Second Quarter 2022 Financial Highlights
- Record second quarter 2022 revenue of $184.2 million, a 41% increase year-over-year
- Second quarter 2022 Telecom segment revenue of $175.2 million, a 48.5% increase
year-over-year
- Telecom adjusted EBITDA margins continue to expand as
expected
- Reported 24-month backlog at the end of Q2 2022 is
$2.3 billion
BLUE
BELL, Pa., Aug. 8, 2022 /PRNewswire/ -- QualTek
Services Inc. ("QualTek" or the "Company") (NASDAQ: QTEK), a
leading turnkey provider of infrastructure services to the North
American 5G wireless, telecom, power grid modernization, and
renewable energy sectors, announced today strong 2022 second
quarter financial results of its subsidiary QualTek HoldCo,
LLC.
Second quarter 2022 revenue was $184.2
million, compared to $130.6
million for the second quarter of 2021, a 41% increase. The
increase in revenue was attributable to significant volume
increases in 5G and Fiber rollouts in the Company's Telecom
segment. Net loss for the second quarter 2022 was $25.6 million compared to $21.8 million for the prior year period. The
increase is largely driven by public company readiness costs, stock
compensation, and costs related to being a public company, which
did not exist in the same quarter prior year. Second quarter 2022
adjusted EBITDA was $10.2 million
compared to $6.4 million, inclusive
of discontinued Canadian operations, for the second quarter of
2021, a 59% increase. Backlog at the end of the second quarter 2022
was $2.3 billion, up from year-end
2021 of $2.1 billion and up from
first quarter 2022 of $2.2 billion.
As previously discussed, the Company will issue updated guidance
after Q3.
Scott Hisey, QualTek's Chief
Executive Officer, said "We continue to experience unprecedented
demand for our services. In this past quarter, we recorded the
highest second quarter revenue in the Company's history, up 41%
year-over-year. It's important to note that 96% of revenue was
generated under Master Service Agreements. This growth, coupled
with our estimated $2.3 billion
backlog, has positioned QualTek to capitalize on what we continue
to believe will be the largest telecommunications 5G and fiber
builds in our nation's history."
Management will hold a conference call to discuss these results
on Tuesday, August 9, 2022, at
9:00 a.m. Eastern Time. The call-in
number for the conference call is 1 (888) 330 – 2454 or 1 (240) 789
- 2714 using passcode 2965812. Additionally, the call will be
broadcast live over the Internet and can be accessed and replayed
through the investor relations section of the Company's website at
qualtekservices.com.
The following tables set forth the financial results for the
periods ended July 2, 2022, and
July 3, 2021:
|
QUALTEK SERVICES
INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(Unaudited - in thousands, except
share and per share information)
|
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
|
|
July 2, 2022
|
|
July 3, 2021
|
|
July 2, 2022
|
|
July 3, 2021
|
|
Revenue
|
|
$
|
184,222
|
|
$
|
130,609
|
|
$
|
332,383
|
|
$
|
249,722
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
|
|
164,180
|
|
|
111,828
|
|
|
296,285
|
|
|
215,339
|
|
General and
administrative
|
|
|
16,637
|
|
|
11,396
|
|
|
38,778
|
|
|
23,923
|
|
Transaction
expenses
|
|
|
1,320
|
|
|
903
|
|
|
10,588
|
|
|
1,452
|
|
Depreciation and
amortization
|
|
|
14,794
|
|
|
13,023
|
|
|
29,560
|
|
|
25,645
|
|
Total costs and expenses
|
|
|
196,931
|
|
|
137,150
|
|
|
375,211
|
|
|
266,359
|
|
Loss from operations
|
|
|
(12,709)
|
|
|
(6,541)
|
|
|
(42,828)
|
|
|
(16,637)
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale/disposal
of property and equipment
|
|
|
145
|
|
|
114
|
|
|
2,060
|
|
|
304
|
|
Interest
expense
|
|
|
(13,085)
|
|
|
(11,227)
|
|
|
(25,428)
|
|
|
(21,138)
|
|
Loss on extinguishment
of convertible notes
|
|
|
—
|
|
|
(2,436)
|
|
|
—
|
|
|
(2,436)
|
|
Total other expense
|
|
|
(12,940)
|
|
|
(13,549)
|
|
|
(23,368)
|
|
|
(23,270)
|
|
Loss from continuing
operations
|
|
|
(25,649)
|
|
|
(20,090)
|
|
|
(66,196)
|
|
|
(39,907)
|
|
Loss from discontinued
operations
|
|
|
—
|
|
|
(1,740)
|
|
|
—
|
|
|
(3,129)
|
|
Net loss
|
|
|
(25,649)
|
|
|
(21,830)
|
|
|
(66,196)
|
|
|
(43,036)
|
|
Less: Net loss attributable to noncontrolling
interests
|
|
|
(13,931)
|
|
|
—
|
|
|
(49,478)
|
|
|
—
|
|
Net loss attributable to QualTek Services
Inc.
|
|
|
(11,718)
|
|
|
(21,830)
|
|
|
(16,718)
|
|
|
(43,036)
|
|
Other comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
|
—
|
|
|
(13)
|
|
|
—
|
|
|
172
|
|
Comprehensive loss
|
|
$
|
(11,718)
|
|
$
|
(21,843)
|
|
$
|
(16,718)
|
|
$
|
(42,864)
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
|
|
Three months ended
|
|
February 14, 2022
|
|
Six months ended
|
|
|
July 2, 2022
|
|
July 3, 2021
|
|
through July 2, 2022
|
|
July 3, 2021
|
|
Net loss per share -
continuing operations - basic
|
|
$
|
(0.48)
|
|
$
|
(1.75)
|
|
$
|
(0.68)
|
|
$
|
(3.52)
|
|
Net loss per share -
continuing operations - diluted
|
|
$
|
(0.50)
|
|
$
|
(1.75)
|
|
$
|
(0.71)
|
|
$
|
(3.52)
|
|
Net loss per share -
discontinued operations - basic and diluted
|
|
$
|
—
|
|
$
|
(0.15)
|
|
$
|
—
|
|
$
|
(0.27)
|
|
Weighted average Class
A common shares outstanding - basic
|
|
|
22,171,350
|
|
|
11,923,941
|
|
|
22,171,350
|
|
|
11,797,013
|
|
Weighted average Class
A common shares outstanding - diluted
|
|
|
—
|
|
|
11,923,941
|
|
|
—
|
|
|
11,797,013
|
|
Weighted average Class
A and B common shares outstanding - diluted
|
|
|
44,998,748
|
|
|
—
|
|
|
44,998,748
|
|
|
—
|
|
QUALTEK SERVICES
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited - in thousands)
|
|
|
|
|
|
|
|
|
|
July 2, 2022
|
|
December 31, 2021
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets
|
|
$
|
266,610
|
|
$
|
226,523
|
|
Property and equipment,
net
|
|
|
54,729
|
|
|
50,682
|
|
Intangible assets,
net
|
|
|
343,052
|
|
|
364,174
|
|
Goodwill
|
|
|
28,943
|
|
|
28,723
|
|
Other long-term
assets
|
|
|
1,775
|
|
|
1,657
|
|
Total assets
|
|
$
|
695,109
|
|
$
|
671,759
|
|
Liabilities and Deficit
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
166,223
|
|
$
|
267,207
|
|
Capital lease
obligations, net of current portion
|
|
|
20,149
|
|
|
19,851
|
|
Long-term debt, net of
current portion and deferred financing fees
|
|
|
515,120
|
|
|
418,813
|
|
Contingent
consideration, net of current portion
|
|
|
22,128
|
|
|
21,457
|
|
Distributions
payable
|
|
|
—
|
|
|
11,409
|
|
Warrant
liabilities
|
|
|
77
|
|
|
—
|
|
Tax Receivable
Agreement liabilities
|
|
|
34,092
|
|
|
—
|
|
Accumulated
deficit
|
|
|
(62,680)
|
|
|
(66,978)
|
|
Total liabilities and deficit
|
|
$
|
695,109
|
|
$
|
671,759
|
|
QUALTEK SERVICES
INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited - in thousands)
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
(in thousands)
|
|
July 2, 2022
|
|
July 3, 2021
|
|
Net cash used in
operating activities from continuing operations
|
|
$
|
(58,733)
|
|
$
|
(12,157)
|
|
Net cash used in
investing activities from continuing operations
|
|
|
(62)
|
|
|
(21,208)
|
|
Net cash provided by
financing activities from continuing operations
|
|
|
57,696
|
|
|
73,262
|
|
Effect of foreign
currency exchange rate (translation) on cash
|
|
|
(310)
|
|
|
(13)
|
|
Net
(decrease) increase in cash
|
|
$
|
(1,423)
|
|
$
|
37,628
|
|
Supplemental
Disclosures and Reconciliation of Non-GAAP
Disclosures
(Unaudited - in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
For The Six Months
Ended
|
|
Revenue:
|
|
July 2, 2022
|
|
July 3, 2021
|
|
July 2, 2022
|
|
July 3, 2021
|
|
Telecom
|
|
$
|
175,173
|
|
$
|
117,959
|
|
$
|
307,837
|
|
$
|
224,439
|
|
Renewables and Recovery
Logistics
|
|
|
9,049
|
|
|
12,650
|
|
|
24,546
|
|
|
25,283
|
|
Total consolidated
revenue
|
|
$
|
184,222
|
|
$
|
130,609
|
|
$
|
332,383
|
|
$
|
249,722
|
Adjusted EBITDA
Adjusted EBITDA represents net loss before the provision for
management fees, transaction expenses, share based compensation,
depreciation and amortization, interest expense, loss on
extinguishment of convertible notes, integration, public company
readiness and close out costs and other items that are included in
net income for the period that the Company does not consider
indicative of its ongoing operating performance and certain unusual
items impacting results in a particular period.
The following table presents our calculation of Adjusted EBITDA
for the three and six months ended July 2,
2022, and July 3, 2021 and
reconciles these measures to our Net loss for the same periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
For The Six Months
Ended
|
|
Adjusted EBITDA Reconciliation:
|
|
July 2, 2022
|
|
July 3, 2021
|
|
July 2, 2022
|
|
July 3, 2021
|
|
Telecom adjusted
EBITDA
|
|
$
|
17,031
|
|
$
|
11,202
|
|
$
|
21,843
|
|
$
|
16,016
|
|
Renewables and Recovery
Logistics adjusted EBITDA
|
|
|
(601)
|
|
|
1,141
|
|
|
4,708
|
|
|
4,019
|
|
Corporate adjusted
EBITDA
|
|
|
(6,276)
|
|
|
(4,720)
|
|
|
(12,366)
|
|
|
(8,649)
|
|
Total adjusted EBITDA
continuing operations
|
|
$
|
10,154
|
|
$
|
7,623
|
|
$
|
14,185
|
|
$
|
11,386
|
|
Total adjusted EBITDA -
discontinuing operations (1)
|
|
|
—
|
|
|
(1,212)
|
|
|
—
|
|
|
(2,075)
|
|
Total adjusted EBITDA
|
|
$
|
10,154
|
|
$
|
6,411
|
|
$
|
14,185
|
|
$
|
9,311
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
fees
|
|
|
—
|
|
|
(124)
|
|
|
(126)
|
|
|
(622)
|
|
Transaction
expenses
|
|
|
(1,320)
|
|
|
(903)
|
|
|
(10,588)
|
|
|
(1,452)
|
|
Share based
compensation
|
|
|
(1,114)
|
|
|
—
|
|
|
(7,825)
|
|
|
—
|
|
Depreciation and
amortization
|
|
|
(14,794)
|
|
|
(13,023)
|
|
|
(29,560)
|
|
|
(25,645)
|
|
Interest
expense
|
|
|
(13,085)
|
|
|
(11,227)
|
|
|
(25,428)
|
|
|
(21,138)
|
|
Loss on extinguishment
of convertible notes
|
|
|
—
|
|
|
(2,436)
|
|
|
—
|
|
|
(2,436)
|
|
Integration, public
company readiness and close out costs
|
|
|
(5,490)
|
|
|
—
|
|
|
(6,854)
|
|
|
—
|
|
Net loss from
continuing operations
|
|
$
|
(25,649)
|
|
$
|
(20,090)
|
|
$
|
(66,196)
|
|
$
|
(39,907)
|
|
Net loss from
discontinued operations
|
|
|
—
|
|
|
(1,740)
|
|
|
—
|
|
|
(3,129)
|
|
Net loss
|
|
$
|
(25,649)
|
|
$
|
(21,830)
|
|
$
|
(66,196)
|
|
$
|
(43,036)
|
|
(1) Represents suspended Canadian
operations within the Telecom segment
|
|
|
|
About QualTek
Founded in 2012, QualTek is a leading technology-driven provider
of infrastructure services to the 5G wireless, telecom, power grid
modernization, and renewable energy sectors across North America. QualTek has a national
footprint with more than 80 operation centers across the U.S. and a
workforce of over 5,000 people. QualTek has established a
nationwide operating network to enable quick responses to customer
demands as well as proprietary technology infrastructure for
advanced reporting and invoicing. The Company reports within two
operating segments: Telecommunications and Renewables and Recovery.
For more information, please visit qualtekservices.com.
Forward Looking Statements
This communication contains forward-looking statements for
purposes of the safe harbor provisions under the United States
Private Securities Litigation Reform Act of 1995, including
statements about the financial condition, results of operations,
earnings outlook and prospects of QualTek. Forward-looking
statements are typically identified by words such as "plan,"
"believe," "expect," "anticipate," "intend," "outlook," "estimate,"
"forecast," "project," "continue," "could," "may," "might,"
"possible," "potential," "predict," "should," "would" and other
similar words and expressions, but the absence of these words does
not mean that a statement is not forward-looking.
The forward-looking statements are based on the current
expectations of the management of QualTek and are inherently
subject to uncertainties and changes in circumstances and their
potential effects and speak only as of the date of such statement.
There can be no assurance that future developments will be those
that have been anticipated. These forward-looking statements
involve a number of risks, uncertainties or other assumptions that
may cause actual results or performance to be materially different
from those expressed or implied by these forward-looking
statements. These risks and uncertainties include, but are not
limited to, those discussed and identified in public filings made
with the SEC by QualTek.
Should one or more of the risks or uncertainties materialize or
should any of the assumptions made by the management of QualTek
prove incorrect, actual results may vary in material respects from
those projected in these forward-looking statements.
All pro forma numbers are used for illustrative purpose only,
are not forecasts and may not reflect actual results.
All subsequent written and oral forward-looking statements
concerning the matters addressed in this communication and
attributable to QualTek or any person acting on its behalf are
expressly qualified in their entirety by the cautionary statements
contained or referred to in this communication. Except to the
extent required by applicable law or regulation, QualTek undertakes
no obligation to update these forward-looking statements to reflect
events or circumstances after the date of this communication to
reflect the occurrence of unanticipated events.
Media Contact:
QualTek IR/Communications
Gianna Lucchesi
PR@qualtekservices.com
(484) 804 - 4585
Use of Non-GAAP Financial Measures
Non-GAAP results are not presentations made in accordance with
U.S. generally accepted accounting principles ("GAAP") and are
presented only as a supplement to our financial statements based on
GAAP. Non-GAAP financial information is provided to enhance the
reader's understanding of our financial performance, but none of
these non-GAAP financial measures are recognized terms under GAAP.
They are not measures of financial condition or liquidity, and
should not be considered as an alternative to profit or loss for
the period determined in accordance with GAAP or operating cash
flows determined in accordance with GAAP. As a result, you should
not consider such measures in isolation from, or as a substitute
for, financial measures or results of operations calculated or
determined in accordance with GAAP.
We use non-GAAP measures in our operational and financial
decision-making. We believe that such measures allow us to focus on
what we deem to be a more reliable indicator of ongoing operating
performance and our ability to generate cash flow from operations
and we also believe that investors may find these non-GAAP
financial measures useful for the same reasons. Non-GAAP measures
are frequently used by securities analysts, investors, and other
interested parties in their evaluation of companies comparable to
us, many of which present non-GAAP measures when reporting their
results. These measures can be useful in evaluating our performance
against our peer companies because we believe the measures provide
users with valuable insight into key components of GAAP financial
disclosures. However, non-GAAP measures have limitations as
analytical tools and because not all companies use identical
calculations, our presentation of non-GAAP financial measures may
not be comparable to other similarly titled measures of other
companies.
Definitions and reconciliations of non-GAAP measures, such as
Adjusted EBITDA, to the most directly comparable GAAP measures are
provided within the schedules attached to this release. Our
presentation of non-GAAP measures should not be construed as an
inference that our future results will be unaffected by any of the
adjusted items, or that any projections and estimates will be
realized in their entirety or at all.
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SOURCE QualTek Services Inc.
