NEW YORK--(BUSINESS WIRE)--Charge Enterprises, Inc. (Nasdaq: CRGE) (“Charge” or the “Company”), today reported second quarter 2023 results. For the quarter, revenues were $147.6 million, compared with $181.0 million in the second quarter of 2022. Gross profit for the second quarter of 2023 increased to $7.7 million, compared with $6.3 million in the second quarter of 2022.
“Charge’s second quarter revenue results were led by the strong performance from our Infrastructure segment, which includes our fast-growing Electric Vehicle (EV) charging infrastructure business. The 18% growth in revenues in our Infrastructure segment was offset by a decline in revenues in our Telecommunications segment, which experienced lower wholesale voice volume. The decline in revenues in the Telecommunications segment was expected to occur over time due to technology dynamics in voice calling. We have taken steps to mitigate this impact through new higher margin SMS text product offerings. Most importantly, we delivered on another significant milestone by achieving a second consecutive quarter of record Infrastructure segment backlog, reaching approximately $138 million at the end of the second quarter. We believe the continued increase in our customer commitments to engage Charge as their trusted resource in EV installations supports our long-term growth strategy for our Infrastructure segment. The expansion of our backlog also reflects the success we are experiencing in winning new automotive retail dealership customers nationwide," said Andrew Fox, Founder, Chairman and CEO.
"Our auto dealer customers' multi-year programs to install EV infrastructure is expected to continue to drive demand for our services and create recurring revenue opportunities with our remote monitoring and management software tool. At the end of the second quarter, we achieved nearly 20% of our goal of project engagement with 1,000 major market dealerships by 2025. Our recently announced acquisition of Greenspeed, a leading provider of EV infrastructure solutions, marks an important initiative for Charge that enhances our capabilities to both execute and service customers as the nation transitions to EVs. With Greenspeed’s skilled workforce, we have significantly strengthened our capabilities to serve clients directly, which is expected to enhance the quality of service and drive higher gross margin opportunities with our customer engagements. We believe that by leveraging Greenspeed’s success with retail dealerships and other channels, along with its scale and capacity, we can provide an even more compelling and complete suite of services to meet the high customer demand for EV infrastructure over the coming years.”
Fox added, “The strong demand for EV infrastructure, both from private and public sectors, is boosted by increasing government support for sustainable solutions, and auto OEM mandates for EV infrastructure deployments across dealer networks, creating very favorable market dynamics. We believe our robust growth in backlog, together with our strategic EV infrastructure acquisition, provides a positive outlook for the remainder of this year and that our strategies for profitable growth in 2024 and beyond are gaining momentum."
Selected Financial Information
Three months ended June 30, |
Six months ended June 30, |
||||||||||||||||||
($ in thousands) |
2023 |
|
2022
|
Increase
|
2023 |
|
2022
|
(Decrease) |
|||||||||||
Total Revenues |
$ |
147,586 |
|
$ |
181,041 |
|
$ |
(33,455 |
) |
|
$ |
341,135 |
|
$ |
344,019 |
|
$ |
(2,884 |
) |
Gross Profit |
7,748 |
|
6,274 |
|
1,474 |
|
14,037 |
|
11,636 |
|
2,401 |
|
|||||||
Net Income (Loss) |
|
(8,846 |
) |
|
(17,160 |
) |
|
8,314 |
|
|
|
(18,058 |
) |
|
(27,186 |
) |
|
9,128 |
|
Adjusted EBITDA(2) |
$ |
(2,323 |
) |
$ |
(1,602 |
) |
$ |
(721 |
) |
$ |
(4,831 |
) |
$ |
(3,435 |
) |
$ |
(1,396 |
) |
|
(1) |
As Adjusted represents the Company's change in accounting principle for recognizing stock-based compensation expense from a graded vesting attribution method to a straight-line attribution method. The effects of the change have been retrospectively applied to all periods effective from January 1, 2023, as presented in the Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 10-Q to be filed with the SEC on August 14, 2023. |
|
(2) |
Adjusted EBITDA represents income (loss) before interest, income taxes, depreciation and amortization, and amortization of debt discount and debt issue costs adjusted for stock-based compensation, loss on impairment, (income) loss from investments, net, change in fair value of derivative liabilities, other (income) expense, net, and foreign exchange adjustments. Refer to Appendix for definition and complete non-GAAP reconciliation for Adjusted EBITDA. |
Charge’s CFO Leah Schweller commented, “Although our second quarter revenues declined compared with the prior year period, this was expected due to the ongoing decrease in wholesale voice volume in our Telecommunications segment. However, we continued to benefit from growth within our Infrastructure segment, primarily driven by our BW and EV charging infrastructure businesses. We are encouraged by our robust backlog and our recent acquisition of Greenspeed, which we believe will enable us to serve our customers at an even higher level. Our priorities remain focused on growing revenues and EBITDA, maintaining strong controls over expenses, and driving profitability. In pursuit of growth, we plan to continue to make strategic investments, including proper staffing levels, technology enabled tools, and the ongoing implementation of SMS technology, while diligently seeking opportunities to reduce costs.”
As discussed last quarter, the Company changed its accounting principle for recognizing stock-based compensation expense from a graded vesting attribution method to a straight-line attribution method. Additionally, subsequent to the change in accounting principle, the Company reclassified its expense related to stock-based compensation arrangements to present in the same financial statement line item as cash compensation paid to the same employees and nonemployees. As a result, the stock-based compensation financial statement line item was eliminated, and there was a corresponding change in expense reported in cost of sales, general and administrative and salaries and related benefits financial statement line items. Further details can be found within Note 2, Summary of significant accounting policies, and in the Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 10-Q to be filed with the SEC on August 14, 2023.
Second Quarter 2023 Financial Results
Revenues for the second quarter of 2023 decreased $33.5 million to $147.6 million, compared with $181.0 million in the second quarter of 2022. The 18% decrease in revenues was the result of lower revenues in the Company’s Telecommunications segment, partially offset by increased revenues in its Infrastructure segment.
- Infrastructure: Revenues increased $4.5 million to $30.0 million, compared with $25.4 million in the second quarter of 2022, driven by increased electrical contracting services within BW, and continued execution within EV charging infrastructure compared with the prior year. The increase was partially offset by lower revenues in the Company’s ANS business, as a result of reduced spending by the major wireless broadband companies.
- Telecommunications: Revenues decreased $38.0 million to $117.6 million, compared with $155.6 million in the second quarter of 2022, primarily attributable to the expected lower wholesale voice volume.
Gross profit for the second quarter of 2023 increased $1.5 million to $7.7 million, compared with $6.3 million in the second quarter of 2022. The increase in gross profit was primarily driven by higher gross profit in the Company’s Infrastructure segment, partially offset by lower gross profit in the Company’s Telecommunications segment.
Consolidated gross margin percentage for the second quarter of 2023 increased versus the prior year period, driven by higher gross margin in both of the Company’s business segments, as well as an increasing proportion of revenues coming from the Company’s higher margin Infrastructure segment.
Net loss for the second quarter of 2023 was $8.8 million, compared with a net loss of $17.2 million in the second quarter of 2022. Expenses after gross profit were primarily related to continued investments the Company made to support its growth strategy. The largest drivers over the prior year period were:
- $5.4 million in general and administrative expense, which represented a decrease of $1.0 million, attributable to a decrease in stock-based compensation expense, partially offset by higher investments in marketing;
- $9.2 million in salaries and related benefits, which represented a $1.4 million increase, driven by incremental headcount to support the growth of the Company over the past year, partially offset by a decrease in stock-based compensation;
- $0.4 million in professional fees, which represented a $0.4 million decrease, primarily related to reduced legal fees in the current period following the insourcing of legal counsel in the fourth quarter of 2022, as well as higher fees incurred in the prior year period to support the uplist to the Nasdaq; and
- $0.1 million in other income/(expense), net, which represented an increase of $7.1 million, primarily driven by a $5.4 million decrease in relation to debt amortization costs and an increase in investment income, net, of $1.7 million.
Net loss of $8.8 million in the second quarter of 2023, adjusted for non-cash and certain one-time items, resulted in an Adjusted EBITDA loss of $2.3 million, compared with Adjusted EBITDA loss of $1.6 million in the second quarter of 2022. See the Appendix for definition and a full reconciliation.
As of June 30, 2023, the Company held $61.7 million in cash, cash equivalents and marketable securities, most of which is used for operations. On August 11, 2023, the Company entered into a Securities Purchase Agreement with an existing stockholder pursuant to which, beginning on October 15, 2023 and through March 31, 2024, the Company has the right, but not the obligation, to sell, and to require the purchaser to purchase, up to $5.0 million of shares of the Company’s common stock, at a purchase price of $1.00 per share.
For further details of the Company’s financials, please see Charge Enterprises’ Form 10-Q to be filed on August 14, 2023, with the Securities and Exchange Commission and available on Charge’s website Charge | SEC Filings. Financial statements prior to December 31, 2021, were filed with the OTC Markets.
Webcast Data
Charge Enterprises, Inc. will host a webcast at 10:30 a.m. Eastern Time today to discuss the second quarter 2023 financial results. The webcast can be accessed on the Company’s website on the Investor Relations page at Charge Enterprises, Inc.
About Charge Enterprises, Inc.
Charge Enterprises, Inc. is an electrical, broadband and EV charging infrastructure company that provides clients with end-to-end project management services. We operate in two segments: Infrastructure, which has a primary focus on EV charging, broadband and wireless, and electrical contracting services; and Telecommunications, which provides connection of voice calls, Short Message Services (SMS) and data to global carriers. Our vision is to be a leader in enabling the next wave of transportation and connectivity. By building, designing, and operating seamless infrastructure for electric vehicles, we aim to create a future where transportation is clean, efficient, and connected and to empower individuals, communities, and businesses to thrive in a more sustainable world. Our plan is to cultivate repeat customers and recurring revenues by deploying a multi-phased strategy, initially where investment in the EV charging revolution is taking place, the nation’s approximately 18,000 franchised auto dealers.
To learn more about Charge, visit Charge Enterprises, Inc.
Notice Regarding Forward-Looking Information
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect current expectations or beliefs regarding future events or Charge's future performance. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", “potential”, "continues", "forecasts", "projects", "predicts", "intends", "anticipates", "targets" or "believes", or variations of, or the negatives of, such words and phrases or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. All forward-looking statements, including those herein, are qualified by this cautionary statement. Although Charge believes that the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements involve risks and uncertainties, and actual results may differ materially from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include the ability to achieve the expected benefits of the Greenspeed acquisition, including the risks that the Company’s synergy estimates are inaccurate or that the Company faces higher than anticipated integration or other costs in connection with the acquisition, the business plans and strategies of Charge, Charge’s ability to satisfy its debt payment obligations or extend the maturity or refinance outstanding debt at or prior to maturity, Charge's future business development, market acceptance of electric vehicles, the success of Charge’s retail dealership initiative and the size, scope and success of the related initial installation projects, Charge's ability to generate profits and positive cash flow, changes in government regulations and government incentives, subsidies, or other favorable government policies, rising interest rates and the impact on investments by our customers, and other risks discussed in Charge's filings with the U.S. Securities and Exchange Commission ("SEC"). Readers are cautioned that the foregoing list of risks and uncertainties is not exhaustive of the factors that may affect forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release or as of the date or dates specified in such statements. For more information on us, investors are encouraged to review our public filings with the SEC, including the factors described in the section captioned “Risk Factors” of Charge’s Annual Report on Form 10-K filed with the SEC on March 15, 2023, and Charge’s Quarterly Report on Form 10-Q to be filed with the SEC on August 14, 2023, as well as subsequent reports we file from time to time with the SEC which are available on the SEC's website at www.sec.gov. Charge disclaims any intention or obligation to update or revise any forward- looking information, whether as a result of new information, future events or otherwise, other than as required by law.
Notice Regarding Non-GAAP Measures
The press release includes both financial measures in accordance with U.S. generally accepted accounting principles (“GAAP”), as well as non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. See the Appendix for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.
APPENDIX
CHARGE ENTERPRISES, INC. CONSOLIDATED RESULTS OF OPERATIONS (Unaudited) |
|||||||||||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||||||||
Increase |
% Increase |
Increase |
% Increase |
||||||||||||||||||||||
(in thousands) |
|
2023 |
|
|
2022 (As Adjusted) |
|
(Decrease) |
|
(Decrease) |
|
2023 |
|
|
2022 (As Adjusted) |
|
(Decrease) |
|
(Decrease) |
|||||||
Revenues: |
|||||||||||||||||||||||||
Infrastructure |
$ |
29,954 |
|
$ |
25,433 |
|
$ |
4,521 |
|
18 |
% |
$ |
57,451 |
|
$ |
45,051 |
|
$ |
12,400 |
|
28 |
% |
|||
Telecommunications |
117,632 |
|
155,608 |
|
(37,976 |
) |
(24 |
%) |
283,684 |
|
298,968 |
|
(15,284 |
) |
(5 |
%) |
|||||||||
Total revenues |
147,586 |
|
181,041 |
|
(33,455 |
) |
(18 |
%) |
341,135 |
|
344,019 |
|
(2,884 |
) |
(1 |
%) |
|||||||||
Cost of Sales |
139,838 |
|
174,767 |
|
(34,929 |
) |
(20 |
%) |
327,098 |
|
332,383 |
|
(5,285 |
) |
(2 |
%) |
|||||||||
Gross profit |
7,748 |
|
6,274 |
|
1,474 |
|
23 |
% |
14,037 |
|
11,636 |
|
2,401 |
|
21 |
% |
|||||||||
General and administrative |
5,433 |
|
6,452 |
|
(1,019 |
) |
(16 |
%) |
10,539 |
|
12,059 |
|
(1,520 |
) |
(13 |
%) |
|||||||||
Salaries and related benefits |
9,156 |
|
7,799 |
|
1,357 |
|
17 |
% |
18,283 |
|
15,747 |
|
2,536 |
|
16 |
% |
|||||||||
Professional fees |
446 |
|
848 |
|
(402 |
) |
(47 |
%) |
912 |
|
1,912 |
|
(1,000 |
) |
(52 |
%) |
|||||||||
Depreciation and amortization expense |
1,192 |
|
1,103 |
|
89 |
|
8 |
% |
2,402 |
|
1,312 |
|
1,090 |
|
83 |
% |
|||||||||
Income (loss) from operations |
(8,479 |
) |
(9,928 |
) |
1,449 |
|
15 |
% |
(18,099 |
) |
(19,394 |
) |
1,295 |
|
7 |
% |
|||||||||
Other income (expenses) |
(125 |
) |
(7,187 |
) |
7,062 |
|
98 |
% |
393 |
|
(9,120 |
) |
9,513 |
|
104 |
% |
|||||||||
Income tax (expense) benefit |
(242 |
) |
(45 |
) |
(197 |
) |
(438 |
%) |
(352 |
) |
1,328 |
|
(1,680 |
) |
(127 |
%) |
|||||||||
Net income (loss) |
$ |
(8,846 |
) |
$ |
(17,160 |
) |
$ |
8,314 |
|
48 |
% |
$ |
(18,058 |
) |
$ |
(27,186 |
) |
$ |
9,128 |
|
34 |
% |
|||
Infrastructure
CHARGE ENTERPRISES, INC. SEGMENT RESULTS OF OPERATIONS (Unaudited) |
|||||||||||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||||||||
Increase |
% Increase |
Increase |
% Increase |
||||||||||||||||||||||
(in thousands) |
|
2023 |
|
|
2022 (As Adjusted) |
|
(Decrease) |
|
(Decrease) |
|
2023 |
|
|
2022 (As Adjusted) |
|
(Decrease) |
|
(Decrease) |
|||||||
Revenues |
$ |
29,954 |
|
$ |
25,433 |
|
$ |
4,521 |
|
18 |
% |
$ |
57,451 |
|
$ |
45,051 |
|
$ |
12,400 |
|
28 |
% |
|||
Cost of Sales |
23,114 |
|
20,247 |
|
2,867 |
|
14 |
% |
45,019 |
|
35,931 |
|
9,088 |
|
25 |
% |
|||||||||
Gross profit |
6,840 |
|
5,186 |
|
1,654 |
|
32 |
% |
12,432 |
|
9,120 |
|
3,312 |
|
36 |
% |
|||||||||
General and administrative |
1,527 |
|
1,612 |
|
(85 |
) |
(5 |
%) |
2,933 |
|
2,746 |
|
187 |
|
7 |
% |
|||||||||
Salaries and related benefits |
4,733 |
|
4,066 |
|
667 |
|
16 |
% |
9,883 |
|
8,147 |
|
1,736 |
|
21 |
% |
|||||||||
Professional fees |
75 |
|
81 |
|
(6 |
) |
(7 |
%) |
108 |
|
142 |
|
(34 |
) |
(24 |
%) |
|||||||||
Depreciation and amortization expense |
1,183 |
|
1,062 |
|
121 |
|
11 |
% |
2,373 |
|
1,227 |
|
1,146 |
|
93 |
% |
|||||||||
Income (loss) from operations |
(678 |
) |
(1,635 |
) |
957 |
|
59 |
% |
(2,865 |
) |
(3,142 |
) |
277 |
|
9 |
% |
|||||||||
Other income (expenses) |
29 |
|
(365 |
) |
394 |
|
108 |
% |
175 |
|
(814 |
) |
989 |
|
121 |
% |
|||||||||
Income tax (expense) benefit |
(242 |
) |
15 |
|
(257 |
) |
(1713 |
%) |
(352 |
) |
105 |
|
(457 |
) |
(435 |
%) |
|||||||||
Net income (loss) |
$ |
(891 |
) |
$ |
(1,985 |
) |
$ |
1,094 |
|
55 |
% |
$ |
(3,042 |
) |
$ |
(3,851 |
) |
$ |
809 |
|
21 |
% |
|||
Telecommunications
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||||||||
Increase |
% Increase |
Increase |
% Increase |
||||||||||||||||||||||
(in thousands) |
|
2023 |
|
2022 (As Adjusted) |
|
(Decrease) |
|
(Decrease) |
|
2023 |
|
|
2022 (As Adjusted) |
|
(Decrease) |
|
(Decrease) |
||||||||
Revenues |
$ |
117,632 |
$ |
155,608 |
$ |
(37,976 |
) |
(24 |
%) |
$ |
283,684 |
|
$ |
298,968 |
$ |
(15,284 |
) |
(5 |
%) |
||||||
Cost of Sales |
116,724 |
154,520 |
(37,796 |
) |
(24 |
%) |
282,079 |
|
296,452 |
(14,373 |
) |
(5 |
%) |
||||||||||||
Gross profit |
908 |
1,088 |
(180 |
) |
(17 |
%) |
1,605 |
|
2,516 |
(911 |
) |
(36 |
%) |
||||||||||||
General and administrative |
598 |
566 |
32 |
|
6 |
% |
1,163 |
|
1,163 |
- |
|
0 |
% |
||||||||||||
Salaries and related benefits |
293 |
229 |
64 |
|
28 |
% |
525 |
|
607 |
(82 |
) |
(14 |
%) |
||||||||||||
Professional fees |
5 |
11 |
(6 |
) |
(55 |
%) |
25 |
|
36 |
(11 |
) |
(31 |
%) |
||||||||||||
Depreciation and amortization expense |
9 |
41 |
(32 |
) |
(78 |
%) |
29 |
|
85 |
(56 |
) |
(66 |
%) |
||||||||||||
Income (loss) from operations |
3 |
241 |
(238 |
) |
(99 |
%) |
(137 |
) |
625 |
(762 |
) |
(122 |
%) |
||||||||||||
Other income (expenses) |
344 |
201 |
143 |
|
71 |
% |
625 |
|
73 |
552 |
|
756 |
% |
||||||||||||
Income tax (expense) benefit |
- |
67 |
(67 |
) |
(100 |
%) |
- |
|
252 |
(252 |
) |
(100 |
%) |
||||||||||||
Net income (loss) |
$ |
347 |
$ |
509 |
$ |
(162 |
) |
(32 |
%) |
$ |
488 |
|
$ |
950 |
$ |
(462 |
) |
(49 |
%) |
||||||
Non-Operating Corporate
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||||||||
Increase |
% Increase |
Increase |
% Increase |
||||||||||||||||||||||
(in thousands) |
|
2023 |
|
|
2022 (As Adjusted) |
|
(Decrease) |
|
(Decrease) |
|
2023 |
|
|
2022 (As Adjusted) |
|
(Decrease) |
|
(Decrease) |
|||||||
Revenues |
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
|||||||
Cost of Sales |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|||||||||||||
Gross profit |
- |
|
- |
|
- |
|
|
- |
|
- |
|
- |
|
|
|||||||||||
General and administrative |
3,308 |
|
4,274 |
|
(966 |
) |
(23 |
%) |
6,443 |
|
8,150 |
|
(1,707 |
) |
(21 |
%) |
|||||||||
Salaries and related benefits |
4,130 |
|
3,504 |
|
626 |
|
18 |
% |
7,875 |
|
6,993 |
|
882 |
|
13 |
% |
|||||||||
Professional fees |
366 |
|
756 |
|
(390 |
) |
(52 |
%) |
779 |
|
1,734 |
|
(955 |
) |
(55 |
%) |
|||||||||
Income (loss) from operations |
(7,804 |
) |
(8,534 |
) |
730 |
|
9 |
% |
(15,097 |
) |
(16,877 |
) |
1,780 |
|
11 |
% |
|||||||||
Other income (expenses) |
(498 |
) |
(7,023 |
) |
6,525 |
|
93 |
% |
(407 |
) |
(8,379 |
) |
7,972 |
|
95 |
% |
|||||||||
Income tax (expense) benefit |
- |
|
(127 |
) |
127 |
|
100 |
% |
- |
|
971 |
|
(971 |
) |
(100 |
%) |
|||||||||
Net income (loss) |
$ |
(8,302 |
) |
$ |
(15,684 |
) |
$ |
7,382 |
|
47 |
% |
$ |
(15,504 |
) |
$ |
(24,285 |
) |
$ |
8,781 |
|
36 |
% |
|||
Charge Enterprises, Inc. |
||||||||
Consolidated Balance Sheets |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|
|
|
||
|
|
|
June 30, |
|
|
December 31, |
||
In thousands, except share and per share data |
|
|
2023 |
|
|
|
2022 (As Adjusted) |
|
Assets |
|
|
|
|
|
|
||
Current assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
50,142 |
|
|
$ |
26,837 |
|
Restricted cash |
|
|
886 |
|
|
|
886 |
|
Accounts receivable net of allowances of $184 in 2023 and $322 in 2022 |
|
|
74,036 |
|
|
|
72,405 |
|
Inventory |
|
|
118 |
|
|
|
111 |
|
Deposits, prepaids and other current assets |
|
|
2,298 |
|
|
|
3,187 |
|
Investments in marketable securities |
|
|
11,597 |
|
|
|
6,757 |
|
Investments in non-marketable securities |
|
|
236 |
|
|
|
236 |
|
Contract assets |
|
|
7,290 |
|
|
|
6,090 |
|
Total current assets |
|
|
146,603 |
|
|
|
116,509 |
|
|
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
|
553 |
|
|
|
732 |
|
Finance lease right-of-use asset |
|
|
600 |
|
|
|
341 |
|
Operating lease right-of-use asset |
|
|
3,323 |
|
|
|
4,028 |
|
Non-current assets |
|
|
248 |
|
|
|
240 |
|
Goodwill |
|
|
12,672 |
|
|
|
12,672 |
|
Intangible assets, net |
|
|
31,865 |
|
|
|
33,932 |
|
Total Assets |
|
|
195,864 |
|
|
|
168,454 |
|
|
|
|
|
|
|
|
||
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
||
Current liabilities |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
87,946 |
|
|
$ |
61,644 |
|
Accrued liabilities |
|
|
7,801 |
|
|
|
11,121 |
|
Contract liabilities |
|
|
24,765 |
|
|
|
13,741 |
|
Derivative liability |
|
|
59 |
|
|
|
6,521 |
|
Finance lease liability |
|
|
163 |
|
|
|
112 |
|
Operating lease liability |
|
|
1,336 |
|
|
|
1,579 |
|
Current portion of long-term debt |
|
|
26,136 |
|
|
|
29,180 |
|
Total current liabilities |
|
|
148,206 |
|
|
|
123,898 |
|
|
|
|
|
|
|
|
||
Non-current liabilities |
|
|
|
|
|
|
||
Finance lease liability, non-current |
|
|
374 |
|
|
|
146 |
|
Operating lease liability, non-current |
|
|
1,809 |
|
|
|
2,199 |
|
Net deferred tax liability |
|
|
1,170 |
|
|
|
1,410 |
|
Total Liabilities |
|
|
151,559 |
|
|
|
127,653 |
|
|
|
|
|
|
|
|
||
Mezzanine Equity |
|
|
|
|
|
|
||
Series C Preferred Stock (6,226,370 shares issued and outstanding at June 30, 2023, and December 31, 2022) |
|
|
16,572 |
|
|
|
16,572 |
|
Total Mezzanine Equity |
|
|
16,572 |
|
|
|
16,572 |
|
|
|
|
|
|
|
|
||
Commitments, contingencies and concentration risk |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Stockholders' Equity |
|
|
|
|
|
|
||
Preferred stock, $0.0001 par value, 20,000,000 shares authorized; |
|
|
|
|
|
|
||
Series D: 1,177,023 shares issued and outstanding at June 30, 2023, and December 31, 2022 |
|
|
- |
|
|
|
- |
|
Series E: 3,200,000 shares issued and outstanding at June 30, 2023, and 0 shares outstanding at December 31, 2022 |
|
|
- |
|
|
|
- |
|
Common stock, $0.0001 par value; 750,000,000 shares authorized 212,899,281 and 206,844,580 issued and outstanding at June 30, 2023 and December 31, 2022, respectively |
|
|
21 |
|
|
|
20 |
|
Additional paid in capital |
|
|
201,989 |
|
|
|
179,723 |
|
Accumulated other comprehensive income (loss) |
|
|
- |
|
|
|
- |
|
Accumulated deficit |
|
|
(174,277 |
) |
|
|
(155,514 |
) |
Total Stockholders' Equity |
|
|
27,733 |
|
|
|
24,229 |
|
Total Liabilities and Stockholders' Equity |
|
$ |
195,864 |
|
|
$ |
168,454 |
|
Charge Enterprises, Inc. |
||||||||||||||||
Consolidated Statement of Operations |
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
In thousands, except per share data |
|
2023 |
|
|
2022 (As Adjusted) |
|
2023 |
|
|
2022 (As Adjusted) |
||||||
Revenues |
|
$ |
147,586 |
|
|
$ |
181,041 |
|
|
$ |
341,135 |
|
|
$ |
344,019 |
|
Cost of sales |
|
139,838 |
|
|
174,767 |
|
|
|
327,098 |
|
|
332,383 |
|
|||
Gross profit |
|
7,748 |
|
|
|
6,274 |
|
|
|
14,037 |
|
|
|
11,636 |
|
|
|
|
|
|
|
|
|
||||||||||
Operating expenses |
|
|
|
|
|
|
||||||||||
General and administrative |
|
5,433 |
|
|
6,452 |
|
|
|
10,539 |
|
|
12,059 |
|
|||
Salaries and related benefits |
|
9,156 |
|
|
7,799 |
|
|
|
18,283 |
|
|
15,747 |
|
|||
Professional fees |
|
446 |
|
|
848 |
|
|
|
912 |
|
|
1,912 |
|
|||
Depreciation and amortization expense |
|
1,192 |
|
|
1,103 |
|
|
|
2,402 |
|
|
1,312 |
|
|||
Total operating expenses |
|
16,227 |
|
|
16,202 |
|
|
|
32,136 |
|
|
31,030 |
|
|||
|
|
|
|
|
|
|
||||||||||
(Loss) from operations |
|
(8,479 |
) |
|
(9,928 |
) |
|
|
(18,099 |
) |
|
(19,394 |
) |
|||
|
|
|
|
|
|
|
||||||||||
Other income (expenses): |
|
|
|
|
|
|
||||||||||
Income (loss) from investments, net |
|
666 |
|
|
(973 |
) |
|
|
962 |
|
|
(1,143 |
) |
|||
Change in fair value of derivative liabilities |
|
280 |
|
|
- |
|
|
|
1,656 |
|
|
- |
|
|||
Interest expense |
|
(1,488 |
) |
|
(7,160 |
) |
|
|
(3,026 |
) |
|
(8,924 |
) |
|||
Loss on impairment |
|
(58 |
) |
|
- |
|
|
|
(58 |
) |
|
- |
|
|||
Other income (expense), net |
|
637 |
|
|
776 |
|
|
|
1,028 |
|
|
1,034 |
|
|||
Foreign exchange adjustments |
|
(162 |
) |
|
170 |
|
|
|
(169 |
) |
|
(87 |
) |
|||
Total other income (expenses), net |
|
(125 |
) |
|
(7,187 |
) |
|
|
393 |
|
|
(9,120 |
) |
|||
|
|
|
|
|
|
|
||||||||||
(Loss) before income taxes |
|
(8,604 |
) |
|
(17,115 |
) |
|
|
(17,706 |
) |
|
(28,514 |
) |
|||
|
|
|
|
|
|
|
||||||||||
Income tax (expense) benefit |
|
(242 |
) |
|
(45 |
) |
|
|
(352 |
) |
|
1,328 |
|
|||
|
|
|
|
|
|
|
||||||||||
Net (loss) |
|
$ |
(8,846 |
) |
|
$ |
(17,160 |
) |
|
$ |
(18,058 |
) |
|
$ |
(27,186 |
) |
Less: Deemed dividend |
|
- |
|
|
(32,841 |
) |
|
|
- |
|
|
(36,697 |
) |
|||
Less: Preferred dividends |
|
(362 |
) |
|
(353 |
) |
|
|
(724 |
) |
|
(620 |
) |
|||
Net (loss) available to common stockholders |
|
$ |
(9,208 |
) |
|
$ |
(50,354 |
) |
|
$ |
(18,782 |
) |
|
$ |
(64,503 |
) |
|
|
|
|
|
|
|
||||||||||
Basic income (loss) per share available to common stockholders |
|
$ |
(0.04 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.34 |
) |
Diluted income (loss) per share available to common stockholders |
|
$ |
(0.04 |
) |
|
$ |
(0.26 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.34 |
) |
|
|
|
|
|
|
|
||||||||||
Weighted average number of shares outstanding, basic |
|
212,858 |
|
|
193,508 |
|
|
|
209,974 |
|
|
190,966 |
|
|||
Weighted average number of shares outstanding, diluted |
|
212,858 |
|
|
193,508 |
|
|
|
209,974 |
|
|
190,966 |
|
|||
Charge Enterprises, Inc. |
|||||||
Consolidated Statement of Cash Flows |
|||||||
(Unaudited) |
|||||||
|
Six Months Ended June 30, |
||||||
|
|
2023 |
|
|
2022 (As Adjusted) |
||
In thousands |
|
|
|
||||
Cash flows from Operating Activities: |
|
|
|
||||
Net loss |
$ |
(18,058 |
) |
|
$ |
(27,186 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||
Amortization |
|
2,067 |
|
|
861 |
|
|
Depreciation |
|
335 |
|
|
451 |
|
|
Stock-based compensation |
|
10,866 |
|
|
14,228 |
|
|
Change in fair value of derivative liabilities |
|
(1,656 |
) |
|
- |
|
|
Amortization of debt discount |
|
1,980 |
|
|
7,444 |
|
|
Loss on foreign currency exchange |
|
169 |
|
|
87 |
|
|
Loss on impairment |
|
58 |
|
- |
|
||
Net loss (gain) from investments |
|
(962 |
) |
|
1,143 |
|
|
Other expense, net |
|
(794 |
) |
|
(855 |
) |
|
Change in deferred income taxes |
|
(219 |
) |
|
(1,328 |
) |
|
Changes in working capital requirements: |
|
|
|
||||
Accounts receivable |
|
(1,776 |
) |
|
(1,856 |
) |
|
Inventory |
|
(6 |
) |
|
(57 |
) |
|
Deposits, prepaids and other current assets |
|
112 |
|
|
(304 |
) |
|
Other assets / liabilities |
|
124 |
|
|
(30 |
) |
|
Contract assets |
|
(1,200 |
) |
|
(3,445 |
) |
|
Accounts payable |
|
26,477 |
|
|
27,162 |
|
|
Other current liabilities |
|
186 |
|
|
1,062 |
|
|
Contract liabilities |
|
11,024 |
|
|
(1,741 |
) |
|
Net cash provided by operating activities |
|
28,727 |
|
|
15,636 |
|
|
|
|
|
|
||||
Cash flows from Investing Activities: |
|
|
|
||||
Acquisition of property, plant and equipment |
|
(102 |
) |
|
(70 |
) |
|
Sale of intellectual property |
|
794 |
|
|
159 |
|
|
Purchase of marketable securities |
|
(22,530 |
) |
|
(43,255 |
) |
|
Sale of marketable securities |
|
18,612 |
|
|
34,901 |
|
|
Acquisition of EV Depot |
|
1 |
|
|
(1,231 |
) |
|
Cash acquired in acquisitions |
|
- |
|
|
104 |
|
|
Net cash provided by (used in) investing activities |
|
(3,225 |
) |
|
(9,392 |
) |
|
|
|
|
|
||||
Cash flows from Financing Activities: |
|
|
|
||||
Proceeds from sale of common stock |
|
- |
|
|
10,000 |
|
|
Proceeds from sale of Series C preferred stock |
|
- |
|
|
10,845 |
|
|
Proceeds from issuance of Series E preferred stock |
|
1,600 |
|
|
- |
|
|
Proceeds from exercise of warrants |
|
2,200 |
|
|
1,072 |
|
|
Proceeds from exercise of stock options |
|
41 |
|
|
20 |
|
|
Draws from revolving line of credit |
|
4,717 |
|
|
10,409 |
|
|
Payments on revolving line of credit |
|
(9,741 |
) |
|
(9,550 |
) |
|
Payment on financing lease |
|
(141 |
) |
|
(102 |
) |
|
Payment of dividends on preferred stock |
|
(724 |
) |
|
(498 |
) |
|
Net cash (used in) provided by financing activities |
|
(2,048 |
) |
|
22,196 |
|
|
|
|
|
|
||||
Effect of foreign exchange rate changes |
|
(149 |
) |
|
(97 |
) |
|
|
|
|
|
||||
Net Increase in Cash and Cash Equivalents |
|
23,305 |
|
|
28,343 |
|
|
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period |
|
27,723 |
|
|
18,238 |
|
|
Cash, Cash Equivalents, and Restricted Cash, End of Period |
$ |
51,028 |
|
|
$ |
46,581 |
|
|
|
|
|
||||
Cash paid for interest expense |
$ |
969 |
|
|
$ |
1,477 |
|
Cash paid for income taxes |
$ |
718 |
|
|
$ |
- |
|
Non-cash investing and financing activities: |
|
|
|
||||
Issuance of common stock for acquisition |
$ |
- |
|
|
$ |
17,530 |
|
Non-GAAP Measures
In this press release, the Company has supplemented the presentation of its financial results calculated in accordance with U.S. generally accepted accounting principles (“GAAP”) with the following financial measures that are not calculated in accordance with GAAP: EBITDA and Adjusted EBITDA. Management uses both GAAP and non-GAAP measures to assist in making business decisions and assessing overall performance. The Company’s measurement of these non-GAAP financial measures may be different from similarly titled financial measures used by others and therefore may not be comparable. These non-GAAP financial measures should not be considered superior to the GAAP measures in the tables included within this material.
Certain information presented in this press release reflects adjustments to GAAP measures such as EBITDA and Adjusted EBITDA as an additional way of assessing certain aspects of the Company’s operations that, when viewed with the GAAP financial measures, provide a more complete understanding of its on-going business. EBITDA is defined as income (loss) before interest, income taxes, depreciation and amortization, and amortization of debt discount and debt issue costs. Adjusted EBITDA represents EBITDA adjusted for stock-based compensation, income (loss) from investments, net, change in fair value of derivative liabilities, other (income) expense, net, and foreign exchange adjustments.
As it related to future projections for the Company’s Adjusted EBITDA described above, the Company has not provided guidance for comparable GAAP measure or a quantitative reconciliation of forward-looking non-GAAP financial measures because it is unable to determine with reasonable certainty the ultimate outcome of certain significant items necessary to calculate such measures without unreasonable effort. These items include, but are not limited to income or loss from investments, change in fair value of derivative liabilities and foreign exchange adjustments.
CHARGE ENTERPRISES, INC. NON-GAAP RECONCILIATION |
||||||||||||
Three months ended June 30, |
Six months ended June 30, |
|||||||||||
($ in thousands) |
2023 |
|
2022
|
2023 |
|
2022
|
||||||
Adjusted EBITDA: |
||||||||||||
Net income (loss) |
$ |
(8,846 |
) |
|
(17,160 |
) |
$ |
(18,058 |
) |
|
(27,186 |
) |
Income tax expense (benefit) |
242 |
|
45 |
|
352 |
|
(1,328 |
) |
||||
Interest expense |
|
1,488 |
|
|
7,160 |
|
|
3,026 |
|
|
8,924 |
|
Depreciation & Amortization |
1,192 |
|
1,103 |
|
2,402 |
|
1,312 |
|
||||
EBITDA |
|
(5,924 |
) |
|
(8,852 |
) |
|
(12,278 |
) |
|
(18,278 |
) |
Adjustments: |
||||||||||||
Stock based compensation |
|
4,964 |
|
|
7,223 |
|
|
10,866 |
|
|
14,647 |
|
(Income) loss from investments, net |
(666 |
) |
973 |
|
(962 |
) |
1,143 |
|
||||
Change in fair value of derivative liabilities |
|
(280 |
) |
|
- |
|
|
(1,656 |
) |
|
- |
|
Loss on impairment |
58 |
|
- |
|
58 |
|
- |
|
||||
Other (income) expense, net |
|
(637 |
) |
|
(776 |
) |
|
(1,028 |
) |
|
(1,034 |
) |
Foreign exchange adjustments |
162 |
|
(170 |
) |
169 |
|
87 |
|
||||
Adjusted EBITDA |
$ |
(2,323 |
) |
$ |
(1,602 |
) |
$ |
(4,831 |
) |
$ |
(3,435 |
) |
