Integrated Electrical Services Reports Fiscal 2013 Third Quarter Results

  Integrated Electrical Services Reports Fiscal 2013 Third Quarter Results

Business Wire

HOUSTON -- August 12, 2013

Integrated Electrical Services, Inc. (NASDAQ: IESC), an infrastructure
services company with leading positions in a broad range of markets for
electrical and communications products and services, today announced financial
results for its fiscal 2013 third quarter.

THIRD QUARTER OF FISCAL 2013 HIGHLIGHTS

  *Operating cash flow of $2.6 million for the third quarter of 2013, an
    increase of $0.7 million from the third quarter of 2012
  *Adjusted EBITDA (a non-GAAP measure meaning earnings before interest,
    taxes, depreciation and amortization and other items; see reconciliation
    statement below) of $1.3 million, a decrease of $0.5 million from the
    third quarter of 2012
  *Net loss from continuing operations of ($0.7) million, or ($0.05) per
    share; adjusted net loss from continuing operations (a non-GAAP measure;
    see reconciliation statement below) of ($0.1) million, or ($0.01) per
    share
  *Backlog was approximately $194 million at June 30, 2013, a $12 million
    decrease from March 31, 2013

YEAR-TO-DATE FISCAL 2013 HIGHLIGHTS

  *Operating cash flow of $3.7 million for the year-to-date 2013, an increase
    of $9.6 million from the year-to-date 2012
  *Adjusted EBITDA (a non-GAAP measure meaning earnings before interest,
    taxes, depreciation and amortization and other items; see reconciliation
    statement below) of $6.5 million, an improvement of $3.3 million from the
    year-to-date 2012
  *Net loss from continuing operations of ($1.0) million, or ($0.07) per
    share; adjusted net income from continuing operations (a non-GAAP measure;
    see reconciliation statement below) of $3.0 million, or $0.20 per share

James Lindstrom, Chairman and Chief Executive Officer stated, "IES’ third
quarter operating cash flow, backlog stability and gross margin expansion
reflect improved performance across our divisions despite challenging market
dynamics. Looking forward, we maintain a conservative outlook on our markets,
while remaining confident in our ability to continue increasing our recurring
revenue base, cash flow and margins through operating and bidding discipline
and selective acquisitions over the long term.”

“The strong gross margins in our Communications division offset the wind-down
of a significant mission critical project in that division that started in
2012. Our Residential and Commercial & Industrial divisions, while achieving
solid operating improvements over the quarter, were impacted by the
recognition of $1.4 million of specific project cost overruns in our
multi-family division and one of our commercial locations,” said Robert Lewey,
Chief Financial Officer of IES. He continued, “Our increase in selling,
general and administrative expenses resulted from the significant revenue
growth in our Residential segment, an increased sales and marketing investment
in our Communications segment and increased acquisition related expenses.”

NON-GAAP FINANCIAL MEASURES AND OTHER ADJUSTMENTS

This press release includes certain financial measures that are 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 reflecting additional ways to view aspects of the
Company’s operations that, when reconciled to the corresponding GAAP measures,
help our investors to better identify underlying trends in 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. A reconciliation of the non-GAAP financial measures
presented above to GAAP results has been provided in the financial tables
included in this press release.

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,
2012 and quarterly report on Form 10-Q for the period ended June 30, 2013, to
be filed with the Securities and Exchange Commission by August 12, 2013.

ABOUT INTEGRATED ELECTRICAL SERVICES, INC.

Integrated Electrical Services, Inc. is an infrastructure services company
with leading positions in a broad range of markets for electrical and
communications products and services. Our 2,500 employees serve clients
throughout the United States. For more information about IES, please visit
www.ies-corporate.com.

Certain statements in this release, including statements regarding the
restructuring plan and total estimated charges and cost reductions associated
with this plan, are "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934, all of which are based upon various estimates and assumptions
that the Company believes to be reasonable as of the date hereof. In some
cases, you can identify forward-looking statements by terminology such as
"may," "will," "could," "should," "expect," "plan," "project," "intend,"
"anticipate," "believe," "seek," "estimate," "predict," "potential," "pursue,"
"target," "continue," the negative of such terms or other comparable
terminology. These statements involve risks and uncertainties that could cause
the Company's actual future outcomes to differ materially from those set forth
in such statements. Such risks and uncertainties include, but are not limited
to, fluctuations in operating activity due to downturns in levels of
construction, seasonality and differing regional economic conditions;
competition in our respective industries, both from third parties and former
employees, which could result in the loss of one or more customers or lead to
lower margins on new projects; a general reduction in the demand for our
services; a change in the mix of our customers, contracts and business; our
ability to successfully manage projects; possibility of errors when estimating
revenue and progress to date on percentage-of-completion contracts; inaccurate
estimates used when entering into fixed-priced contracts; challenges
integrating new businesses into the Company or new types of work or new
processes into our divisions; the cost and availability of qualified labor;
accidents resulting from the physical hazards associated with our work and the
potential for accidents; success in transferring, renewing and obtaining
electrical and construction licenses; our ability to pass along increases in
the cost of commodities used in our business, in particular, copper, aluminum,
steel, fuel and certain plastics; potential supply chain disruptions due to
credit or liquidity problems faced by our suppliers; loss of key personnel and
effective transition of new management; warranty losses, damages or other
latent defect claims in excess of our existing reserves and accruals; warranty
losses or other unexpected liabilities stemming from former divisions which we
have sold or closed; growth in latent defect litigation in states where we
provide residential electrical work for home builders not otherwise covered by
insurance; limitations on the availability of sufficient credit or cash flow
to fund our working capital needs; difficulty in fulfilling the covenant terms
of our credit facilities; increased cost of surety bonds affecting margins on
work and the potential for our surety providers to refuse bonding or require
additional collateral at their discretion; increases in bad debt expense and
days sales outstanding due to liquidity problems faced by our customers;
changes in the assumptions made regarding future events used to value our
stock options and performance-based stock awards; the recognition of potential
goodwill, long-lived assets and other investment impairments; uncertainties
inherent in estimating future operating results, including revenues, operating
income or cash flow; disagreements with taxing authorities with regard to tax
positions we have adopted; the recognition of tax benefits related to
uncertain tax positions; complications associated with the incorporation of
new accounting, control and operating procedures; the financial impact of new
or proposed accounting regulations; the ability of our controlling shareholder
to take action not aligned with other shareholders; the possibility that
certain tax benefits of our net operating losses may be restricted or reduced
in a change in ownership; credit and capital market conditions, including
changes in interest rates that affect the cost of construction financing and
mortgages, and the inability for some of our customers to retain sufficient
financing which could lead to project delays or cancellations; the sale or
disposition of the shares of our common stock held by our majority
shareholder, which, under certain circumstances, would trigger change of
control provisions in contracts such as employment agreements and financing
and surety arrangements; and additional closures or sales of facilities could
result in significant future charges and a significant disruption of our
operations. You should understand that the foregoing, as well as other risk
factors discussed in this document and in the Company's annual report on Form
10-K for the year ended September 30, 2012 and the Company's quarterly report
on Form 10-Q for the quarter ended June 30, 2013, could cause future outcomes
to differ materially from those expressed in such forward-looking statements.
The Company undertakes no obligation to publicly update or revise any
information, including information concerning its controlling shareholder, net
operating losses, restructuring efforts, borrowing availability, or cash
position, or any forward-looking statements to reflect events or circumstances
that may arise after the date of this release.

Forward-looking statements are provided in this press release pursuant to the
safe harbor established under the private Securities Litigation Reform Act of
1995 and should be evaluated in the context of the estimates, assumptions,
uncertainties, and risks described herein.

General information about Integrated Electrical Services, Inc. can be found at
http://www.ies-corporate.com under "Investors." The Company's annual report on
Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as
well as any amendments to those reports, are available free of charge through
the Company's website as soon as reasonably practicable after they are filed
with, or furnished to, the SEC.

INTEGRATED ELECTRICAL SERVICES INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)

                     Three Months Ended June 30,  Nine Months Ended June 30,
                      2013            2012         2013           2012
                                                                    
Revenues              $  121.6         $ 116.1      $  370.8        $ 332.7
Cost of services        105.9         101.9       321.2        291.5  
Gross profit             15.7            14.3          49.6           41.2
Selling, general
and administrative       16.6            15.0          48.1           42.0
expenses
Gain on asset sales     (0.0    )      (0.0   )     (0.1    )     (0.2   )
Income (loss) from       (0.9    )       (0.7   )      1.6            (0.6   )
operations
Interest expense,        0.4             0.5           1.3            1.6
net
Other expense            (0.6    )       (0.0   )      1.0            (0.1   )
(income), net
Provision (benefit)     0.1           0.0         0.3          0.0    
for income taxes
Net income (loss)
from continuing          (0.7    )       (1.2   )      (1.0    )      (2.2   )
operations
Net income (loss)
from discontinued       (0.4    )      (2.0   )     (0.7    )     (8.1   )
operations
Net income (loss)     $  (1.1    )     $ (3.2   )   $  (1.7    )    $ (10.3  )
                                                                    
(Loss) per share:
Continuing            $  (0.05   )     $ (0.08  )   $  (0.07   )    $ (0.15  )
operations
Discontinued          $  (0.03   )     $ (0.14  )   $  (0.05   )    $ (0.56  )
operations
Basic                 $  (0.08   )     $ (0.22  )   $  (0.12   )    $ (0.71  )
                                                                    
Diluted loss per
share:
Continuing            $  (0.05   )     $ (0.08  )   $  (0.07   )    $ (0.15  )
operations
Discontinued          $  (0.03   )     $ (0.14  )   $  (0.05   )    $ (0.56  )
operations
Diluted               $  (0.08   )     $ (0.22  )   $  (0.12   )    $ (0.71  )
                                                                    
Shares used in the computation of income (loss)
per share:
Basic (in                14,937          14,642        14,883         14,617
thousands)
Diluted (in              14,937          14,642        14,883         14,617
thousands)


INTEGRATED ELECTRICAL SERVICES INC., AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF ADJUSTED EBITDA
(DOLLARS IN MILLIONS)
(UNAUDITED)

                     Three Months Ended June 30,  Nine Months Ended June 30,
                      2013           2012          2013          2012
                                                                   
Net income (loss)
from continuing       $   (0.7  )     $  (1.2  )    $  (1.0  )     $  (2.2  )
operations
Interest expense,         0.4            0.5           1.3            1.6
net
Provision (benefit)       0.1            0.0           0.3            0.0
for income taxes
Depreciation and         0.9          0.5         2.0          1.6   
amortization
EBITDA                    0.6            (0.2  )       2.5            1.0
Non-cash equity
compensation              0.2            0.3           0.9            0.5
expense
Litigation                -              1.7           -              1.7
Settlement
Acquisition Related       0.8            -             1.6            -
Expenses
Reserve related to
receivable from          (0.3  )       -           1.4          -     
former surety
Adjusted EBITDA       $   1.3        $  1.8       $  6.5        $  3.2   


INTEGRATED ELECTRICAL SERVICES INC., AND SUBSIDIARIES
NON-GAAP RECONCILIATION OF ADJUSTED NET INCOME (LOSS)
(DOLLARS IN MILLIONS)
(UNAUDITED)

                     Three Months Ended June 30,  Nine Months Ended June 30,
                      2013            2012         2013           2012
                                                                    
Net income (loss)
from continuing       $  (0.7    )     $ (1.2   )   $  (1.0    )    $ (2.2   )
operations
Non-cash equity
compensation             0.2             0.3           0.9            0.5
expense
Litigation               -               1.7           -              1.7
Settlement
Acquisition Related      0.8             -             1.6            -
Expenses
Reserve related to
receivable from         (0.3    )      -           1.4          -      
former surety
Adjusted net income   $  (0.1    )     $ 0.7       $  3.0         $ 0.0    
(loss)
                                                                    
Adjusted income
(loss) per share:
Basic                 $  (0.01   )     $ 0.05       $  0.20         $ 0.00
Diluted               $  (0.01   )     $ 0.05       $  0.20         $ 0.00
                                                                    
Shares used in the computation of income (loss)
per share:
Basic (in                14,937          14,642        14,883         14,617
thousands)
Diluted (in              14,937          14,642        14,883         14,617
thousands)


INTEGRATED ELECTRICAL SERVICES INC., AND SUBSIDIARIES
SELECTED BALANCE SHEET AND CASH FLOW INFORMATION
(DOLLARS IN MILLIONS)
(UNAUDITED)
                                                              
                                                 June 30, 2013   June 30, 2012
                                                                 
Selected Balance Sheet Data:
Cash and cash equivalents (includes restricted   $   22.2        $   28.2
cash)
Net working capital (excludes cash and cash      $   21.6        $   26.0
equivalents)
Goodwill and intangible assets                   $   9.2         $   4.4
Total assets                                     $   151.5       $   172.1
Total debt                                       $   4.9         $   11.2
Total stockholders' equity                       $   52.0        $   54.4
                                                                 
Liquidity:
Cash and cash equivalents plus borrowing         $   37.1        $   44.1
availability

                                                 Three Months Ended June 30,
                                                 2013            2012
                                                                 
Cash provided (used) in operating activities     $   2.6         $   1.9
Cash provided (used) in investing activities     $   (0.3   )    $   (0.2   )
Cash provided (used) in financing activities     $   (0.6   )    $   (0.8   )


INTEGRATED ELECTRICAL SERVICES INC., AND SUBSIDIARIES
OPERATING SEGMENT STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS)
(UNAUDITED)

COMMUNICATIONS
                                   Three Months Ended   Nine Months Ended
                                    June 30,              June 30,
                                    2013      2012       2013       2012
                                                                      
Revenues                            $ 24.2    $ 31.1    $ 96.1     $ 84.7 
Cost of services                     19.7     26.8     78.6      72.8 
Gross profit                          4.4        4.2        17.5        11.9
Selling, general and                  3.0        3.7        9.2         8.6
administrative expenses
Corporate allocations                0.3      0.5      1.0       1.4  
Income (loss) from operations       $ 1.1     $ 0.0     $ 7.3      $ 1.8  
                                                                      
Other data:
Depreciation & amortization         $ 0.1      $ 0.1      $ 0.3       $ 0.2
expense
Total assets                        $ 22.1     $ 34.2     $ 22.1      $ 34.2

RESIDENTIAL
                                    Three Months Ended    Nine Months Ended
                                    June 30,              June 30,
                                    2013       2012       2013        2012
                                                                      
Revenues                            $ 44.5     $ 35.2     $ 119.9     $ 94.1
Cost of services                     37.4     29.7     99.9      79.4 
Gross profit                          7.1        5.6        20.0        14.8
Selling, general and                  6.5        4.7        17.6        12.7
administrative expenses
Corporate allocations                0.3      0.5      0.8       1.4  
Income (loss) from operations       $ 0.3     $ 0.4     $ 1.6      $ 0.6  
                                                                      
Other data:
Depreciation & amortization         $ 0.3      $ 0.1      $ 0.6       $ 0.3
expense
Total assets                        $ 40.5     $ 29.2     $ 40.5      $ 29.2


INTEGRATED ELECTRICAL SERVICES INC., AND SUBSIDIARIES
OPERATING SEGMENT STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS)
(UNAUDITED)

COMMERCIAL & INDUSTRIAL
                                  Three Months Ended   Nine Months Ended
                                   June 30,              June 30,
                                   2013      2012       2013       2012
                                                                     
Revenues                           $ 52.9     $ 49.8     $ 154.9     $ 153.9
Cost of services                    48.8     45.4     142.7     139.3 
Gross profit                         4.1        4.5        12.1        14.6
Selling, general and                 3.0        2.4        9.3         8.0
administrative expenses
Corporate allocations               0.5      1.4      1.6       4.3   
Income (loss) from operations      $ 0.5     $ 0.7     $ 1.2      $ 2.3   
                                                                     
Other data:
Depreciation & amortization        $ 0.1      $ 0.1      $ 0.2       $ 0.2
expense
Total assets                       $ 54.2     $ 63.5     $ 54.2      $ 63.5

CORPORATE & OTHER
                                   Three Months Ended    Nine Months Ended
                                   June 30,              June 30,
                                   2013       2012       2013        2012
                                                                     
Revenues                           $ -        $ -        $ -         $ -
Cost of services                    -        -        -         -     
Gross profit                         -          -          -           -
Selling, general and                 3.9        4.2        12.0        12.6
administrative expenses
Corporate allocations               (1.2 )    (2.4 )    (3.5  )    (7.1  )
Income (loss) from operations        (2.8 )     (1.8 )     (8.5  )     (5.4  )
Interest and other expense, net      (0.3 )     0.5        2.4         1.5
Provision (benefit) for income      0.1      0.0      0.3       0.0   
taxes
Net income (loss) from             $ (2.6 )   $ (2.3 )   $ (11.1 )   $ (7.0  )
continuing operations
                                                                     
Other data:
Depreciation & amortization        $ 0.3      $ 0.3      $ 0.9       $ 0.9
expense
Total assets                       $ 34.7     $ 45.2     $ 34.7      $ 45.2


INTEGRATED ELECTRICAL SERVICES INC., AND SUBSIDIARIES
DISCONTINUED OPERATIONS STATEMENT OF OPERATIONS
(DOLLARS IN MILLIONS)
(UNAUDITED)

                     Three Months Ended June 30,  Nine Months Ended June 30,
                      2013           2012          2013          2012
                                                                   
Revenues              $   0.3         $  3.2        $  1.4         $  14.7
Cost of services         0.5          4.4         1.4          19.4  
Gross profit              (0.1  )        (1.3  )       0.0            (4.8  )
Selling, general
and administrative        0.1            0.6           0.5            2.1
expenses
Loss (gain) on            0.2            (0.0  )       0.2            0.1
asset sales
Restructuring            (0.0  )       0.2         0.1          1.0   
charges
Loss from
discontinued              (0.4  )        (2.0  )       (0.7  )        (7.9  )
operations
Provision (benefit)      (0.0  )       (0.0  )      (0.0  )       0.2   
for income taxes
Net loss from
discontinued          $   (0.4  )     $  (2.0  )    $  (0.7  )     $  (8.1  )
operations

Contact:

Integrated Electrical Services, Inc.
Robert Lewey, 713-860-1500
CFO
or
ICR Inc.
Phil Denning, 203-682-8246
phil.denning@icrinc.com