OIG Orbital Infrastructure Group Inc

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 $0.001; 10,000,000 shares authorized; no shares issued at March 31, 2023 or December 31, 2022

—

—

Common stock, par value $0.001; 325,000,000 shares authorized; 4,658,274 shares issued and 4,649,447 shares outstanding at March 31, 2023 and 3,947,101 shares issued and 3,938,274 shares outstanding at December 31, 2022

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.