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IES Holdings(IESC) - 2025 Q3 - Quarterly Results
IES HoldingsIES Holdings(US:IESC)2025-08-01 11:55

Fiscal 2025 Third Quarter Results Overview This chapter provides a comprehensive overview of IES Holdings' financial performance for Q3 fiscal 2025, highlighting key results, segment-specific contributions, strategic initiatives, and capital allocation activities Highlights and Recent Developments IES Holdings reported strong Q3 fiscal 2025 performance with significant revenue and operating income growth, driven by data center demand across multiple segments, alongside strategic investments and acquisitions Overview of Results IES Holdings achieved strong Q3 fiscal 2025 results, with double-digit growth in revenue, operating income, net income, and diluted EPS, primarily driven by robust demand - IES Holdings delivered strong performance in Q3 fiscal 2025, with a 16% increase in revenue and a 24% increase in operating income, driven by robust demand, particularly in the data center market5 Q3 Fiscal 2025 Financial Performance (Millions of USD) | Metric | Q3 Fiscal 2025 | Q3 Fiscal 2024 | YoY Change | | :------------------------------------------ | :------------- | :------------- | :--------- | | Revenue | $890 million | $768 million | +16% | | Operating income | $111.9 million | $90.2 million | +24% | | Net income attributable to IES | $77.2 million | $62.1 million | +24% | | Diluted EPS attributable to common stockholders | $3.81 | $2.67 | +42.7% | | Adjusted net income attributable to IES | $79.8 million | $63.2 million | +26% | | Diluted adjusted EPS attributable to common stockholders | $3.95 | $2.72 | +45.2% | - Remaining performance obligations stood at approximately $1.3 billion, and backlog (non-GAAP) was approximately $2.1 billion as of June 30, 20256 - Subsequent to quarter end, the Communications segment acquired Qypsys, a Tampa-based provider of wireless network infrastructure6 Segment Performance This section details the individual financial performance of IES Holdings' Communications, Residential, Infrastructure Solutions, and Commercial & Industrial segments for Q3 fiscal 2025 Communications Segment The Communications segment experienced significant revenue and operating income growth in Q3 fiscal 2025, driven by strong demand in data center and high-tech manufacturing markets Communications Segment Performance (Millions of USD) | Metric | Q3 Fiscal 2025 | Q3 Fiscal 2024 | YoY Change | | :------- | :------------- | :------------- | :--------- | | Revenue | $299.2 million | $192.3 million | +56% | | Operating income | $47.8 million | $21.0 million | +127.6% | - Growth was driven by strong demand across the business, particularly in the data center market, high-tech manufacturing, and distribution center end markets, coupled with successful project execution and improved margins7 Residential Segment The Residential segment faced an 8% revenue decline and a 23.5% operating income decrease in Q3 fiscal 2025 due to a challenging housing market Residential Segment Performance (Millions of USD) | Metric | Q3 Fiscal 2025 | Q3 Fiscal 2024 | YoY Change | | :------- | :------------- | :------------- | :--------- | | Revenue | $346.1 million | $377.5 million | -8% | | Operating income | $33.4 million | $43.7 million | -23.5% | - The segment faced a challenging housing market due to concerns over affordability, insurance availability, unemployment, and economic uncertainty, leading to reduced revenue and operating margins78 - Decreased demand was partially mitigated by expansion of plumbing and HVAC trades in new markets7 Infrastructure Solutions Segment The Infrastructure Solutions segment achieved substantial revenue and operating income growth in Q3 fiscal 2025, primarily from data center demand and operational efficiencies Infrastructure Solutions Segment Performance (Millions of USD) | Metric | Q3 Fiscal 2025 | Q3 Fiscal 2024 | YoY Change | | :------- | :------------- | :------------- | :--------- | | Revenue | $129.5 million | $102.0 million | +27% | | Operating income | $32.6 million | $19.8 million | +64.6% | - Growth was driven by strong demand in custom engineered solutions, primarily in the data center end market, and expansion of field services offerings. Profit improvement resulted from higher volumes, improved pricing, operating efficiencies, and capacity investments9 Commercial & Industrial Segment The Commercial & Industrial segment reported a 20% revenue increase in Q3 fiscal 2025, driven by education, healthcare, and data center markets, despite a slight operating income decrease Commercial & Industrial Segment Performance (Millions of USD) | Metric | Q3 Fiscal 2025 | Q3 Fiscal 2024 | YoY Change | | :------- | :------------- | :------------- | :--------- | | Revenue | $115.4 million | $96.6 million | +20% | | Operating income | $12.9 million | $13.0 million | -0.8% | - Increased activity in the education and healthcare end markets, expansion in the Midwest, and continued solid demand and strong execution in the data center end market contributed to revenue growth11 Strategic Initiatives and Acquisitions IES is strategically expanding capacity for data center projects, investing in IT upgrades, and pursuing acquisitions to enhance its custom engineered solutions and wireless network infrastructure capabilities - IES is focusing on growth by expanding capacity for large data center projects in its Communications, Infrastructure Solutions, and Commercial & Industrial segments, and investing in IT upgrades for the Residential segment12 - The company entered an agreement to purchase an industrial fabrication operation in Manitowoc, Wisconsin, to expand custom engineered solutions capacity12 - Subsequent to quarter end, IES acquired the remaining 20% interest in Edmonson Electric and the Communications segment completed the acquisition of Qypsys, a wireless network infrastructure provider13 Capital Allocation and Stock Buyback Plan Capital allocation remains a priority for IES, with significant cash reserves, capital expenditures, and investments in marketable securities, alongside a stock repurchase program - Capital allocation remains a top priority, with the company ending the quarter with $88.4 million of cash and restricted cash, net of debt, and $66.8 million of marketable securities14 - Capital allocation highlights include $17.1 million in capital expenditures, a $7 million deposit for the Manitowoc fabrication operation, repurchasing 33,900 shares for $5.3 million, and using $32.8 million to purchase marketable securities15 Non-GAAP Financial Measures Explanation This chapter clarifies the definition and purpose of IES Holdings' non-GAAP financial measures, including adjusted net income, adjusted diluted EPS, and backlog, and their reconciliation to GAAP Definition and Purpose IES Holdings uses non-GAAP measures like adjusted net income and adjusted EBITDA to provide additional insights by distinguishing nonrecurring or noncash items, aiding in trend identification and peer comparisons - Non-GAAP measures like adjusted net income, adjusted diluted EPS, and adjusted EBITDA are used to distinguish nonrecurring events (e.g., litigation settlements, leadership change expenses, gains/losses from business sales) or noncash events (e.g., impairment charges, unrealized gains/losses on investments)16 - These measures, when reconciled to GAAP, help investors identify underlying trends, compare financial performance across periods and peers, and should not be considered in isolation from or as a substitute for GAAP financial information16 Remaining Performance Obligations and Backlog Remaining performance obligations (RPO) represent unrecognized GAAP revenue, while backlog, a non-GAAP measure, expands on RPO by including non-enforceable agreements to provide a broader view of future revenue potential - Remaining performance obligations are a GAAP measure representing the unrecognized revenue value of contract commitments17 - Backlog is a non-GAAP measure common in IES's industry, which includes remaining performance obligations plus signed agreements and letters of intent that are not legally enforceable prior to work starting17 - Management believes backlog enables more effective forecasting of future results and identification of future operating trends, but its methodology may not be comparable to other companies17 About IES Holdings, Inc. This chapter provides an overview of IES Holdings, Inc., detailing its core business of designing and installing electrical and technology systems and providing infrastructure products across diverse markets Company Profile IES Holdings, Inc. designs and installs integrated electrical and technology systems and provides infrastructure products and services to various end markets across the United States - IES designs and installs integrated electrical and technology systems and provides infrastructure products and services19 - The company serves various end markets, including data centers, residential housing, and commercial and industrial facilities, with over 9,000 employees in the United States19 Contact Information This chapter provides essential contact details for IES Holdings' Chief Financial Officer and its Investor Relations group for company and investor inquiries Company and Investor Relations Contacts This section provides contact details for IES Holdings' Chief Financial Officer and its Investor Relations group, Alpha IR Group, for company and investor inquiries - Company Contact: Tracy McLauchlin, Chief Financial Officer, IES Holdings, Inc. (713) 860-150021 - Investor Relations Contact: Robert Winters or Stephen Poe, Alpha IR Group, (312) 445-2870, IESC@alpha-ir.com21 Forward-Looking Statements This chapter serves as a disclaimer for forward-looking statements, outlining inherent risks and uncertainties that could cause actual results to differ materially from projections Disclaimer and Risk Factors This section serves as a comprehensive disclaimer for forward-looking statements, highlighting that such statements are based on estimates and assumptions and involve significant risks and uncertainties - Statements in the release may be 'forward-looking statements' based on estimates and assumptions, identifiable by terms like 'may,' 'will,' 'expect,' 'plan,' 'intend,' 'believe,' etc21 - These statements involve risks and uncertainties that could cause actual future outcomes to differ materially, including general economic conditions, competition, project execution, labor costs, supply chain disruptions, inaccurate estimates, reliance on third parties, integration challenges, and regulatory changes2122 - The company undertakes no obligation to publicly update or revise any information or forward-looking statements after the date of the release, and these statements are provided pursuant to the safe harbor under the Private Securities Litigation Reform Act of 19952223 Condensed Consolidated Financial Statements This chapter presents the unaudited condensed consolidated financial statements for IES Holdings, Inc., including the statement of operations, balance sheets, and cash flows for specified periods Condensed Consolidated Statement of Operations This section presents the unaudited condensed consolidated statement of operations for IES Holdings, Inc. and its subsidiaries for the three and nine months ended June 30, 2025, and 2024, detailing revenues, gross profit, operating income, net income, and earnings per share Condensed Consolidated Statement of Operations (Millions of USD, except EPS) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenues | $890.2 | $768.4 | $2,473.7 | $2,108.6 | | Gross profit | $239.6 | $194.8 | $626.5 | $510.2 | | Operating income | $111.9 | $90.2 | $279.2 | $225.9 | | Net income attributable to IES Holdings, Inc. | $77.2 | $62.1 | $204.2 | $156.0 | | Diluted EPS attributable to common stockholders | $3.81 | $2.67 | $10.03 | $6.84 | Condensed Consolidated Balance Sheets This section provides the unaudited condensed consolidated balance sheets for IES Holdings, Inc. and its subsidiaries as of June 30, 2025, and September 30, 2024, outlining the company's assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (Millions of USD) | Metric | June 30, 2025 | September 30, 2024 | | :------------------------- | :------------ | :----------------- | | Total current assets | $1,012.8 | $871.7 | | Total assets | $1,469.7 | $1,244.0 | | Total current liabilities | $546.6 | $522.6 | | Total liabilities | $647.3 | $591.9 | | Total stockholders' equity | $781.4 | $611.1 | Condensed Consolidated Statements of Cash Flows This section presents the unaudited condensed consolidated statements of cash flows for IES Holdings, Inc. and its subsidiaries for the nine months ended June 30, 2025, and 2024, detailing cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Millions of USD) | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $154.1 | $141.6 | | Net cash used in investing activities | $(114.1) | $(96.4) | | Net cash used in financing activities | $(32.4) | $(76.1) | | Net increase (decrease) in cash and cash equivalents | $7.6 | $(30.9) | | Cash and cash equivalents, end of period | $108.4 | $44.9 | Operating Segment Statement of Operations This chapter provides a detailed breakdown of revenues and operating income (loss) for each of IES Holdings' operating segments for the three and nine months ended June 30, 2025, and 2024 Segment-wise Performance This section provides a detailed breakdown of revenues and operating income (loss) for each of IES Holdings' operating segments—Communications, Residential, Infrastructure Solutions, and Commercial & Industrial—for the three and nine months ended June 30, 2025, and 2024, illustrating the individual contributions and performance of each business unit Operating Segment Performance (Millions of USD) | Segment | Q3 Fiscal 2025 Revenue | Q3 Fiscal 2024 Revenue | Q3 Fiscal 2025 Operating Income (Loss) | Q3 Fiscal 2024 Operating Income (Loss) | | :------------------------ | :--------------------- | :--------------------- | :----------------------------------- | :----------------------------------- | | Communications | $299.2 | $192.3 | $47.8 | $21.0 | | Residential | $346.1 | $377.5 | $33.4 | $43.7 | | Infrastructure Solutions | $129.5 | $102.0 | $32.6 | $19.8 | | Commercial & Industrial | $115.4 | $96.6 | $12.9 | $13.0 | | Corporate | - | - | $(14.8) | $(7.3) | | Total | $890.2 | $768.4 | $111.9 | $90.2 | Non-GAAP Reconciliations This chapter provides reconciliations of IES Holdings' non-GAAP financial measures, including adjusted net income, adjusted EBITDA, and backlog, to their most directly comparable GAAP measures Adjusted Net Income and EPS Reconciliation This section provides a reconciliation of GAAP net income attributable to IES Holdings, Inc. to adjusted net income and adjusted earnings per share attributable to common stockholders, detailing adjustments for unrealized gains/losses on trading securities and their associated tax impacts for the three and nine months ended June 30, 2025, and 2024 Adjusted Net Income and EPS Reconciliation (Millions of USD, except EPS) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income attributable to IES Holdings, Inc. | $77.2 | $62.1 | $204.2 | $156.0 | | Unrealized (gain) loss on trading securities | $3.7 | $1.5 | $(4.1) | $3.3 | | Adjusted net income attributable to IES Holdings, Inc. | $79.8 | $63.2 | $201.1 | $158.5 | | Adjusted diluted EPS attributable to common stockholders | $3.95 | $2.72 | $9.88 | $6.96 | Adjusted EBITDA Reconciliation This section reconciles GAAP net income attributable to IES Holdings, Inc. to EBITDA and Adjusted EBITDA for the three and nine months ended June 30, 2025, and 2024, by adding back provisions for income taxes, interest and other (income) expense, depreciation and amortization, and non-cash equity compensation expense Adjusted EBITDA Reconciliation (Millions of USD) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income attributable to IES Holdings, Inc. | $77.2 | $62.1 | $204.2 | $156.0 | | Provision for income taxes | $29.4 | $22.6 | $75.5 | $57.4 | | Interest & other (income) expense, net | $3.1 | $1.0 | $(5.9) | $1.5 | | Depreciation and amortization | $11.7 | $10.6 | $34.7 | $26.0 | | EBITDA | $121.4 | $96.3 | $308.5 | $240.9 | | Non-cash equity compensation expense | $4.3 | $1.4 | $9.4 | $4.3 | | Adjusted EBITDA | $125.7 | $97.7 | $317.9 | $245.2 | Remaining Performance Obligations and Backlog Reconciliation This section provides a supplemental reconciliation of remaining performance obligations (a GAAP measure) to backlog (a non-GAAP measure) as of June 30, 2025, September 30, 2024, and June 30, 2024, by including agreements that do not yet have an enforceable obligation Remaining Performance Obligations and Backlog Reconciliation (Millions of USD) | Metric | June 30, 2025 | September 30, 2024 | June 30, 2024 | | :---------------------------------------- | :------------ | :----------------- | :------------ | | Remaining performance obligations | $1,295 | $1,176 | $1,177 | | Agreements without an enforceable obligation | $772 | $610 | $520 | | Backlog | $2,067 | $1,786 | $1,697 |