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Charge Enterprises Reports Second Quarter 2023 Financial Results

  • Gross Profit grew 23% to $7.7 million, compared with the prior year period, driven by increases in the Infrastructure segment
  • Second quarter revenues of $147.6 million; Infrastructure segment revenues increased 18%, compared with the prior year period
  • Infrastructure segment backlog totaled $138.2 million at the close of the second quarter 2023
  • Reaffirms expected positive Adjusted EBITDA in the first quarter 2024
  • Recent acquisition of Greenspeed further solidifies the Company’s focus on establishing itself as a go-to resource for customers needing EV charging support

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

(As Adjusted)(1)

Increase

(Decrease)

2023

 

2022

(As Adjusted)

(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

(As Adjusted)

2023

 

2022

(As Adjusted)

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

)

 

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