Overall story didn’t change much. Still very cheap stock, unfortunately pressured by cost inflation and supply chain headwinds. Longer term prospects seem excellent, near term price action is anyone’s guess. I am planning to add on dips slowly.
Thanks for the great write and congrats on going thru a very complex cap structure successfully.
1) I agree with you about sandbagged guidance for 2021and I think it would be much higher(Q2 revenue beats by more than 12%, although missed the eps). But it all comes to management and execution. How well you know them? Any history?
2) how well geographically diversified are they now? (To avoid 2018 type cat event)
3) about refinancing: since your view for it to happen is 12-18 months, what do you think about a potential rate raise?
I’ve spoken with CFO once before. I think mgmt. is generally competent. I think geography wise they are pretty much the same as 2018 (maybe slightly more diverse now since they’ve won more projects etc but not leaps and bounds). The 2018 event was a bit of a freak weather issue that is unlikely to be repeated as far as I know (famous last words). I cross checked this with other unrelated businesses in Texas and they all agreed that the severity and duration of the rainfall was unprecedented in their working memory. I am not sure what your (3) means but if you are asking if they can get screwed on the new debt interest rate, this is extremely unlikely. HY bond market is white hot right now, I expect the new bonds to price at 5-6%. Maybe 7% if they get unlucky.
Great analysis Plum Capital. What do you think about today’s news. IEA had its 2Q2021 earnings report. After earnings, they posted PR about a proposed offering (offering price and shares not disclosed at this time). Thoughts ?
Very useful analysis. However from a risk / reward point of view I think the better play, now that we understand the importance of a refinance, is to wait for the announcement or clues that that refinance is imminent. Such things are rarely priced in immediately for a company of this size, so we should have time to act. Individual investors aren't aware of the importance, Wall Street doesn't pay a lot of attention to firms of this size and usually needs more time to act than we do. The return might be less, but the risk and holding period will be also.
Fair point, but I think the company is going to execute and 2021 EBITDA looks quite sandbagged to me. Also, I wouldn’t be surprised if this thing squeezes randomly in any given day given retail following and high short interest. I think everyone should have at least some ESG/renewables exposure in their books, and this is my favorite play in that respect. Could it trade down? Absolutely, but the valuation and macro tailwinds give me comfort
Any updates or recent thoughts on IEA?
Overall story didn’t change much. Still very cheap stock, unfortunately pressured by cost inflation and supply chain headwinds. Longer term prospects seem excellent, near term price action is anyone’s guess. I am planning to add on dips slowly.
Will the $300mm debt raise take out the preferreds?
Yes, that is the whole point of the transaction and why I like the stock
Thanks for the great write and congrats on going thru a very complex cap structure successfully.
1) I agree with you about sandbagged guidance for 2021and I think it would be much higher(Q2 revenue beats by more than 12%, although missed the eps). But it all comes to management and execution. How well you know them? Any history?
2) how well geographically diversified are they now? (To avoid 2018 type cat event)
3) about refinancing: since your view for it to happen is 12-18 months, what do you think about a potential rate raise?
Thnx
I’ve spoken with CFO once before. I think mgmt. is generally competent. I think geography wise they are pretty much the same as 2018 (maybe slightly more diverse now since they’ve won more projects etc but not leaps and bounds). The 2018 event was a bit of a freak weather issue that is unlikely to be repeated as far as I know (famous last words). I cross checked this with other unrelated businesses in Texas and they all agreed that the severity and duration of the rainfall was unprecedented in their working memory. I am not sure what your (3) means but if you are asking if they can get screwed on the new debt interest rate, this is extremely unlikely. HY bond market is white hot right now, I expect the new bonds to price at 5-6%. Maybe 7% if they get unlucky.
Thanks for the insights!
Great analysis Plum Capital. What do you think about today’s news. IEA had its 2Q2021 earnings report. After earnings, they posted PR about a proposed offering (offering price and shares not disclosed at this time). Thoughts ?
Been a super busy day… I think this is a positive development. Update email coming tomorrow
Very useful analysis. However from a risk / reward point of view I think the better play, now that we understand the importance of a refinance, is to wait for the announcement or clues that that refinance is imminent. Such things are rarely priced in immediately for a company of this size, so we should have time to act. Individual investors aren't aware of the importance, Wall Street doesn't pay a lot of attention to firms of this size and usually needs more time to act than we do. The return might be less, but the risk and holding period will be also.
Fair point, but I think the company is going to execute and 2021 EBITDA looks quite sandbagged to me. Also, I wouldn’t be surprised if this thing squeezes randomly in any given day given retail following and high short interest. I think everyone should have at least some ESG/renewables exposure in their books, and this is my favorite play in that respect. Could it trade down? Absolutely, but the valuation and macro tailwinds give me comfort