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Infrastructure and Energy Alternatives, Inc. (NASDAQ: IEA)
Q4 2021 Earnings Call
Mar 08, 2022, 11:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning, and welcome to Infrastructure and Energy Alternatives' fourth quarter and full year 2021earnings call [Operator instructions] And with that, I will turn the call over to Aaron Reddington, vice president of investor relations. Aaron, please go ahead.
Aaron Reddington -- Vice President, Investor Relations
Hello, and thank you for joining us today to discuss IEA's fourth quarter and full year 2021 financial results. With us from management are JP Roehm, president and chief executive officer; and Pete Moerbeek, executive vice president and chief financial officer. Before turning the call over to management, I would like to note that today's discussion contains forward-looking statements about IEA's future growth and financial expectations. Any forward-looking statements should be considered in conjunction with the cautionary statements in yesterday's press release and the risk factors included in the company's SEC filings.
Except as required by law, IEA undertakes no obligation to update its forward-looking statements after today's call. Since management will be presenting some non-GAAP financial measurements as references, including adjusted EBITDA, the appropriate GAAP financial reconciliations can be found in the press release issued on March 7, 2022. And with that, I'll turn the call over to JP Roehm, chief executive officer. Please go ahead, JP.
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JP Roehm -- President and Chief Executive Officer
Well, thank you, Aaron, and welcome, and thank you for joining our call to discuss the 2021 fourth quarter and full year results. On the call today, I will provide a brief overview of our performance in the fourth quarter, an update on our strategic priorities and commentary on key end market trends as we see them. I will then turn the call over to Pete for a more detailed financial review of the quarter and guidance for 2022. We finished 2021 on a very strong note, with fourth quarter revenue up nearly 40% compared to the prior year and backlog at record levels.
Our solid fourth quarter performances across each of our business lines enabled us to achieve both record annual revenue and results at the high end of our revised guidance range for the full year 2021. The challenges and concerns in the wind and solar markets are well documented. From the uncertain policy outlook, supply chain and inflationary challenges to questions surrounding the outlook for domestic wind, we often see headlines highlighting these issues. While the challenges are very real and daily considerations for IEA's business, I'm proud of the way our team has continued to execute in the current environment to achieve record revenue and adjusted EBITDA in 2021.
Revenue within our renewables segment increased by nearly 40% year over year on an organic basis, driven by broad-based demand within both onshore wind and utility scale solar markets. Our specialty civil segment had a very strong fourth quarter as well, with revenues up 38% year over year, due in large part to strength in our environmental remediation business. We continue to see a growing multiyear opportunity within the coal ash remediation market. While supply chain and inflationary pressures were headwinds in the quarter, we were still able to grow adjusted EBITDA nearly 60% year over year for the fourth quarter, while improving our adjusted EBITDA margin by 110 basis points to 8.5%.
We are very proud of how we finished the year, and we are even more excited about the opportunities that lay ahead. Our new award activity levels across both our renewables and specialty civil markets accelerated during the latter half of 2021, resulting in a record backlog in next 12 months backlog. For the full year 2021, IEA signed nearly $2 billion in wind and solar awards and the pipeline of new opportunities remains robust. We entered 2022 on strong footing and are positioned for another year of record revenue and earnings.
At year-end 2021, total backlog was $2.9 billion, up 41% from the end of 2020. Our renewables backlog ended 2021, up 35% over last year. And our specialty civil backlog is up nearly 60% versus the end of 2020. Our next 12-month backlog was $2.15 billion at year-end, giving us good visibility into another year of record revenues in 2022.
Long-term demand fundamentals remain strong across each of our end markets. Within our renewables segment, increased commercial and industrial demand for clean energy, together with the increasingly competitive levelized cost of wind and solar when compared to carbon-based energy sources remain key catalysts for our growth. We were awarded several important renewables contracts in the quarter that contributed to the strong backlog growth. Some of the highlights were as follows.
We were awarded a 50-megawatt solar contract to construct the Turkey Creek solar Ranch in Garard County, Kentucky by Nashville-based Silicon Ranch Corporation, within the nation's largest independent solar power producers. Turkey Creek solar Ranch is the first utility scale solar project to receive approval from the Kentucky Public Service Commission signing board. Construction began in December 2021 and is expected to be completed by November 2022. We secured a $75 million award within energy, where IEA will provide construction services for the Sapphire Sky wind project.
That's a planned 250-megawatt utility scale wind farm in McClain County, Illinois. The project commenced during the fourth quarter 2021, with targeted completion by the fourth quarter 2022. We were awarded a $44 million contract to lead the construction of a 60-megawatt utility-scale wind farm in Riverside County, California. The project is expected to commence in the first quarter of 2022, with targeted completion by the first quarter of 2023.
IEA will self-perform all engineering and construction of 15 wind turbines, two substations and mineralogical evaluation towers and an underground electrical collection system. IEA will also be tasked with construction of new private land access roads, together with improvements to existing public roads surrounding the property. This is a good example of synergies that are often leveraged between our renewables and specialty civil segments, as most renewable projects have some form of civil work that is included in the project scopes. The ability to self-perform these services enables us to provide better control of the project timing and retain more of the profit.
Within our civil segment, we expect to be a beneficiary of the transformative $1.2 trillion federal infrastructure bill passed last year. As with all federal stimulus plans, it will take some time for funds to start to flow, particularly as states municipalities seek to adjust bidding levels to reflect sustained raw materials cost inflation. Even still, we expect the infrastructure bill to provide ratable incremental cash flows over a multiyear period as stimulus funds find their way into new projects of scale. As I indicated earlier, we remain very excited about the opportunities evident within our Environmental Remediation business.
We believe we are in the early innings of a significant capital spend cycle for coal ash remediation, a market where IEA brings significant scale and expertise. Recent EPA actions provide further momentum toward remediation of the approximately 500 unlined coal ash surface impoundments nationwide. The timing is a bit difficult to predict as utilities are working to get the cost of remediation included in rate base adjustments. While the timing is worked out on a project-by-project basis, it is clear there is a huge opportunity for coal ash remediation, and IEA is uniquely positioned to be a key player in this market.
Before I turn it over to Pete, I want to spend some time walking through our key strategic priorities for the business entering 2022. These priorities provide a clear road map for long-term value creation and are a way for the investment community to measure our progress as we enter this next chapter of growth. First, we continue to focus on developing a leading market position of scale within markets where IEA is competitively advantaged. IEA intends to leverage its technical expertise, geographic reach and scale across its solar, wind, heavy civil, rail and environmental services.
We remain focused on developing a strong backlog of diversified infrastructure projects to support sustained profitable growth through the economic cycle. For the full year 2021, we generated total organic revenue growth of 19%, while the renewables segment revenue increased 28% on an organic basis versus the prior-year period, reflecting strong progress in this area. Secondly, we intend to capitalize on the favorable long-term fundamentals within renewables. In 2021, approximately 70% of IEA's revenue was derived from solar and wind related EPC services.
Over the next five years, IEA expects more than 100 gigawatts of new utility-scale solar capacity to be installed within the United States, an increase of more than 80% versus the prior five-year period. Onshore wind installations are also anticipated to accelerate over the next decade, with 110 gigawatt of new installed capacity expected to be online by 2030. Third, we will maintain bidding discipline and drive economies of scale to support margin expansion. IEA intends to pursue higher value margin-enhancing opportunities, while leveraging its size and scale to deliver exceptional value for the customer.
solar is the fastest-growing segment of the renewable energy market, given the multi-decade trend toward decarbonization. Having entered the solar market in 2019, we have just begun to realize economies of scale, positioning us to achieve margin expansion within this business, despite the inflationary pressures. Over time, we expect margins in our solar business to be at least equal to the margins in our wind business. Fourth, we will look to further simplify our capital structure while maintaining sufficient liquidity to support our growth.
In November of 2021, our board of directors authorized a program to repurchase up to $25 million of outstanding warrants to further streamline the company's capital structure. Since announcing this program, IEA has repurchased nearly 64% of the outstanding warrants through last Friday, March 4, 2022. Finally, we will pursue a disciplined capital allocation strategy. IEA will continue to invest in organic growth initiatives by expanding product and service offerings to better serve our customers, further developing industry-leading technical expertise and growing our skilled labor workforce.
IEA also intends to consider complementary bolt-on acquisitions that increase its service capabilities in adjacent markets and expand its geographic presence and enhance its blended margin profile. We are committed to our strategic plan and are confident that as we execute against our goals, it will enable us to continue to grow the business, generate attractive returns and create value for all of our stakeholders. And with that, I will turn the call over to Pete. Pete?
Pete Moerbeek -- Executive Vice President and Chief Financial Officer
Thanks, JP, and good morning to everyone. Our earnings release, updated investor deck and Form 10-K were filed last night. So I'll limit my remarks to providing some financial highlights, giving an update on our liquidity and our continuing capital structure simplification and wrap it up with a full year 2022 guidance. Before focusing on the fourth quarter, I do want to note that our 2021 full year revenue of $2.1 billion exceeded the guidance at the start of the year and that even with the negative impact of the pandemic and supply chain constraints, our adjusted EBITDA of $135.1 million was right in the middle of the guidance provided at the start of the year.
For the fourth quarter of 2021 compared to the fourth quarter of 2020, total revenue increased 39% to $544.1 million, reflecting strength across both our renewables and specialty civil segments. The increased revenue helped us achieve gross profit of $63.9 million in the quarter, up 50% versus last year, and our gross profit margin for the fourth quarter 2021 was 11.7%, up 90 basis points from the same period last year. For the quarter, SG&A expenses increased by $5.6 million compared to last year's fourth quarter, primarily from higher employee compensation and benefit expenses. However, as a percentage of revenue, SG&A expenses declined to 5.8% compared to 6.6% in the prior-year period.
Interest expense for the quarter totaled $6.4 million, down from $14.5 million in the fourth quarter of 2020, demonstrating the benefit of the recapitalization transactions. We expect that these transactions will provide an annual reduction of $22 million in interest expense and cash interest payments going forward. Net income for the quarter was $31.7 million, compared to a net loss of $1.4 million in the prior-year fourth quarter. Fourth quarter results included $12.9 million pre-tax benefit relating to the fair value adjustment of our publicly traded warrant liabilities.
Adjusted EBITDA increased 59% on a year-over-year basis to $46.2 million in the fourth quarter 2021 versus $29.1 million in the prior-year period. Adjusted EBITDA especially benefited from the combination of strong revenue growth and overall gross margin expansion. Now, turning to the segments. Renewable segment revenue totaled $338.7 million during the fourth quarter 2021, an increase of 39.5% compared to the prior year.
Wind revenue was up 30% during the quarter, while solar revenue nearly doubled. renewables segment gross profit was $34.8 million or 10.3% of revenue for the fourth quarter of 2021 compared to $26.7 million or 11% of revenue for the same period in 2020. The decrease in gross profit margin percentage for the segment was primarily due to supply chain disruptions, especially in the company's solar business. Although we finished the quarter within our long-term margin percentage goals of 10% to 12%, we were somewhat disappointed in the 70 basis point reduction from last year's quarter.
We recognize we are working in a challenging operating environment, and we expect that these challenges will continue into 2022 and perhaps, beyond. These factors, coupled with recent earnings guidance from our peers, up and down the solar and wind supply chain are worth noting. Of course, IEA is not immune to market pressures, but let me briefly discuss while we fully expect we can achieve our renewable margin targets. While we are rapidly growing our solar business, we are still gaining scale.
We did not reenter the solar market until the end of 2019. And in the past two years, solar revenue has grown to over $300 million, and in 2021, was more than 20% of our total renewable segment revenue. As expected, there has been a learning curve, but as we gain scale and experience in solar, we fully expect our solar project margins to be like our wind project margins. As the solar utility market is maturing, we see many similarities to the wind market, especially in the forms of contracting.
Let me highlight the factors that help us protect our margins from some of the inflationary and supply chain challenges impacting the market today. First, our contracts are relatively short in duration, with most projects finishing within 12 to 18 months. Thus, we have less risk than we would in a multiyear project. Second, our customers supply most of the larger and expensive components such as panels, blades and turbines.
So we do not have inflation risk on these key components. Third, we often adjust contracts at the notice to proceed date and place most of our material orders while the pricing is still fresh, so there is reduced price pressure on materials. Fourth, we are fortunate to have a highly skilled and dedicated workforce, many of whom have been with IEA for many years. To date, we have not had significant retention issues, although we remain concerned about labor inflation.
We also have some ability to shift workers among wind, solar and civil projects, which helps from a planning perspective. Finally, our contracts contain force majeure provisions that provide a level of protection from unexpected events, such as unusually inclement weather. We all remember 2018 when weather was a meaningful headwind for our industry. But with the improved contract structure, we are largely protected from such issues.
As I said earlier, we will be affected by market issues, as we have seen when supply chain challenges negatively impacted the efficiency and sequences on some solar projects. However, we have been able to structure the business so that we are insulated from many of the issues being discussed everyday in the market, and we remain confident that we can achieve our renewables long-term margin goal of 10% to 12%. Now, turning to our specialty civil segment. Revenue for the quarter totaled $205.4 million, an increase of 37.7% or $56.2 million year over year, primarily due to growth in environmental and heavy civil.
The environmental remediation business is benefiting from the ramp-up of a large customer as well as contract expansion of an existing customer. Heavy civil revenues were up approximately 20% and some work that had been delayed was pushed into the fourth quarter. Rail revenues were down modestly, due to reduced customer capex, resulting from the last two years of COVID-19 pressures. Specialty civil segment gross profit was $29.1 million or 14.2% of total revenue for the fourth quarter of '21 as compared to $15.8 million or 10.6% of revenue for the same period in 2020.
The increase in the segment's gross profit percentage was primarily due to growth in the environmental remediation market and favorable year-end project completions. At December 31, our balance sheet showed cash of $124 million and total debt was $358 million, which included our $300 million unsecured notes, $3.6 million in commercial equipment loans and $54.4 million of construction equipment financing lease obligations. Our net debt to adjusted EBITDA ratio was a sparkling 1.7, a meaningful improvement from where we have been. At year-end, we had nearly $119 million of availability under our credit facility.
Net of letters of credit, which when combined with cash, gave the company total liquidity of $243 million. Because some of our projects are pushed toward the end of 2021 or even into 2022, we incurred a negative cash flow from operations for the year of $11 million. This is the result of a construction industry characteristics, namely owners do not want to negotiate or especially pay for, change orders until the end of a project. On average, our larger projects accrue 5% to 8% of revenue as change orders and the delay in completing projects has a direct impact on billing and cash collection.
We obviously monitor the situation closely. And while the number is frustrating, we are not anticipating a significant issue as we go forward. This construction industry characteristic is another reason to maintain a strong balance sheet. Last November, our board of directors authorized to suspend up to $25 million to buy back the public warrants.
These warrants, which trade under the symbol IEAWW are the last vestiges of the SPAC process in our capital structure. The warrants expire on March 26, 2023. At the end of 2021, we have repurchased 9.27 million warrants or about 54.8% of the total at an average price of $1.27 per warrant. While the pace of repurchases has slowed as of March 4, we had repurchased almost 10.9 million warrants or almost 63.9% of the total warrants for a total cost of $14.6 million.
We benefit in three ways from the repurchases. First, we reduced the number of potential shares that would need to be issued in the first quarter of 2023. Second, there remain anti-dilution covenants from the Series B preferred agreements. And for every share issued on the conversion of the warrants, we would owe 0.3 shares to the former Series B owners.
To date, the repurchases have reduced by over 7 million the potential shares issued on the exercise of the public warrants. That means we have reduced the SPAC warrant overhang from 120% to 108% of diluted shares. Lastly, we are reducing the number of publicly traded warrants that must be mark-to-market at the end of each quarter, thereby slightly reducing the volatility of our earnings calculations. Now, pivoting from the past into the future.
Total backlog at the end of 2021 was $2.9 billion, an increase of 41% compared to the end of 2020. Renewable segment backlog at December 31, 2021 was $2.0 billion, an increase of 35% compared to the prior year, driven by strong growth in our solar market, combined with steady performance in wind. IEA signed nearly $2.0 billion in wind and solar awards in 2021 and the pipeline of new opportunities remains robust. specialty civil backlog at year-end 2021 was $881.3 million, up nearly 60% compared to last year, due in large part to favorable market trends in our environmental business.
The company expects to realize approximately $2.15 billion of its estimated backlog during the next 12 months, up $523 million from the end of 2020. Now, on to guidance. The long-term outlook for IEA's business and our markets remain strong. We see 2022 as another record year for our business, both in terms of revenue and adjusted EBITDA.
However, we recognize that challenges from 2021, including the impact of supply chain disruptions in COVID-19 will continue into 2022. IEA's guidance for 2022 reflects our efforts to recognize the uncertainties associated with these challenges. For 2022, we project total revenue of between $2.1 billion and $2.2 billion. We expect that the renewables segment will generate approximately 2/3 of that revenue.
We expect that Wind revenue may decline from 2021 by 15% to 20%, but that solar and Wind services revenue will more than make up for that decline. We expect that we will continue our normal seasonal patterns, with approximately 40% of the revenue in the first two quarters of the year. Our projection for 2022 adjusted EBITDA is $140 million to $150 million. That includes approximately $48 million of depreciation and amortization, interest expense of around $26 million and a tax rate of around 26%.
We expect to invest around $45 million to $48 million in capex. Finally, because we absorbed more fixed costs as our revenue increases, we expect to recognize between 25% and 30% of the adjusted EBITDA amount in the first two quarters of the year. With that, I will turn the call back to JP.
JP Roehm -- President and Chief Executive Officer
Well, thank you, Pete. 2021 was an important year for IEA, and I am extremely proud of everything we accomplished despite the sometimes uncertain and volatile market conditions. Looking at the year-end review, some of the important highlights were as follows. We significantly simplified our capital structure by redeeming our Series A and Series B preferred stock.
Refinanced our debt facility and are in the process of repurchasing a portion of our warrants, all to the benefit of the common shareholder. We continue to grow our renewables business and in three short years, have become one of the leading utility scale solar EPC firms in the country. We see significant growth in the solar market in the coming years, and IEA is very well positioned to take advantage of these trends. We executed very well in our renewables business despite the supply chain inflationary and labor headwinds.
We did have some modest margin compression, but we think our performance validates our ability to execute even in the most challenging times and highlights how IEA is different than the wind OEMs, blade manufacturers or residential solar firms that saw significant margin compression in 2021. We positioned IEA to be a leader in the environmental remediation market and have successfully ramped up our business in recent quarters, with approximately 500 unlined coal ash surface impoundments nationwide, we see a long path of growth in this market. I want to leave you with one key thought regarding our growth opportunity in renewables. We are excited about what we see in the coming years, for both wind and solar.
But I think it is important to understand that IEA and the wind and solar market are not policy or tax credit stories. We certainly hope the renewables industry is supported with extensions to the ITC and the PTC, as it will help our business near term. That said, we are not dependent on policy to drive profitable growth. Currently, nearly 200 gigawatts of legacy power capacity is scheduled to come offline in the next 30 years.
Low-cost wind and solar are going to be the key beneficiaries of this replacement cycle. The reduction in the levelized cost of wind and particularly solar, have made it such that renewable energy is not only the right environmental choice, it's also become the right economic choice as well. The growth opportunity is large and is one of the few EPC firms with the scale, expertise and experience. To execute on this opportunity, we are very well positioned for years to come.
This concludes our prepared remarks for today. Operator, would you please open up the call to questions.
Questions & Answers:
Operator
Thank you. [Operator instructions] And our first question comes from the line of Brent Thielman with D.A. Davidson. Please proceed with your question.
Brent Thielman -- D.A. Davidson -- Analyst
Good. Thanks, good morning, JP and Pete. Congrats on a great quarter.
JP Roehm -- President and Chief Executive Officer
Hey, Brent. Thank you.
Brent Thielman -- D.A. Davidson -- Analyst
I guess, the first question, it seems like potentially the revenue guidance could be sort of handicapping some ongoing supply challenges, obviously in solar which we all hear about. I guess my question is how much of that business today or backlog today is really scheduled to get done this year versus what you're sort of currently embedding in the revenue outlook to get worked through as you try to anticipate some of these ongoing challenges?
Pete Moerbeek -- Executive Vice President and Chief Financial Officer
That's a good question, Brent. I think that when we look at the numbers, we recognize that we have a situation where we are showing $2.15 billion in near term, but we may not achieve all that this year in the same way that we did not get to our total next 12 months in 2021. So we are recognizing that some of the jobs may get pushed. And so the guidance is trying to kind of walk a middle part between what we have been told we could build versus what we're afraid some of the supply chain limitations means.
So that's why you see kind of a middle of the road type guidance.
Brent Thielman -- D.A. Davidson -- Analyst
OK. Appreciate that Pete. On the wind business again, I think nothing too surprising about the outlook here for '22 there. I guess, JP any thoughts on how we ought to think about kind of revival here in 2023 or what are the things we need to see through this year to get more comfortable that business can get that back on better for the next year?
JP Roehm -- President and Chief Executive Officer
Well, I think this is kind of an ongoing question we've handled in this last two or three calls, but I'll kind of restate some of the things I've said before. The fact that I think while we see as we discussed in the commentary here on the call, we see wind maybe down a little bit this year. We certainly don't see it down as much as what we've seen, some analysts predict in the market. So that kind of level sets 2022, but to your question, going forward, I've said this repeatedly our customers are our barometer for how we plan our business going forward.
And we see a lot of strong wind demand. I think we've heard particularly one wind OEM indicate they've seen an uptick in orders in the last part of 2022 going into 2023. So we do see kind of resurgence. I don't think that's kind of picked up in any analyst reports yet, but from our feet on the ground we see kind of a resurgence of wind.
We've also seen some of our clients kind of in this supply chain uncertainty times for solar that have kind of shifted their capex spending more toward wind next year. So all we said -- we're diversified renewable contractor. Obviously we've got a long storied history in wind but any kind of federal legislation or not we think wind is kind of here to stay and the part of this energy transition for the future.
Brent Thielman -- D.A. Davidson -- Analyst
OK. Thanks for that, JP and then outstanding margins in specialty civil maybe just kind of help us understand how much was transitory things this quarter versus what still benefit the margins in the segment on a go-forward basis and kind of what are you assuming for margins and the guidance?
Pete Moerbeek -- Executive Vice President and Chief Financial Officer
We saw some very strong benefit in our environmental work. So I think that will kind of stay. And then we did get some benefits from as we got to the end of jobs and we're able to negotiate the final change orders. I would say that our guidance has been that we want our specialty civil segment to be 9-plus-percent margin points and I think that that's kind of where we expect it to stay with occasionally being able to get to the outstanding margins that we got at the end of '21.
JP Roehm -- President and Chief Executive Officer
I also I appreciate you pointing that out, Brent. We spent a lot of time talking about renewables on these calls, but I appreciate you in particular pointing out that performance in the quarter we're proud of our team and their performance and quite frankly it's a great goal for them as Pete mentioned in the future. But thank you for pointing that out.
Brent Thielman -- D.A. Davidson -- Analyst
Yes. Last one, just for me could you talk about the offshore wind partnership you've engaged in maybe what your role will be and certain financial implications or further down the road, but what those could potentially be?
JP Roehm -- President and Chief Executive Officer
Yes. I would say we would, one thing that I would say before is before I'd really get into it, is we're very early on into this partnership. And the industry is very early on into what is could be a pretty substantial industry by 2030 as predicted and with any industries, it is continuing to mature since it's never been built in the United States before the means methods, jurisdictions of trades everything's, everybody's kind of still working that out so to speak. So we think it has a potential to be a meaningful contributor in the years coming or we wouldn't have done it.
But our strategy is pretty simple. We're focusing on the onshore component of offshore wind. So what that mean? Well, what that means is running the port that services the project, taking, managing all the inbound shipments that come in from various OEM vendors and receiving those shipments, no different than we do out on an onshore project. But doing pre-assembly as required and in prepping those components and loading them on a barge that would ultimately take them out into the water for assembly by others.
I want to reiterate I think that I've mentioned several times in the past. We currently do not have, we're not pursuing a strategy that would be involving IEA out in the water. Everything that we are currently pursuing for IEA on offshore business is port type onshore work.
Brent Thielman -- D.A. Davidson -- Analyst
OK. Thanks for that, JP – best of luck.
JP Roehm -- President and Chief Executive Officer
Thank you.
Operator
Our next question comes from the line of Adam Thalhimer with Thompson Davis. Please proceed with your question.
Adam Thalhimer -- Thompson Davis and Company -- Analyst
Hey, good morning guys. Congrats on the strong Q4.
JP Roehm -- President and Chief Executive Officer
Thanks Adam.
Pete Moerbeek -- Executive Vice President and Chief Financial Officer
Thanks Adam.
Adam Thalhimer -- Thompson Davis and Company -- Analyst
Where are you guys in terms of the wind services revenue? And I think you said that would help to offset some of the decline in the wind project revenue this year?
Pete Moerbeek -- Executive Vice President and Chief Financial Officer
We have not fully broken that out yet. I mean, it is still going to be order of magnitude less than a hundred million, but we're seeing some great growth opportunities. They had a good year. They actually broke even this year and we look for them to continue growing.
It's going to take a while obviously to get to scale. But we think we can be one of the real strong operators in that field.
Adam Thalhimer -- Thompson Davis and Company -- Analyst
OK. And I was glad Brent asked the question about the specialty civil margins because if those are kind of in 9% to 10% range. I think the guidance would imply that you get back to 10% to 12% at renewables. And I guess the question would be just what gives you confidence that you'll be within that range this year at renewable.
JP Roehm -- President and Chief Executive Officer
Well, certainly, we've historically been able to accomplish that. One thing's for sure, we we've been building wind for 18 years now. So we certainly understand wind. We've been in and out of the solar business over the period of years, but in it solidly now for over a period of three years.
We -- as Pete mentioned in his commentary, we had some ups and downs in solar last year, but basically, where you've seen us come out is our conviction that we certainly have learned -- we learned and continue to scale that business and have a firm conviction of where we believe we can bring that business in. And as we indicated, we also believe that it should be approaching, if not, at margin with our wind business. So from what kind of lessons learned over the last couple of years, we believe that, that's where we can land.
Adam Thalhimer -- Thompson Davis and Company -- Analyst
Great. And then lastly, I guess for Pete how do you think the cash flow shakes out this year? Or maybe even if you just want to kind of address it in terms of a quarterly cadence, that'd be helpful?
Pete Moerbeek -- Executive Vice President and Chief Financial Officer
Yes. I think that one of the humorous things in life is that, unfortunately, there are specific dates. We picked up almost $40 million in cash on January 4, which was the first day of the new year. And we would have looked, obviously, a lot better from cash flow of operations, but for that weekend.
I think what we will continue to see is stretching out some pushing until we finish the project and get all the change orders done. So it's going to go probably, first year -- first quarter, we should be OK. Toward the end of the quarter, maybe April before we settle some of these. And I think then we'll get back into a much more normal cadence.
We think that, that what's happened to us is by pushing back some of the projects, you just delayed our ability to collect because we haven't finished all the change orders.
Adam Thalhimer -- Thompson Davis and Company -- Analyst
Helpful. OK. Thanks guys.
JP Roehm -- President and Chief Executive Officer
Thanks Adam.
Operator
Our next question comes from Shar Pourreza with Guggenheim Partners. Please proceed with your question.
Unknown speaker
Hello it's actually Constantine for Shahrier, congrats on a great quarter.
Pete Moerbeek -- Executive Vice President and Chief Financial Officer
Great, good morning.
JP Roehm -- President and Chief Executive Officer
Thank you. Good morning.
Unknown speaker
I wanted to start off with a question on the 2022 outlook. Appreciate the revenue projections outlined today. And just as you continue to sign more projects, especially starting in the 2022 timeframe, would you expect the cadence of the revenue recognition to impact the guidance of the upside, especially as you keep announcing projects here in 1Q?
Pete Moerbeek -- Executive Vice President and Chief Financial Officer
Well, as I said, in my remarks, we expect to see about 40% of the revenue in the first half of the year and 60% in the second half of the year to the degree that any of that moves up, obviously we do a better job of absorbing overheads and increasing EBITDA and EBITDA margin. I think the big challenge for us will be the point of which our customers feel comfortable that they can give us notice as to proceed and the point at which they can get especially in the case of solar panels that they can get the delivery anecdotally we're hearing that some of them are still not they're ready to give us a notice to proceed, but they have not yet acquired the solar panels because they're still negotiating with the manufacturers. So those are the sorts of things that keep us up at night as we -- our issue is that especially with solar you want to do the, all of the manufacturing, all of the construction once. You don't want to have to go back in and change anything.
So for us, if we were in a position where we could get everything when the clients want us to start the jobs, and we could work our way through, then yes, you would see -- we would do even better both on revenue and margin. What we've tried to do is kind of do a middle of the road case that gets us through, hopefully, most of the issues associated with inflation and associated with the start of the project.
Unknown speaker
That's very helpful. And just kind of on the same note, in terms of the kind of operating leverage that you're embedding in plan. Is there some inflationary contingency around input costs?
Pete Moerbeek -- Executive Vice President and Chief Financial Officer
Yes. And as I said in my remarks, there would a lot of input costs that are not our responsibility. The actual purchase of the panels, the purchase of the turbines. Secondly, in a lot of cases, we have the ability that at the time we are given the contract, the notice to proceed that we will go ahead and commit to purchase or actually purchase a lot of the materials that we need.
And then we benefit obviously from having a relatively shorter timeframe in which do construction but having said that, yes we are somewhat susceptible. Obviously labor is always going to be a challenge. We have tried to address that issue in our forecast, in our projections and some of that unfortunately we won't know until we actually see what happens, but we certainly learned last year in third quarter that this is a real impact and that we need to take into consideration going forward.
Unknown speaker
That's very good clarity. And maybe just lastly, shifting a little bit more broadly, the financial strengthening that was done in '21 was well received. And how are you thinking about capital allocation for '22 and beyond just getting a sense of the stack of priorities between kind of taking out the dilute of security and expanding the platform organic and inorganic, etc?
Pete Moerbeek -- Executive Vice President and Chief Financial Officer
I probably starting, let JP finish. I think from the financial side, we are looking and obviously we've taken out a lot of the publicly traded ones. We're probably approaching the point at which we're not going to do a whole lot more. At this point we are looking to make sure that we have the availability in cash that we need for organic growth.
Obviously we are can generate good cash flow out of our projects, but when we look at where we're going, I think we certainly are looking at potential opportunities bolt on acquisitions. JP might you know.
JP Roehm -- President and Chief Executive Officer
Yes. From my standpoint, I think if you look at our track record on organic growth it's almost kind of second to none of any of our public peers the last several years and I believe that our ability to continue to do that is going into this year is continues. So primarily, we're going to be thinking of organic growth and margin enhancement. I think those are no doubt are two key themes of this year.
Now that means that these weren't the markets that are very tough to organically grow and we've been very successful at it, but still in order to continue to scale it to kind of the appetite, to facilitate the appetite of the market it might be best to inorganically grow or execute a bolt on acquisition. So we're always looking for, particularly in our key end markets for those type of opportunities, but as I would think about us in the near term, I would think about us concentrating on organic growth and margin enhancement opportunities.
Unknown speaker
That's perfect. Abundantly clear that. Thanks for taking our questions.
JP Roehm -- President and Chief Executive Officer
Thank you.
Operator
And our next question comes from the line of Noelle Dilts with Stifel. Please proceed with your question.
Noelle Dilts -- Stifel Financial Corp. -- Analyst
Hi guys. I just was hoping you could comment a little bit more on the coal ash remediation opportunities you're seeing when you look out kind of what's in the market are these kind of smaller opportunities or do you see some additional large contract opportunities over the next couple of years? Thanks.
JP Roehm -- President and Chief Executive Officer
Well, it is a great question. I'm glad you asked it, Noel. Earlier in the quarter the – earlier in the first quarter of this year, the Biden administration kind of announced or the Biden administration's EPA announced that they were going to even further crack down on the guidelines and the requirements for remediation. So certainly I think what was already kind of a incredible opportunity has even gotten better in the near term.
It is a, we would kind of reiterate as we talked in the past since it's not a revenue producer in our margin producing for the utility. They move very slowly. And quite frankly they analyze any and all opportunities depend on what state you're in to get a rate base recovery. And then they kind of get curve balls every time that the Federal government kind of changes the guideposts on them.
So that's all to be said is we continue to see opportunities moving forward. We continue to respond to RFPs and it's growing for us. But we think this is not a one or two year opportunity. This is a multi, this is what's more than a decade opportunity.
And we expect to be continuing to incrementally grow this business for quite some time. And quite frankly that's good from the standpoint. It is a very resource intensive business, both especially from the manpower that it takes, but also the specialty equipment and there's with the market that's out in front of us, certainly not the opportunity to ramp this business up overnight. So we are glad to be the player and scale and expertise that we are.
And here again, just reiterate we're going to be a big player in coal ash, as it continues to grow over the next decade plus.
Noelle Dilts -- Stifel Financial Corp. -- Analyst
OK, great. That's really helpful. And then recognizing your comments that the business is not necessarily dependent on within wind and solar on policy and tax credits, but could you just speak to kind of what your expectations are around the potential for given that build back better sort of in limbo, how you're thinking about what may or may not occur in terms of the wind tax credits and how you've sort of incorporated that into your guidance. In other words if we do see the direct pay option come through and then a multi-year extension of the tax credits.
Does that just represent upside to your guidance or do you think it would really be something that might benefit 2023? Thanks.
JP Roehm -- President and Chief Executive Officer
Well, I'll take the last part of your first because it's easiest to answer. I don't see any change our guidance for what happens legislatively in Washington at all be it '23 or after. As far as what a roller coaster this last 90, 120 days has been for anybody in this industry. Obviously bill back better looked very favorably back and forth the holidays and then obviously suffered some headwinds and then obviously with things that have happened more of a world scale Russia and Supreme Court justice and things of that nature it's kind of almost fallen or had fallen off the kind of the day-to-day rhetoric.
But however, that being said I think all our kind of connections to Washington, I think this may be coalescing around it may not be build back better, maybe more of just a climate bill or more of an energy security type of bill. But I think the situation you have in Russia is bringing really two sides together. And I think that what you see going on with oil and everything else right now, I'm feeling very strongly from what we hear is you'll see some legislation soon hopefully within the second quarter that kind of reengages some of the principles on the climate side from build back better.
Noelle Dilts -- Stifel Financial Corp. -- Analyst
OK. Got it. Thanks very much.
JP Roehm -- President and Chief Executive Officer
Thank you Noelle.
Pete Moerbeek -- Executive Vice President and Chief Financial Officer
Thanks Noelle.
Operator
And we have reached the end of the question and answer session and I'll now turn the call back over to JP Roehm for closing remarks.
JP Roehm -- President and Chief Executive Officer
Well, we appreciate each and every one of you for joining us today as we reported on year-end 2021 and fourth quarter 2021. It will be just a short few weeks here before we're back together in early May, as we look forward to reporting to you on our Q1 2022 results. Everybody, be safe, and we will talk to you soon. Thank you.
Operator
[Operator signoff]
Duration: 59 minutes
Call participants:
Aaron Reddington -- Vice President, Investor Relations
JP Roehm -- President and Chief Executive Officer
Pete Moerbeek -- Executive Vice President and Chief Financial Officer
Brent Thielman -- D.A. Davidson -- Analyst
Adam Thalhimer -- Thompson Davis and Company -- Analyst
Unknown speaker
Noelle Dilts -- Stifel Financial Corp. -- Analyst
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