NEW YORK--(BUSINESS WIRE)--Charge Enterprises, Inc. (Nasdaq: CRGE) ("Charge" or the "Company"), today reported third quarter 2023 results. For the quarter, revenues were $132.3 million, compared with $185.9 million in the third quarter of 2022. Gross profit for the third quarter 2023 increased to $9.0 million, compared with $6.1 million in the third quarter of 2022.
"Our third quarter results were highlighted by our Infrastructure segment once again, as shown by the 19% growth in revenue and 59% growth in gross profit versus the prior year, which was driven by strong project delivery within our electrical services business and momentum within our EV charging business, including the Greenspeed acquisition," said Craig Denson, Interim Chief Executive Officer and Chief Operating Officer. "At the end of August, Stellantis selected Charge Enterprises to assist its US dealerships with their infrastructure requirements for overall power management solutions for over 2,600 Stellantis dealers nationwide, demonstrating our commitment to implementing critical EV charging infrastructure for the future.
"We are making good progress against the three fundamental objectives outlined in August. We are well underway in strategic planning for the future, along with the accompanying marketing and communications plan with our new partner, Gateway Group. We are also pleased with the progress to date on integration and leveraging our existing portfolio of companies with our most recent acquisition, Greenspeed. We are already experiencing significant benefits including operational best practices and cost efficiencies resulting in a higher quality product offering delivered to our customers in a timely manner. In fact, we have been able to remove approximately $2 million of annualized people costs from our newly combined EV charging infrastructure business. We have developed more direct and transparent go-to-market strategies in order to execute our services across all geographies as we continue leveraging our subsidiaries and capitalizing on the various strengths they possess. These combined initiatives are designed to facilitate momentum towards continued earnings growth and positive Adjusted EBITDA in the full year of 2024."
Selected Financial Information
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2022 | Increase | 2022 | Increase | |||||||||||||||||||||
($ in thousands) | 2023 | (As Adjusted)(1) | (Decrease) | 2023 | (As Adjusted)(1) | (Decrease) | ||||||||||||||||||
Total Revenues | $ | 132,277 | $ | 185,857 | $ | (53,580 | ) | $ | 473,412 | $ | 529,876 | $ | (56,464 | ) | ||||||||||
Gross Profit | 9,022 | 6,097 | 2,925 | 23,059 | 17,733 | 5,326 | ||||||||||||||||||
Net Income (Loss) | (6,951 | ) | 16,181 | (23,132 | ) | (25,009 | ) | (11,005 | ) | (14,004 | ) | |||||||||||||
Adjusted EBITDA(2) | $ | (606 | ) | $ | (1,693 | ) | $ | 1,087 | $ | (5,437 | ) | $ | (5,128 | ) | $ | (309 | ) | |||||||
(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 U.S. Securities and Exchange Commission on November 8, 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 gain (loss). Refer to Appendix for definition and complete non-GAAP reconciliation for Adjusted EBITDA. |
Charge Enterprise's CFO Leah Schweller commented, "While our third-quarter revenues declined compared to the same period last year, the decline was anticipated due to decreasing wholesale voice volume in our Telecommunications segment. Our Infrastructure segment continues to perform well, with strong growth driven by our electrical services, and EV charging infrastructure, thanks to our recent acquisition of Greenspeed. We are pleased with our improving loss from operations and Adjusted EBITDA results and have high confidence in achieving positive Adjusted EBITDA in the first quarter of 2024. Additionally, we expect to deliver positive Adjusted EBITDA for the full year 2024. Our backlog remains solid, and the integration of Greenspeed is progressing smoothly. We remain committed to executing our forthcoming comprehensive strategic plan, which will focus on nurturing organic growth, integrating our subsidiaries, optimizing capital allocation, and elevating cost synergies across our entire organization."
As discussed in prior quarters, 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 U.S. Securities and Exchange Commission on November 8, 2023.
Third Quarter 2023 Financial Results
Revenues for the third quarter 2023 decreased $53.6 million to $132.3 million, compared with $185.9 million in the third quarter of 2022. The 29% decrease in revenues was the result of lower wholesale traffic volumes in the Company's Telecommunications segment, partially offset by increased revenues in the electrical services and EV charging installations within its Infrastructure segment.
- Infrastructure: Revenues increased $5.0 million to $31.8 million, compared with $26.8 million in the third quarter of 2022, driven by growth related to its electrical services business and increased revenues in its EV charging business, both organically and through the recent acquisition of Greenspeed, partially offset by lower revenues in the Company's wireless broadband business due to decreased spending by wireless broadband carriers.
- Telecommunications: Revenues decreased $58.6 million to $100.5 million, compared with $159.1 million in the third quarter of 2022, primarily attributable to the expected lower wholesale voice volume.
Gross profit for the third quarter 2023 increased $2.9 million to $9.0 million, compared with $6.1 million in the third 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 third quarter 2023 increased versus the prior year period, driven by higher gross margin in both of the Company's business segments and an increasing share of revenues originating from the Company's higher-margin Infrastructure segment.
Net loss for the third quarter 2023 was $7.0 million, compared with net income of $16.2 million in the third quarter of 2022. Expenses after gross profit were primarily due to ongoing investments the Company made to bolster its growth strategy. The largest drivers over the prior year period were:
- $4.3 million in general and administrative expense, which represented a decrease of $0.8 million, attributable to a decrease in stock-based compensation expense, partially offset by higher insurance expense;
- $8.9 million in salaries and related benefits, which represented a $1.0 million increase, driven by increased headcount to support the Company's growth in the past year, partially offset by a decrease in stock-based compensation;
- $1.0 million in professional fees, which represented a $0.3 million increase, primarily related to approximately $0.5 million in non-recurring legal fees in the current period; and
- $0.2 million in other income/(expense), net, which represented a decrease of $24.0 million, primarily due to a decrease in the gain related to the change in fair value of derivative liabilities of $28.6 million, offset by a loss on contingent liability of $3.4 million occurring in the prior year.
Net loss of $7.0 million in the third quarter 2023, adjusted for non-cash and certain one-time items, resulted in an Adjusted EBITDA loss of $0.6 million, compared with Adjusted EBITDA loss of $1.7 million in the third quarter of 2022. Refer to the Appendix for definitions and full reconciliations.
As of September 30, 2023, the Company held $57.2 million in cash, cash equivalents and marketable securities, most of which is expected to be used for operations and debt service.
For further details of the Company's financials, please see Charge Enterprises' Form 10-Q to be filed on November 8, 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 third 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, and continued auto maker investment in 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, macroeconomic and geopolitical conditions, and the ongoing automotive industry labor dispute 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 subsequent reports we file from time to time with the SEC, including Charge's Quarterly Report on Form 10-Q to be filed with the SEC on November 8, 2023, 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 September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2022 | Increase | % Increase | 2022 | Increase | % Increase | |||||||||||||||||||||||||
(in thousands) | 2023 | (As Adjusted) | (Decrease) | (Decrease) | 2023 | (As Adjusted) | (Decrease) | (Decrease) | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||
Infrastructure | $ | 31,795 | $ | 26,753 | $ | 5,042 | 19 | % | $ | 89,246 | $ | 71,804 | $ | 17,442 | 24 | % | ||||||||||||||
Telecommunications | 100,482 | 159,104 | (58,622 | ) | (37 | )% | 384,166 | 458,072 | (73,906 | ) | (16 | )% | ||||||||||||||||||
Total revenues | 132,277 | 185,857 | (53,580 | ) | (29 | )% | 473,412 | 529,876 | (56,464 | ) | (11 | )% | ||||||||||||||||||
Cost of Sales | 123,255 | 179,760 | (56,505 | ) | (31 | )% | 450,353 | 512,143 | (61,790 | ) | (12 | )% | ||||||||||||||||||
Gross profit | 9,022 | 6,097 | 2,925 | 48 | % | 23,059 | 17,733 | 5,326 | 30 | % | ||||||||||||||||||||
General and administrative | 4,315 | 5,141 | (826 | ) | (16 | )% | 14,854 | 17,200 | (2,346 | ) | (14 | )% | ||||||||||||||||||
Salaries and related benefits | 8,890 | 7,850 | 1,040 | 13 | % | 27,173 | 23,597 | 3,576 | 15 | % | ||||||||||||||||||||
Professional fees | 1,006 | 666 | 340 | 51 | % | 1,918 | 2,578 | (660 | ) | (26 | )% | |||||||||||||||||||
Depreciation and amortization expense | 1,172 | 433 | 739 | 171 | % | 3,574 | 1,745 | 1,829 | 105 | % | ||||||||||||||||||||
Income (loss) from operations | (6,361 | ) | (7,993 | ) | 1,632 | 20 | % | (24,460 | ) | (27,387 | ) | 2,927 | 11 | % | ||||||||||||||||
Other income (expenses) | 151 | 24,166 | (24,015 | ) | (99 | )% | 544 | 15,046 | (14,502 | ) | (96 | )% | ||||||||||||||||||
Income tax (expense) benefit | (741 | ) | 8 | (749 | ) | (9,363 | )% | (1,093 | ) | 1,336 | (2,429 | ) | (182 | )% | ||||||||||||||||
Net income (loss) | $ | (6,951 | ) | $ | 16,181 | $ | (23,132 | ) | (143 | )% | $ | (25,009 | ) | $ | (11,005 | ) | $ | (14,004 | ) | (127 | )% | |||||||||
CHARGE ENTERPRISES, INC. | ||||||||||||||||||||||||||||||
SEGMENT RESULTS OF OPERATIONS | ||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||
Infrastructure | ||||||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2022 | Increase | % Increase | 2022 | Increase | % Increase | |||||||||||||||||||||||||
(in thousands) | 2023 | (As Adjusted) | (Decrease) | (Decrease) | 2023 | (As Adjusted) | (Decrease) | (Decrease) | ||||||||||||||||||||||
Revenues | $ | 31,795 | $ | 26,753 | $ | 5,042 | 19 | % | $ | 89,246 | $ | 71,804 | $ | 17,442 | 24 | % | ||||||||||||||
Cost of Sales | 23,600 | 21,607 | 1,993 | 9 | % | 68,619 | 57,538 | 11,081 | 19 | % | ||||||||||||||||||||
Gross profit | 8,195 | 5,146 | 3,049 | 59 | % | 20,627 | 14,266 | 6,361 | 45 | % | ||||||||||||||||||||
General and administrative | 1,485 | 1,369 | 116 | 8 | % | 4,418 | 4,115 | 303 | 7 | % | ||||||||||||||||||||
Salaries and related benefits | 4,867 | 4,468 | 399 | 9 | % | 14,750 | 12,615 | 2,135 | 17 | % | ||||||||||||||||||||
Professional fees | 19 | 70 | (51 | ) | (73 | )% | 127 | 212 | (85 | ) | (40 | )% | ||||||||||||||||||
Depreciation and amortization expense | 1,166 | 391 | 775 | 198 | % | 3,539 | 1,618 | 1,921 | 119 | % | ||||||||||||||||||||
Income (loss) from operations | 658 | (1,152 | ) | 1,810 | 157 | % | (2,207 | ) | (4,294 | ) | 2,087 | 49 | % | |||||||||||||||||
Other income (expenses) | (146 | ) | (92 | ) | (54 | ) | (59 | )% | 29 | (906 | ) | 935 | 103 | % | ||||||||||||||||
Income tax (expense) benefit | (741 | ) | (91 | ) | (650 | ) | (714 | )% | (1,093 | ) | 14 | (1,107 | ) | (7,907 | )% | |||||||||||||||
Net income (loss) | $ | (229 | ) | $ | (1,335 | ) | $ | 1,106 | 83 | % | $ | (3,271 | ) | $ | (5,186 | ) | $ | 1,915 | 37 | % | ||||||||||
Telecommunications | |||||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2022 | Increase | % Increase | 2022 | Increase | % Increase | ||||||||||||||||||||||||
(in thousands) | 2023 | (As Adjusted) | (Decrease) | (Decrease) | 2023 | (As Adjusted) | (Decrease) | (Decrease) | |||||||||||||||||||||
Revenues | $ | 100,482 | $ | 159,104 | $ | (58,622 | ) | (37 | )% | $ | 384,166 | $ | 458,072 | $ | (73,906 | ) | (16 | )% | |||||||||||
Cost of Sales | 99,655 | 158,153 | (58,498 | ) | (37 | )% | 381,734 | 454,605 | (72,871 | ) | (16 | )% | |||||||||||||||||
Gross profit | 827 | 951 | (124 | ) | (13 | )% | 2,432 | 3,467 | (1,035 | ) | (30 | )% | |||||||||||||||||
General and administrative | 507 | 514 | (7 | ) | (1 | )% | 1,670 | 1,677 | (7 | ) | (0 | )% | |||||||||||||||||
Salaries and related benefits | 198 | 187 | 11 | 6 | % | 723 | 794 | (71 | ) | (9 | )% | ||||||||||||||||||
Professional fees | 8 | 27 | (19 | ) | (70 | )% | 33 | 63 | (30 | ) | (48 | )% | |||||||||||||||||
Depreciation and amortization expense | 6 | 42 | (36 | ) | (86 | )% | 35 | 127 | (92 | ) | (72 | )% | |||||||||||||||||
Income (loss) from operations | 108 | 181 | (73 | ) | (40 | )% | (29 | ) | 806 | (835 | ) | (104 | )% | ||||||||||||||||
Other income (expenses) | 808 | (4 | ) | 812 | 20,300 | % | 1,433 | 69 | 1,364 | 1,977 | % | ||||||||||||||||||
Income tax (expense) benefit | - | (255 | ) | 255 | 100 | % | - | (3 | ) | 3 | 100 | % | |||||||||||||||||
Net income (loss) | $ | 916 | $ | (78 | ) | $ | 994 | 1,274 | % | $ | 1,404 | $ | 872 | $ | 532 | 61 | % | ||||||||||||
Non-Operating Corporate | ||||||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||
2022 | Increase | % Increase | 2022 | Increase | % Increase | |||||||||||||||||||||||||
(in thousands) | 2023 | (As Adjusted) | (Decrease) | (Decrease) | 2023 | (As Adjusted) | (Decrease) | (Decrease) | ||||||||||||||||||||||
Revenues | $ | - | $ | - | $ | - | - | $ | - | $ | - | $ | - | - | ||||||||||||||||
Cost of Sales | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
Gross profit | - | - | - | - | - | - | - | - | ||||||||||||||||||||||
General and administrative | 2,323 | 3,258 | (935 | ) | (29 | )% | 8,766 | 11,408 | (2,642 | ) | (23 | )% | ||||||||||||||||||
Salaries and related benefits | 3,825 | 3,195 | 630 | 20 | % | 11,700 | 10,188 | 1,512 | 15 | % | ||||||||||||||||||||
Professional fees | 979 | 569 | 410 | 72 | % | 1,758 | 2,303 | (545 | ) | (24 | )% | |||||||||||||||||||
Income (loss) from operations | (7,127 | ) | (7,022 | ) | (105 | ) | (1 | )% | (22,224 | ) | (23,899 | ) | 1,675 | 7 | % | |||||||||||||||
Other income (expenses) | (511 | ) | 24,262 | (24,773 | ) | (102 | )% | (918 | ) | 15,883 | (16,801 | ) | (106 | )% | ||||||||||||||||
Income tax (expense) benefit | - | 354 | (354 | ) | (100 | )% | - | 1,325 | (1,325 | ) | (100 | )% | ||||||||||||||||||
Net income (loss) | $ | (7,638 | ) | $ | 17,594 | $ | (25,232 | ) | (143 | )% | $ | (23,142 | ) | $ | (6,691 | ) | $ | (16,451 | ) | (246 | )% | |||||||||
Charge Enterprises, Inc. | ||||||||
Consolidated Balance Sheets | ||||||||
(Unaudited) | ||||||||
In thousands, except share and per share data | September 30, 2023 | December 31, 2022 (As Adjusted) | ||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 51,359 | $ | 26,837 | ||||
Restricted cash | 886 | 886 | ||||||
Accounts receivable net of allowances of $68 in 2023 and $322 in 2022 | 55,768 | 72,405 | ||||||
Inventory | 317 | 111 | ||||||
Deposits, prepaids and other current assets | 3,430 | 3,187 | ||||||
Investments in marketable securities | 5,868 | 6,757 | ||||||
Investments in non-marketable securities | 279 | 236 | ||||||
Contract assets | 8,128 | 6,090 | ||||||
Total current assets | 126,035 | 116,509 | ||||||
Property, plant and equipment, net | 485 | 732 | ||||||
Finance lease right-of-use assets | 888 | 341 | ||||||
Operating lease right-of-use assets | 3,123 | 4,028 | ||||||
Non-current assets | 248 | 240 | ||||||
Goodwill | 25,906 | 12,672 | ||||||
Intangible assets, net | 30,832 | 33,932 | ||||||
Total Assets | 187,517 | 168,454 | ||||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 73,105 | $ | 61,644 | ||||
Accrued liabilities | 7,922 | 11,121 | ||||||
Contract liabilities | 25,201 | 13,741 | ||||||
Derivative liability | 2 | 6,521 | ||||||
Finance lease liabilities | 242 | 112 | ||||||
Operating lease liabilities | 1,183 | 1,579 | ||||||
Current portion of long-term debt | 27,126 | 29,180 | ||||||
Total current liabilities | 134,781 | 123,898 | ||||||
Non-current liabilities | ||||||||
Finance lease liabilities, non-current | 530 | 146 | ||||||
Operating lease liabilities, non-current | 1,808 | 2,199 | ||||||
Contingent consideration liability | 5,758 | - | ||||||
Net deferred tax liability | 1,072 | 1,410 | ||||||
Total Liabilities | 143,949 | 127,653 | ||||||
Mezzanine Equity | ||||||||
Series C preferred stock (6,226,370 shares issued and outstanding at September 30, 2023, and December 31, 2022) | 19,458 | 16,572 | ||||||
Total Mezzanine Equity | 19,458 | 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 September 30, 2023, and December 31, 2022 | - | - | ||||||
Series E: 3,200,000 shares issued and outstanding at September 30, 2023, and 0 shares outstanding at December 31, 2022 | - | - | ||||||
Common stock, $0.0001 par value; 750,000,000 shares authorized, 215,039,868 and 206,844,580 issued and outstanding at September 30, 2023 and December 31, 2022, respectively | 21 | 20 | ||||||
Additional paid in capital | 208,564 | 179,723 | ||||||
Accumulated deficit | (184,475 | ) | (155,514 | ) | ||||
Total Stockholders' Equity | 24,110 | 24,229 | ||||||
Total Liabilities and Stockholders' Equity | $ | 187,517 | $ | 168,454 | ||||
Charge Enterprises, Inc. | ||||||||||||||||
Consolidated Statement of Operations | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
In thousands, except per share data | 2023 | 2022 (As Adjusted) | 2023 | 2022 (As Adjusted) | ||||||||||||
Revenues | $ | 132,277 | $ | 185,857 | $ | 473,412 | $ | 529,876 | ||||||||
Cost of sales | 123,255 | 179,760 | 450,353 | 512,143 | ||||||||||||
Gross profit | 9,022 | 6,097 | 23,059 | 17,733 | ||||||||||||
Operating expenses | ||||||||||||||||
General and administrative | 4,315 | 5,141 | 14,854 | 17,200 | ||||||||||||
Salaries and related benefits | 8,890 | 7,850 | 27,173 | 23,597 | ||||||||||||
Professional fees | 1,006 | 666 | 1,918 | 2,578 | ||||||||||||
Depreciation and amortization expense | 1,172 | 433 | 3,574 | 1,745 | ||||||||||||
Total operating expenses | 15,383 | 14,090 | 47,519 | 45,120 | ||||||||||||
(Loss) from operations | (6,361 | ) | (7,993 | ) | (24,460 | ) | (27,387 | ) | ||||||||
Other income (expenses): | ||||||||||||||||
Income (loss) from investments, net | 675 | (200 | ) | 1,637 | (1,343 | ) | ||||||||||
Change in fair value of derivative liabilities | 57 | 28,669 | 1,713 | 28,669 | ||||||||||||
Interest expense | (1,489 | ) | (1,015 | ) | (4,515 | ) | (9,939 | ) | ||||||||
Loss on impairment | (56 | ) | - | (114 | ) | - | ||||||||||
Other income (expense), net | 848 | (3,289 | ) | 1,876 | (2,255 | ) | ||||||||||
Foreign exchange gain (loss) | 116 | 1 | (53 | ) | (86 | ) | ||||||||||
Total other income (expenses), net | 151 | 24,166 | 544 | 15,046 | ||||||||||||
Income (loss) before income taxes | (6,210 | ) | 16,173 | (23,916 | ) | (12,341 | ) | |||||||||
Income tax (expense) benefit | (741 | ) | 8 | (1,093 | ) | 1,336 | ||||||||||
Net income (loss) | $ | (6,951 | ) | $ | 16,181 | $ | (25,009 | ) | $ | (11,005 | ) | |||||
Less: Deemed dividend | (2,885 | ) | - | (2,885 | ) | (36,697 | ) | |||||||||
Less: Preferred dividends | (362 | ) | (302 | ) | (1,086 | ) | (922 | ) | ||||||||
Net income (loss) available to common stockholders | $ | (10,198 | ) | $ | 15,879 | $ | (28,980 | ) | $ | (48,624 | ) | |||||
Basic income (loss) per share available to common stockholders | $ | (0.05 | ) | $ | 0.07 | $ | (0.14 | ) | $ | (0.25 | ) | |||||
Diluted income (loss) per share available to common stockholders | $ | (0.05 | ) | $ | 0.06 | $ | (0.14 | ) | $ | (0.25 | ) | |||||
Weighted average number of shares outstanding, basic | 214,273 | 206,225 | 211,423 | 196,126 | ||||||||||||
Weighted average number of shares outstanding, diluted | 214,273 | 231,388 | 211,423 | 196,126 | ||||||||||||
Charge Enterprises, Inc. | ||||||||
Consolidated Statement of Cash Flows | ||||||||
(Unaudited) | ||||||||
Nine Months Ended September 30, | ||||||||
2023 | 2022 (As Adjusted) | |||||||
In thousands | ||||||||
Cash flows from Operating Activities: | ||||||||
Net loss | $ | (25,009 | ) | $ | (11,005 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Amortization | 3,100 | 1,060 | ||||||
Depreciation | 474 | 685 | ||||||
Stock-based compensation | 15,449 | 20,514 | ||||||
Change in fair value of derivative liabilities | (1,713 | ) | (28,669 | ) | ||||
Amortization of debt discount | 2,970 | 7,938 | ||||||
Loss on foreign currency exchange | 53 | 86 | ||||||
Loss on impairment | 114 | - | ||||||
Net loss (gain) from investments | (1,637 | ) | 1,343 | |||||
Other expense, net | (1,308 | ) | 2,287 | |||||
Change in deferred income taxes | (316 | ) | (1,338 | ) | ||||
Changes in working capital requirements: | ||||||||
Accounts receivable | 17,934 | (1,900 | ) | |||||
Inventory | (1 | ) | (73 | ) | ||||
Deposits, prepaids and other current assets | (1,007 | ) | (1,761 | ) | ||||
Other assets / liabilities | 195 | (43 | ) | |||||
Contract assets | (1,294 | ) | (3,041 | ) | ||||
Accounts payable | 11,277 | 10,148 | ||||||
Other current liabilities | 229 | (1,196 | ) | |||||
Contract liabilities | 7,719 | 2,048 | ||||||
Net cash provided by (used in) operating activities | 27,229 | (2,917 | ) | |||||
Cash flows from Investing Activities: | ||||||||
Acquisition of property, plant and equipment | (143 | ) | (205 | ) | ||||
Sale of intellectual property | 1,308 | 179 | ||||||
Purchase of marketable securities | (27,766 | ) | (45,430 | ) | ||||
Sale of marketable securities | 30,210 | 47,429 | ||||||
Acquisition of ANS | - | (363 | ) | |||||
Acquisition of EV Depot | 1 | (1,231 | ) | |||||
Acquisition of Greenspeed | (5,289 | ) | - |
| ||||
Cash acquired in acquisitions | 1,845 | 105 | ||||||
Net cash provided by investing activities | 166 | 484 | ||||||
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 sale of Series E preferred stock | 1,600 | - | ||||||
Proceeds from exercise of warrants | 2,200 | 1,122 | ||||||
Proceeds from exercise of stock options | 41 | 164 | ||||||
Draws from revolving line of credit | 4,717 | 18,802 | ||||||
Payments on revolving line of credit | (9,741 | ) | (18,548 | ) | ||||
Tax withholding payments for vested stock-based compensation | (9 | ) | (418 | ) | ||||
Payment on financing lease | (252 | ) | (78 | ) | ||||
Payment of dividends on preferred stock | (1,086 | ) | (818 | ) | ||||
Redemption of Series B preferred stock | - | (685 | ) | |||||
Net cash (used in) provided by financing activities | (2,530 | ) | 20,386 | |||||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | (343 | ) | 45 | |||||
Net Increase in Cash and Cash Equivalents | 24,522 | 17,998 | ||||||
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period | 27,723 | 18,238 | ||||||
Cash, Cash Equivalents, and Restricted Cash, End of Period | $ | 52,245 | $ | 36,236 | ||||
Cash paid for interest expense | $ | 1,454 | $ | 2,138 | ||||
Cash paid for income taxes | $ | 1,538 | $ | 485 | ||||
Non-cash investing and financing activities: | ||||||||
Issuance of common stock for acquisition | $ | 2,000 | $ | 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 gain (loss).
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 gain (loss).
CHARGE ENTERPRISES, INC. | ||||||||||||||||
NON-GAAP RECONCILIATION | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in thousands) | 2023 | 2022 (As Adjusted) | 2023 | 2022 (As Adjusted) | ||||||||||||
Adjusted EBITDA: | ||||||||||||||||
Net income (loss) | $ | (6,951 | ) | 16,181 | $ | (25,009 | ) | (11,005 | ) | |||||||
Income tax expense (benefit) | 741 | (8 | ) | 1,093 | (1,336 | ) | ||||||||||
Interest expense | 1,489 | 1,015 | 4,515 | 9,939 | ||||||||||||
Depreciation & Amortization | 1,172 | 433 | 3,574 | 1,745 | ||||||||||||
EBITDA | (3,549 | ) | 17,621 | (15,827 | ) | (657 | ) | |||||||||
Adjustments: | ||||||||||||||||
Stock based compensation | 4,583 | 5,867 | 15,449 | 20,514 | ||||||||||||
(Income) loss from investments, net | (675 | ) | 200 | (1,637 | ) | 1,343 | ||||||||||
Change in fair value of derivative liabilities | (57 | ) | (28,669 | ) | (1,713 | ) | (28,669 | ) | ||||||||
Loss on impairment | 56 | - | 114 | - | ||||||||||||
Other (income) expense, net | (848 | ) | 3,289 | (1,876 | ) | 2,255 | ||||||||||
Foreign exchange adjustments | (116 | ) | (1 | ) | 53 | 86 | ||||||||||
Adjusted EBITDA | $ | (606 | ) | $ | (1,693 | ) | $ | (5,437 | ) | $ | (5,128 | ) | ||||
Contacts
Investors
Christine Cannella
Charge Enterprises, Inc.
954-298-6518
ccannella@chargeenterprises.com
Alex Thompson
Gateway Group
949-574-3860
CRGE@gateway-grp.com
Media
Zach Kadletz
Gateway Group
949-574-3860
CRGE@gateway-grp.com
