IES Holdings Revenue Growth Doubles as Backlog Nears Doubling
IES Holdings posted 40% revenue growth in its fiscal third quarter, more than double the pace of the prior two periods, as backlog swelled to $4.5 billion.
IES Holdings (IESC) reported revenue growth of 40% in its fiscal third quarter, the electrical and technology infrastructure contractor's sharpest acceleration in at least a year. Revenue reached $1.24 billion, up from 17% growth in the fiscal second quarter and 16% in each of the two quarters before that.
The acceleration follows three consecutive quarters of steady mid-teens growth, making the third quarter a clear inflection rather than a continuation of trend. Operating income rose 60% to $178.5 million, outpacing revenue growth and building on gains of 21%, 31% and 39% in the three prior quarters, evidence of operating leverage taking hold as volumes scaled. Net income climbed 98% to $153.0 million from $77.2 million a year earlier, aided by a $26.2 million gain on marketable securities, and outpaced the 56% and 62% net income growth rates posted in the two preceding quarters.
Backlog nearly doubled over the course of the fiscal year, rising to $4.5 billion from $2.6 billion in the first quarter, a 91% increase since fiscal year-end 2024. Remaining performance obligations nearly tripled over the same span, to roughly $2.8 billion from $1.8 billion, with the gains no longer confined to the Communications segment: Commercial & Industrial RPO grew to $838.5 million from $613.6 million at fiscal year-end, and Infrastructure Solutions RPO nearly tripled to $355.5 million from $128.7 million.
Commercial & Industrial revenue grew 109% to $241.4 million, a step-change from prior quarters, with operating income more than quadrupling to $54.2 million from $12.9 million a year earlier. Communications revenue rose 51% to $453.1 million, re-accelerating after slowing to 35% growth the prior quarter, with segment operating margin improving to roughly 18.5% from 16.6%. Infrastructure Solutions revenue grew 73% to $224.1 million, with $51.7 million of that increase coming from the newly acquired Gulf Island; segment operating margin declined year-over-year as the company invested in repositioning newly acquired and underutilized capacity at Gulf Island and facilities in Abilene, Texas, and Manitowoc, Wisconsin.
Residential remained the outlier. Segment revenue fell 6% to $324.1 million, extending an 11% decline in the first quarter, and operating income nearly halved to $16.3 million from $33.4 million as the company continued to struggle to pass through material costs amid weak housing demand. Corporate segment operating losses nearly doubled to $29.0 million from $14.8 million a year earlier, a cost pressure not previously disclosed at this scale.
Adjusted EBITDA margin expanded to 16.2% on $201.3 million of adjusted EBITDA, up from 14.1% a year earlier, the strongest margin quarter of the trailing four periods disclosed. The company spent $52.6 million to purchase transferable federal income tax credits, which will reduce its federal tax obligation by $3.6 million.
IES ended the quarter with zero long-term debt, $77.3 million of cash and $310.6 million in marketable securities, after drawing on its credit facility earlier in the fiscal year to fund the Gulf Island acquisition. The company also announced a two-for-one stock split, with a record date of August 14, 2024, its first such action disclosed across the trailing four quarters.