- Revenue increased 19% for the quarter, compared with the prior
year period
- Gross Profit grew 9% to $6.7 million
- Infrastructure segment backlog surpasses $100 million; with
over 20% derived from the Company’s nationwide electric vehicle
charging infrastructure business
- Positive Adjusted EBITDA expected first quarter of 2024
Charge Enterprises, Inc. (Nasdaq: CRGE) (“Charge” or the
“Company”), today reported first quarter 2023 results. For the
quarter, revenues were $193.5 million, compared with $163.0 million
in the first quarter of 2022. Gross profit for the first quarter of
2023 increased to $6.7 million, compared with $6.2 million in the
first quarter of 2022.
“Charge Enterprises delivered strong revenues of $193.5 million,
with organic growth of 19%, with Infrastructure and
Telecommunications growing at 40% and 16%, respectively. Gross
profit increased 9% to $6.7 million, providing the continued
opportunity of reinvesting our own resources for future growth of
our businesses,” said Andrew Fox, Founder, Chairman and CEO. “We
have also achieved significant and strategic milestones as of the
end of the first quarter, in record backlog orders booked of
approximately $107 million, as well as achieving 15% of our initial
stated goal of project engagement with 1,000 major market
dealerships indicating robust growth opportunities for Charge in
the year ahead.”
“The environment supporting electric vehicle (EV) charging
infrastructure has never been stronger. The current political,
economic, and technological climate are all key macro-environmental
drivers fueling the adoption of electric vehicles. The tailwinds
for EV adoption are being driven by mandates by government entities
that are propelling the EV industry forward. Charge is positioned
to drive the execution of infrastructure to support the transition
to EV’s.”
Mr. Fox concluded, "Charge is committed to excellence, execution
of its business plan, and premium service. During the first quarter
we further delivered on Charge’s diversified revenue stream within
all of our business segments. In addition to diversifying our
services to accommodate all industry segments touching the entire
addressable market, Charge’s focus is to continue establishing and
scaling alliances with top automotive dealerships and recently
announced partnerships with companies such as Eaton and Autel
Energy. Building out and continually maintaining the infrastructure
for EV is paramount to electric vehicle adoption, which is the
cornerstone to Charge’s mission of pioneering custom, high quality,
safe and reliable EV charging ecosystems. At Charge, we make it
simple to go electric.”
Selected Financial Information
Three months ended March
31,
2022
$ Increase
% Increase
($ in thousands)
2023
(As Adjusted)
(Decrease)
(Decrease)
Total Revenues
$
193,549
$
162,978
$
30,571
19%
Gross Profit
6,721
6,166
555
9%
Net Income / (Loss)
(9,212)
(10,026)
814
8%
Adjusted EBITDA(1)
$
(2,508)
$
(1,833)
$
(675)
(37%)
(1)
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, “We expect to deliver
positive Adjusted EBITDA in the first quarter of 2024. Our first
quarter performance is a powerful endorsement of our business model
that leverages the foundation in place for continued growth in our
higher margin EV charging infrastructure, broadband and electrical
installation businesses. We look for our Charge Infrastructure (CI)
business to continue to build momentum and traction, while we
pursue opportunities to expand the footprint and capabilities of
our BW Electrical Services (BW), Advanced Network Services (ANS)
and EV Group Holdings (EV Depot) businesses within the
Infrastructure segment.”
Effective January 1, 2023, the Company elected to change its
accounting principle for recognizing stock-based compensation
expense from a graded vesting attribution method to a straight-line
attribution method. The change resulted in the recognition of a
cumulative benefit to stock-based compensation expense of
approximately $18.1 million ($18.0 million, net of tax). The
Company believes the straight-line attribution method is the
predominant method used in its industry, and more accurately
reflects how awards are earned over its employees’ service periods,
and better aligns the Company’s recognition of stock-based
compensation expense with its peers. The effects of the change in
accounting principle have been retrospectively applied to all
periods presented in 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 May 10, 2023. Refer to “Change in
Accounting Principle” in Part I, Item 1, Note 2 – “Summary of
significant accounting policies” for additional information. The
Company will file an 8-K with the SEC today describing the change
in accounting principle. There are no other changes to the
financials within the 8-K.
First Quarter 2023 Financial Results
Revenues for the first quarter of 2023 increased $30.6 million
to $193.5 million, compared with $163.0 million in the first
quarter of 2022. The increase in reported revenues was driven by
higher revenues in both of the Company’s business segments.
- Infrastructure: Revenues increased
$7.9 million to $27.5 million, compared with $19.6 million in the
first quarter of 2022. The increase in reported revenues was due to
an increase in the volume of electrical contracting services,
wireless network projects, and growth in the Company’s EV charging
installation business.
- Telecommunications: Revenues
increased $22.7 million to $166.1 million, compared with $143.4
million in the first quarter of 2022. The increase was driven by
higher voice call volume.
Gross profit for the first quarter of 2023 increased $0.5
million to $6.7 million, compared with $6.2 million in the first
quarter of 2022. The increase in gross profit was primarily driven
by higher revenues, partially offset by lower gross profit in the
Company’s Telecommunications segment due to customer mix.
Consolidated gross margin percentage for the first quarter of
2023 declined slightly versus the prior year period, driven by
margin pressure in both segments, partially offset by increasing
proportion of revenues coming from the Company’s higher margin
Infrastructure segment.
Net loss for the first quarter of 2023 was $9.2 million,
compared with a net loss of $10.0 million in the first quarter of
2022. Expenses after gross margin were primarily related to
continued investments the Company made during the quarter to
support its growth strategy. The largest drivers over the first
quarter of 2022 were:
- $5.9 million in stock-based compensation expense, which
represented a decrease of $1.5 million, primarily due to lower
stock option grants compared with the prior year period;
- $3.3 million in general and administrative expense, which
represented an increase of $0.6 million, attributable to growing
the business;
- $5.4 million in salaries and related benefits, which
represented a $1.2 million increase, driven by incremental
headcount to support the growth of the Company;
- $1.2 million in depreciation and amortization expense, which
represented a $1.0 million amortization increase driven by the
establishment of intangible assets associated with the acquisitions
of ANS, BW and EV Depot; and
- $0.5 million in other income, net, which represented a $2.5
million increase from an expense of $1.9 million in the prior year
period. The increase was primarily driven by a $1.4 million gain
related to a derivative liability and a gain on the sale of
intellectual property of $0.3 million in the current year, and
higher investment income of $0.5 million.
Net loss of $9.2 million in the first quarter of 2023, adjusted
for non-cash and certain one-time items, resulted in an Adjusted
EBITDA loss of $2.5 million, compared with Adjusted EBITDA loss of
$1.8 million in the first quarter of 2022. See the Appendix for
definition and a full reconciliation.
As of March 31, 2023, Charge held $43.0 million in cash, cash
equivalents and marketable securities.
For further details of the Company’s financials, please see
Charge Enterprises’ Form 10-Q to be filed on May 10, 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 first 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 revenue 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 business plans
and strategies of Charge, 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, 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)
As Reported
Three Months Ended March
31,
Increase
% Increase
(in thousands)
2023
2022 (As Adjusted)
(Decrease)
(Decrease)
Revenues:
Infrastructure
$
27,497
$
19,618
$
7,879
40%
Telecommunications
166,052
143,360
22,692
16%
Total revenues
193,549
162,978
30,571
19%
Cost of Sales
186,828
156,812
30,016
19%
Gross profit
6,721
6,166
555
9%
Stock-based compensation
5,902
7,424
(1,522)
(21%)
General and administrative
3,345
2,742
603
22%
Salaries and related benefits
5,418
4,193
1,225
29%
Professional fees
466
1,064
(598)
(56%)
Depreciation and amortization expense
1,210
209
1,001
479%
Income (loss) from operations
(9,620)
(9,466)
(154)
(2%)
Other income (expenses)
518
(1,933)
2,451
127%
Income tax (expense) benefit
(110)
1,373
(1,483)
(108%)
Net income (loss)
$
(9,212)
$
(10,026)
$
814
8%
CHARGE ENTERPRISES,
INC.
SEGMENT RESULTS OF
OPERATIONS
(Unaudited)
Infrastructure
Three Months Ended March
31,
Increase
% Increase
(in thousands)
2023
2022 (As Adjusted)
(Decrease)
(Decrease)
Revenues
$
27,497
$
19,618
$
7,879
40%
Cost of sales
21,473
14,880
6,593
44%
Gross profit
6,024
4,738
1,286
27%
Stock-based compensation
2,410
-
2,410
100%
General and administrative
1,356
888
468
53%
Salaries and related benefits
3,222
1,987
1,235
62%
Professional fees
33
61
(28)
(46%)
Depreciation and amortization expense
1,190
165
1,025
621%
Income (loss) from operations
(2,187)
1,637
(3,824)
(234%)
Other income (expenses)
146
(449)
595
133%
Income tax (expense) benefit
(110)
90
(200)
(222%)
Net income (loss)
$
(2,151)
$
1,278
$
(3,429)
(268%)
Telecommunications
Three Months Ended March
31,
Increase
% Increase
(in thousands)
2023
2022 (As Adjusted)
(Decrease)
(Decrease)
Revenues
$
166,052
$
143,360
$
22,692
16%
Cost of sales
165,355
141,932
23,423
17%
Gross profit
697
1,428
(731)
(51%)
Stock-based compensation
120
-
120
100%
General and administrative
495
513
(18)
(4%)
Salaries and related benefits
182
319
(137)
(43%)
Professional fees
20
25
(5)
(20%)
Depreciation and amortization expense
20
44
(24)
(55%)
Income (loss) from operations
(140)
527
(667)
(127%)
Other income (expenses)
281
(128)
409
320%
Income tax (expense) benefit
-
185
(185)
(100%)
Net income (loss)
$
141
$
584
$
(443)
(76%)
Non-Operating
Corporate
Three Months Ended March
31,
Increase
% Increase
(in thousands)
2023
2022 (As Adjusted)
(Decrease)
(Decrease)
Revenues
$
-
$
-
$
-
-
Cost of sales
-
-
-
-
Gross profit
-
-
-
-
Stock-based compensation
3,372
7,424
(4,052)
(55%)
General and administrative
1,494
1,341
153
11%
Salaries and related benefits
2,014
1,887
127
7%
Professional fees
413
978
(565)
(58%)
Income (loss) from operations
(7,293)
(11,630)
4,337
37%
Other income (expenses)
91
(1,356)
1,447
107%
Income tax (expense) benefit
-
1,098
(1,098)
(100%)
Net income (loss)
$
(7,202)
$
(11,888)
$
4,686
39%
Charge Enterprises,
Inc.
Consolidated Balance
Sheets
(Unaudited)
March 31,
December 31,
In thousands, except share and per share
data
2023
2022 (As Adjusted)
Assets
Current assets
Cash and cash equivalents
$
36,493
$
26,837
Restricted cash
886
886
Accounts receivable net of allowances of $210 in 2023 and $322 in
2022
75,204
72,405
Inventory
159
111
Deposits, prepaids and other current assets
2,258
3,187
Investments in marketable securities
6,548
6,757
Investments in non-marketable securities
236
236
Contract assets
11,009
6,090
Total current assets
132,793
116,509
Property, plant and equipment, net
697
732
Finance lease right-of-use asset
289
341
Operating lease right-of-use asset
3,590
4,028
Non-current assets
248
240
Goodwill
12,672
12,672
Intangible assets, net
32,899
33,932
Total Assets
183,188
168,454
Liabilities and Stockholders'
Equity
Current liabilities
Accounts payable
$
80,571
$
61,644
Accrued liabilities
5,674
11,121
Contract liabilities
18,043
13,741
Derivative liability
339
6,521
Finance lease liability
94
112
Operating lease liability
1,474
1,579
Current portion of long-term debt
25,146
29,180
Total current liabilities
131,341
123,898
Non-current liabilities
Finance lease liability, non-current
126
146
Operating lease liability, non-current
1,903
2,199
Net deferred tax liability
1,288
1,410
Total Liabilities
134,658
127,653
Mezzanine Equity
Series C Preferred Stock (6,226,370 shares
issued and outstanding at March 31, 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 March 31,
2023, and December 31, 2022
-
-
Series E: 3,200,000 shares issued and outstanding at March 31, 2023
-
-
Common stock, $0.0001 par value;
750,000,000 shares authorized 212,849,281 and 206,844,580 issued
and outstanding at March 31, 2023 and December 31, 2022,
respectively
21
20
Additional paid in capital
197,025
179,723
Accumulated other comprehensive income
(loss)
-
-
Accumulated deficit
(165,088)
(155,514)
Total Stockholders' Equity
31,958
24,229
Total Liabilities and Stockholders'
Equity
$
183,188
$
168,454
Charge Enterprises,
Inc.
Consolidated Statement of
Operations
(Unaudited)
Three Months Ended March
31,
In thousands, except per share data
2023
2022 (As Adjusted)
Revenues
$
193,549
$
162,978
Cost of sales
186,828
156,812
Gross profit
6,721
6,166
Operating expenses
Stock-based compensation
5,902
7,424
General and administrative
3,345
2,742
Salaries and related benefits
5,418
4,193
Professional fees
466
1,064
Depreciation and amortization expense
1,210
209
Total operating expenses
16,341
15,632
(Loss) from operations
(9,620)
(9,466)
Other income (expenses):
Income (loss) from investments, net
296
(170)
Change in fair value of derivative
liabilities
1,376
-
Interest expense
(1,538)
(1,765)
Other income (expense), net
391
258
Foreign exchange adjustments
(7)
(256)
Total other income (expenses), net
518
(1,933)
(Loss) before income taxes
(9,102)
(11,399)
Income tax (expense) benefit
(110)
1,373
Net (loss)
$
(9,212)
$
(10,026)
Less: Deemed dividend
-
(3,856)
Less: Preferred dividends
(362)
(267)
Net (loss) available to common
stockholders
$
(9,574)
$
(14,149)
Basic income (loss) per share available to
common stockholders
$
(0.05)
$
(0.08)
Diluted income (loss) per share available
to common stockholders
$
(0.05)
$
(0.08)
Weighted average number of shares
outstanding, basic
207,060
188,409
Weighted average number of shares
outstanding, diluted
207,060
188,409
Charge Enterprises,
Inc.
Consolidated Statement of Cash
Flows
(Unaudited)
Three Months Ended March
31,
2023
2022 (As Adjusted)
In thousands
Cash flows from Operating
Activities:
Net loss
$
(9,212)
$
(10,026)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Amortization
1,033
-
Depreciation
177
209
Stock-based compensation
5,902
7,424
Change in fair value of derivative
liabilities
(1,376)
-
Amortization of debt discount
990
1,030
Loss on foreign currency exchange
7
256
Net loss (gain) from investments
(296)
170
Other expense, net
(288)
(188)
Change in deferred income taxes
(121)
(1,373)
Changes in working capital
requirements:
Accounts receivable
(2,514)
4,207
Inventory
(48)
-
Deposits, prepaids and other current
assets
156
(221)
Other assets / liabilities
141
(129)
Contract assets
(4,919)
(1,773)
Accounts payable
19,044
17,876
Other current liabilities
(2,062)
(521)
Contract liabilities
4,302
(2,225)
Net cash provided by operating
activities
10,916
14,716
Cash flows from Investing
Activities:
Acquisition of property, plant and
equipment
(90)
(35)
Sale of intellectual property
-
128
Purchase of marketable securities
(6,356)
(42,614)
Sale of marketable securities
6,822
28,401
Acquisition of EV Depot
1
(1,231)
Cash acquired in acquisitions
-
104
Net cash provided by (used in) investing
activities
377
(15,247)
Cash flows from Financing
Activities:
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
-
Proceeds from exercise of stock
options
41
-
Draws from revolving line of credit
4,717
3,200
Payments on revolving line of credit
(9,741)
(5,098)
Payment on financing lease
(20)
(27)
Payment of dividends on preferred
stock
(362)
(261)
Net cash (used in) provided by financing
activities
(1,565)
8,659
Effect of foreign exchange rate
changes
(72)
15
Net Increase in Cash and Cash
Equivalents
9,656
8,143
Cash, Cash Equivalents, and Restricted
Cash, Beginning of Period
27,723
18,238
Cash, Cash Equivalents, and Restricted
Cash, End of Period
$
37,379
$
26,381
Cash paid for interest expense
$
485
$
732
Cash paid for income taxes
$
4
$
-
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.
CHARGE ENTERPRISES,
INC.
NON-GAAP
RECONCILIATION
Three months ended March
31,
($ in thousands)
2023
2022 (As Adjusted)
Adjusted
EBITDA:
Net income (loss)
$
(9,212)
(10,026)
Income tax expense (benefit)
110
(1,373)
Interest expense
1,538
1,765
Depreciation & Amortization
1,210
209
EBITDA
(6,354)
(9,425)
Adjustments:
Stock based compensation
5,902
7,424
(Income) loss from investments, net
(296)
170
Change in fair value of derivative
liabilities
(1,376)
-
Other (income) expense, net
(391)
(258)
Foreign exchange adjustments
7
256
Adjusted EBITDA
$
(2,508)
$
(1,833)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230510005163/en/
Investors Christine Cannella
(954) 298-6518 ccannella@charge.enterprises
Christine Petraglia (917) 633-8980
christine@tradigitalir.com
Media: Kristopher Conesa
(305) 975-5934 kconesa@csuitepr.com
Charge Enterprises (NASDAQ:CRGE)
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