes.
Commercial & Industrial – Provider of electrical design, construction, and maintenance services to the commercial and industrial markets in various regional markets and nationwide in certain areas of expertise, such as the power infrastructure market.
Infrastructure Solutions – Provider of electrical and mechanical solutions to domestic and international customers.

We encourage you to read the 10-K, specifically pages 8 -10 for more clarity on the type of services IESC provides.

Caveat:

The Company has a major controlling shareholder:

“A majority of our outstanding common stock is owned by Tontine Capital Partners, L.P. and its affiliates (collectively, “Tontine”). On October 15, 2015, Tontine filed an amended Schedule 13D indicating its ownership level of 62.2%. As a result, Tontine can control most of our affairs, including most actions requiring the approval of shareholders, such as the approval of any potential merger or sale of all or substantially all assets, segments, or the Company itself. Most of Tontine’s shares are registered on a shelf registration statement (the “Shelf Registration Statement”) filed by the Company and declared effective in 2013 by the U.S. Securities and Exchange Commission (the “SEC”). Tontine’s sale of all or any portion of its shares could result in a change of control, which would trigger the change of control provisions in a number of our material agreements, including our credit facility, bonding agreements with our sureties and our executive severance plan. For more information see Note 3, “Controlling Shareholder” in the notes to our Consolidated Financial Statements.”

Comments & Business Outlook

Mon, 22 Aug 2016 04:00:00 GMT

Second Quarter 2016 Results

Sales of $24.6 million vs $22.3 million
EPS of $0.67 vs $0.85