Orbital Infrastructure Group Reports First Quarter 2023 Results
First Quarter 2023 Summary Financial Results
- Revenue of
$80.2 million $70.3 million - Adjusted EBITDA from continuing operations (a non-GAAP measure) was
$5.6 million $3.8 million - Net cash provided by operating activities totaled
$0.8 million $1.6 million
Non-GAAP Financial Measures
The financial measures not prepared in conformity with generally accepted accounting principles in
Additional Corporate Update
The Company continues to explore a range of strategic alternatives. There can be no assurance any strategic alternative will be completed, and would be dependent on a number of factors that may be beyond the Company's control. The Company will provide updates when it determines that further disclosure is appropriate or necessary.
About Orbital Infrastructure Group
Orbital Infrastructure Group, Inc. is a diversified infrastructure services platform, providing engineering, design, construction, and maintenance services to customers in three operating segments; electric power, telecommunications, and renewables.
Forward Looking Statements
This press release includes "forward-looking statements" within the meaning of the Securities Exchange Act of 1934, as amended, and other federal securities laws. The "forward-looking statements" include our current expectations, assumptions, estimates and projections about our Company. They include statements relating to our future actions or potential outcomes which the Company believes to be reasonable at this time. You can identify forward-looking statements by the use of words such as "outlook," "may," "should," "could," "estimates," "predicts," "potential," "continue," "anticipates," "believes," "plans," "expects," "future" and "intends" and similar expressions which are intended to identify forward-looking statements.
These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict, including, among others:
- the Company's EBITDA and adjusted EBITDA from continuing operations;
- the timing of our review of any strategic alternatives;
- whether we will be able to identify or develop any strategic alternatives;
- our ability to execute on material aspects of any strategic alternatives;
- whether we can achieve the potential benefits of any strategic alternatives;
- changes in macroeconomic conditions;
All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements and risk factors. Forward-looking statements contained in this press release reflect our view only as of the date of this press release. We undertake no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Such risks and uncertainties could cause actual results to differ materially from those expressed or forecasted by us. In evaluating our financial results and forward-looking statements, you should carefully consider the risks and uncertainties more fully described in the "Risk Factors" section or other sections in our reports filed with the SEC including the most recent annual report on Form 10-K and any subsequent periodic reports on Form 10-Q and current reports on Form 8-K.
Investor Relations:
TraDigital Investor Relations
Kevin McGrath
+1 (646) 418-7002
kevin@tradigitalir.com
Orbital Infrastructure Group, Inc. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(Unaudited) | ||||||||
March 31, | December 31, | |||||||
(in thousands, except share and per share amounts) | 2023 | 2022 | ||||||
Assets: | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 23,993 | $ | 21,489 | ||||
Restricted cash - current | 123 | 123 | ||||||
Trade accounts receivable, net of allowance | 49,968 | 52,652 | ||||||
Inventories | 1,857 | 1,691 | ||||||
Contract assets | 18,770 | 13,917 | ||||||
Note receivable, current portion | 1,462 | 1,442 | ||||||
Prepaid expenses and other current assets | 5,173 | 7,840 | ||||||
Assets held for sale - current | 3,198 | 3,198 | ||||||
Total current assets | 104,544 | 102,352 | ||||||
Property and equipment, less accumulated depreciation | 21,718 | 22,930 | ||||||
Investment | 1,063 | 1,063 | ||||||
Right of use assets - Operating leases | 15,321 | 16,588 | ||||||
Right of use assets - Financing leases | 7,447 | 8,394 | ||||||
Goodwill | 7,006 | 7,006 | ||||||
Other intangible assets, net | 108,945 | 111,134 | ||||||
Restricted cash | 576 | 486 | ||||||
Deposits and other assets | 1,593 | 1,618 | ||||||
Total assets | $ | 268,213 | $ | 271,571 | ||||
Liabilities and Stockholders' Equity: | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 49,318 | $ | 41,333 | ||||
Notes payable, current | 250,711 | 144,708 | ||||||
Line of credit | 4,000 | 4,000 | ||||||
Operating lease obligations - current portion | 4,345 | 4,540 | ||||||
Financing lease obligations - current portion | 5,437 | 5,316 | ||||||
Accrued expenses | 45,198 | 39,065 | ||||||
Contract liabilities | 2,700 | 10,218 | ||||||
Financial instrument liabilities | 45,392 | 43,693 | ||||||
Total current liabilities | 407,101 | 292,873 | ||||||
Financial instrument liability, noncurrent portion | — | 536 | ||||||
Warrant liabilities | 1,131 | 1,777 | ||||||
Notes payable, less current portion | 1,276 | 100,528 | ||||||
Operating lease obligations, less current portion | 11,327 | 12,350 | ||||||
Financing lease obligations, less current portion | 6,311 | 7,673 | ||||||
Other long-term liabilities | 570 | 570 | ||||||
Total liabilities | 427,716 | 416,307 | ||||||
Commitments and contingencies | ||||||||
Stockholders' Equity: | ||||||||
Preferred stock, par value | — | — | ||||||
Common stock, par value | 5 | 4 | ||||||
Additional paid-in capital | 353,251 | 347,511 | ||||||
Treasury stock at cost; 8,827 shares held at March 31, 2023 and December 31, 2022 | (413) | (413) | ||||||
Accumulated deficit | (507,286) | (487,121) | ||||||
Accumulated other comprehensive loss | (673) | (691) | ||||||
Total Orbital Energy Group, Inc.'s stockholders' equity | (155,116) | (140,710) | ||||||
Noncontrolling interest | (4,387) | (4,026) | ||||||
Total stockholders' equity | (159,503) | (144,736) | ||||||
Total liabilities and stockholders' equity | $ | 268,213 | $ | 271,571 | ||||
Orbital Infrastructure Group, Inc. | ||||||||
Condensed Consolidated Statements of Operations | ||||||||
(Unaudited) | ||||||||
For the Three Months | ||||||||
(in thousands, except share and per share amounts) | Ended March 31, | |||||||
2023 | 2022 | |||||||
Revenues | $ | 80,186 | $ | 70,254 | ||||
Cost of revenues | 66,069 | 58,671 | ||||||
Gross profit | 14,117 | 11,583 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative expense | 14,260 | 8,126 | ||||||
Depreciation and amortization | 2,659 | 5,323 | ||||||
Provision for (recovery of) bad debt | 490 | (60) | ||||||
Other operating income | (15) | (18) | ||||||
Total operating expenses | 17,394 | 13,371 | ||||||
Loss from operations | (3,277) | (1,788) | ||||||
Loss on extinguishment of debt | (583) | (26,019) | ||||||
Loss on financial instrument | (1,196) | (928) | ||||||
Gain on warrant liabilities | 646 | — | ||||||
Other income (expense) | (4,147) | 345 | ||||||
Interest expense | (11,164) | (8,039) | ||||||
Loss from continuing operations before income taxes | (19,721) | (36,429) | ||||||
Income tax expense | 536 | 241 | ||||||
Loss from continuing operations, net of income taxes | (20,257) | (36,670) | ||||||
Discontinued operations (Note 3) | ||||||||
Loss from discontinued operations, net of income taxes | (268) | (953) | ||||||
Net loss | $ | (20,525) | $ | (37,623) | ||||
Less: net loss attributable to noncontrolling interest | (360) | (22) | ||||||
Net loss attributable to Orbital Infrastructure Group, Inc. | $ | (20,165) | $ | (37,601) | ||||
Basic and diluted weighted average common shares outstanding | 4,327,323 | 2,078,168 | ||||||
Loss from continuing operations per common share - basic and diluted | $ | (4.60) | $ | (17.63) | ||||
Loss from discontinued operations per common share - basic and diluted | (0.06) | (0.46) | ||||||
Loss per common share - basic and diluted | $ | (4.66) | $ | (18.09) | ||||
Orbital Infrastructure Group, Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(Unaudited) | ||||||||
For the Three Months | ||||||||
(in thousands) | Ended March 31, | |||||||
2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (20,525) | $ | (37,623) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 3,173 | 3,687 | ||||||
Amortization of intangibles | 2,242 | 5,003 | ||||||
Amortization of debt discount | 4,224 | 1,635 | ||||||
Amortization of note receivable discount | — | (63) | ||||||
Stock-based compensation and expense, net of forfeitures | 631 | (3,050) | ||||||
Fair value adjustment to liability for stock appreciation rights | — | (269) | ||||||
Fair value adjustment to financial instrument liabilities | 1,196 | 928 | ||||||
Fair value adjustment to warrant liabilities | (646) | — | ||||||
Loss on extinguishment of debt and debt modifications | 583 | 26,019 | ||||||
Provision for bad debt | 490 | 31 | ||||||
Deferred income taxes | 33 | — | ||||||
Inventory reserve | — | (22) | ||||||
Loss (gain) on sale of assets | 212 | (103) | ||||||
Liquidated damages from debt | 4,068 | — | ||||||
Non-cash unrealized foreign currency (gain) loss | (5) | 48 | ||||||
Change in operating assets and liabilities, net of acquisition: | ||||||||
Trade accounts receivable | 2,145 | (3,935) | ||||||
Inventories | (167) | 20 | ||||||
Contract assets | (4,812) | (6,378) | ||||||
Prepaid expenses and other current assets | 2,748 | (751) | ||||||
Right of use assets/lease liabilities, net | 33 | 35 | ||||||
Deposits and other assets | (16) | (26) | ||||||
Accounts payable | 7,633 | 7,929 | ||||||
Accrued expenses | 5,053 | 4,175 | ||||||
Contract liabilities | (7,518) | 1,145 | ||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES | 775 | (1,565) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Cash paid for acquisitions, net of cash received | — | (773) | ||||||
Purchases of property and equipment | (622) | (1,351) | ||||||
Deposits on financing lease property and equipment | 8 | 26 | ||||||
Proceeds from sale of property and equipment | 53 | 78 | ||||||
Purchase of other intangible assets | (18) | (51) | ||||||
Proceeds from notes receivable | — | 3,500 | ||||||
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | (579) | 1,429 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from line of credit | — | 3,500 | ||||||
Payments on line of credit | — | (2,000) | ||||||
Payments on financing lease obligations | (1,310) | (1,212) | ||||||
Proceeds from notes payable | 9,750 | — | ||||||
Payments on notes payable | (6,053) | (5,804) | ||||||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | 2,387 | (5,516) | ||||||
Effect of exchange rate changes on cash | 11 | (268) | ||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 2,594 | (5,920) | ||||||
Cash, cash equivalents and restricted cash at beginning of period | 22,098 | 28,041 | ||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | $ | 24,692 | $ | 22,121 | ||||
Orbital Infrastructure Group, Inc. |
Reconciliation of Non-GAAP Financial Measures |
EBITDA and Adjusted EBITDA from Continuing Operations |
(Unaudited) |
The following table presents reconciliations of the non-GAAP financial measures of EBITDA and Adjusted EBITDA from continuing operations to loss from continuing operations, net of income taxes for the three months ended March 31, 2023 and 2022. These reconciliations are intended to provide useful information to investors and analysts as they evaluate the Company's performance. EBITDA from continuing operations is defined as loss from continuing operations before interest, taxes, depreciation and amortization, and Adjusted EBITDA from continuing operations is defined as EBITDA from continuing operations adjusted for certain other items as described below. We believe that the exclusion of these items from loss from continuing operations enables management and investors to more effectively evaluate the Company's operations period over period and to identify operating trends that might not be apparent when including the excluded items. However, these measures should not be considered as an alternative to loss from continuing operations, net of income taxes or other measures of performance that are derived in accordance with GAAP.
As to certain of the items in the table below: (i) stock-based compensation and expense (benefit) may vary from period to period due to fair value adjustments from changes in market conditions, forfeiture rates, accelerated vesting and the amount stock-based awards granted; (ii) acquisition costs vary from period to period depending on the level of the Company's acquisition activity; (iii) gains and losses on the disposal of assets varies from period to period depending on the utilization and condition of the Company's long-lived assets; (iv) gains and losses on extinguishment and modification of debt varies from period to period depending on changes in the Company's financing activities; and (v) gains and losses on financials instruments varies from period to period depending on changes in the market price of the Company's common stock and other factors; (vi) restructuring costs vary from period to period depending on changes in the Company's restructuring activities.
Because EBITDA and adjusted EBITDA from continuing operations, as defined, exclude some, but not all, items that affect loss from continuing operations, such measures may not be comparable to similarly titled measures of other companies. The most comparable GAAP financial measure, loss from continuing operations, net of income taxes and information reconciling the GAAP and non-GAAP financial measures, are included below. |
For the Three Months Ended | ||||||||
(In thousands) | March 31, | |||||||
2023 | 2022 | |||||||
Loss from continuing operations, net of income taxes (GAAP) | $ | (20,257) | $ | (36,670) | ||||
Interest expense, net | 11,144 | 7,961 | ||||||
Income tax expense | 536 | 241 | ||||||
Depreciation and amortization | 5,415 | 8,690 | ||||||
EBITDA loss from continuing operations | (3,162) | (19,778) | ||||||
Stock-based compensation and expense (benefit) (a) | 631 | (3,319) | ||||||
Acquisition costs (b) | — | 32 | ||||||
(Gain) on disposal of assets (c) | (15) | (103) | ||||||
Loss on extinguishment and modification of debt (d) | 4,651 | 26,019 | ||||||
Loss on financial instruments and warrant liabilities, net (e) | 550 | 928 | ||||||
Restructuring expenses (f) | 2,968 | — | ||||||
Adjusted EBITDA from continuing operations (g) | $ | 5,623 | $ | 3,779 | ||||
Orbital Infrastructure Group, Inc. | |
Reconciliation of Non-GAAP Financial Measures | |
EBITDA and Adjusted EBITDA from Continuing Operations | |
(Unaudited) | |
(a) | The amounts include non-cash expenses (benefit) recognized from the vesting of stock-based compensation awards issued to employees, executives, directors and consultants for services provided, net of forfeitures. The amount for the three months ended March 31, 2022 also includes non-cash expenses recognized on the modification of the Company's executive stock appreciation rights (SARS) compensation awards. |
(b) | The amount for the three months ended March 31, 2022 includes costs incurred on the acquisition of Coax Fiber Solutions. |
(c) | The amounts relate to net gains recognized on the disposal of the Company's long-lived assets. |
(d) | The amounts include losses incurred from the extinguishment of certain notes payable through the issuance of common stock at a discount to market value and liquidated damages incurred from the failure to meet certain debt reduction requirements. The amount for the three months ended March 31, 2022 also includes a loss incurred from the modification of the Company's seller financed notes payable related to the acquisition of Front Line Power Construction, LLC. |
(e) | The amounts include losses on the fair value remeasurement of financial instruments associated with the Company's Front Line Power Construction seller financed notes payable and syndicated debt agreements. The amount of the three months ended March 31, 2023 also includes a gain on the fair value remeasurement of the Company's warrant liabilities. |
(f) | The amount for the three months ended March 31, 2023 includes restructuring costs incurred in connection with the Company's restructuring activities, including legal, consulting and other one-time professional service costs incurred during the year. |
(g) | The calculations of Adjusted EBITDA from continuing operations for the three months ended March 31, 2022 have been amended to conform to the current period calculations. |
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SOURCE Orbital Infrastructure Group, Inc.
