EX-99.1 2 ex_202145.htm EXHIBIT 99.1 ex_199986.htm

Exhibit 99.1

 

Orbital Energy Group Reports Third Quarter 2020
Financial Results


Reach Construction Group, Orbital Power Services and
Increasing Customer Activity Drive 124% Quarterly Revenue Growth from Continuing Operations

 

HOUSTON, November 16, 2020 -- Orbital Energy Group, Inc. (Nasdaq: OEG) (“Orbital Energy” or the “Company”) today reported unaudited financial results for the three and nine months ended September 30, 2020.

 

Financial and Operating Highlights:

 

 

Reported total revenues of $13.6 million for the third quarter of 2020, compared to $6.1 million for the third quarter of 2019, an increase of 124%, primarily attributable to the addition of Reach Construction Group (“Reach”) and the Company's Orbital Power Services group;

 

 

Gross profit was $2.4 million for the third quarter of 2020, compared to $1.4 million for the third quarter of 2019 with the improvement mainly due to increased revenues; this improvement is expected to persist throughout the remainder of 2020 and into 2021;

 

 

Gross margin was 17.3% for the third quarter of 2020, compared to 23.4% for the third quarter of 2019;

 

 

Operating loss was $6.3 million for the third quarter of 2020, compared to $3.7 million in the prior year period, mainly due to higher SG&A expenses associated with Orbital Power Services and the addition of Reach during the second quarter;

 

 

Held Cash and cash equivalents of $4.1 million and Restricted cash of $3.6 million as of September 30, 2020; and

 

 

Total backlog was $52.0 million at September 30, 2020, up from $46.4 million at June 30, 2020, reflecting backlog growth at both Reach Construction and Orbital Power Services.

 

Commentary

 

“In the third quarter, we continued our evolution into a diversified infrastructure services provider,” said Jim O'Neil, vice chairman and CEO of Orbital Energy. “Our recently acquired solar engineering, procurement, and construction services company, Reach Construction Group, is engaged for multiple, utility scale solar programs starting in the fourth quarter and has a robust pipeline of additional project opportunities. Further, our new Orbital Power Services division, which focuses on electric transmission and distribution services, keeps gaining traction and increasing industry recognition. This resulted in several storm-related projects, which generated additional revenues for us in the third quarter and has extended into the fourth quarter.”

 

Mr. O’Neil added, “As utilities continue to integrate renewable generation into their transmission and distribution systems, we believe it is imperative that infrastructure providers have the technology, expertise and construction resources they need to conduct these multi-faceted projects while adhering to increasing environmental, social and governance (ESG) standards. Looking ahead, we expect customer activity will continue to increase, as conditions improve since the onset of COVID-19 and renewable energy trends drive utilities’ capital investment plans. We believe Orbital Energy Group is well suited to meet these needs, with our ability to offer a diverse service offering for these growing industry demands.”

 

Conference Call

 

Management will host a conference call today, November 16, 2020 at 8:30 AM ET to discuss these results as well as recent corporate developments. After management's opening remarks, there will be a question and answer period. To access the call, please dial (888) 734-0328 and provide conference ID 6598596. For international callers, please dial (678) 894-3054. The live webcast of the conference call and accompanying slide presentation can be accessed through the 'Events & Presentations' page of the Orbital Energy Investor Relations website (www.orbitalenergygroup.com).

 

For those unable to attend the live call, a telephonic replay will be available until December 2, 2020. To access the replay of the call dial (855) 859-2056 or (404) 537-3406 and provide conference ID 6598596. An archived copy of the webcast and slide presentation will also be available on the 'Events & Presentations' page of the Orbital Energy Investor Relations website.

 

 

 

 

 

 

 

About Orbital Energy Group

 

Orbital Energy Group, Inc. (Nasdaq: OEG), formerly known as CUI Global, Inc., is creating a diversified infrastructure services platform through the acquisition and development of innovative companies. Orbital Energy’s group of businesses includes: Orbital Gas Systems, Inc., Orbital Power Services and Orbital Solar Services. Orbital Gas Systems is a 30-year leader in innovative gas solutions, serving the energy, power and processing markets through the design, installation and commissioning of industrial gas sampling, measurement and delivery systems. Orbital Power Services provides engineering, construction, maintenance and emergency response solutions to the power, utilities and midstream markets. Orbital Solar Services provides engineering, procurement and construction (“EPC”) expertise in the renewable energy industry and established relationships with solar developers and panel manufacturers in the utility scale solar market. As a publicly traded company, Orbital Energy is dedicated to maximizing shareholder value. But most important, our commitment to conduct business with a high level of integrity, respect, and philanthropic dedication allows the organization to make a difference in the lives of their customers, employees, investors and global community.

 

For more information please visit: www.orbitalenergygroup.com

 

Important Cautions Regarding Forward Looking Statements

 

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are subject to risks and uncertainties that could cause actual results to vary materially from those projected in the forward-looking statements. The Company may experience significant fluctuations in future operating results due to a number of economic, competitive, and other factors, including, among other things, our reliance on third-party manufacturers and suppliers, government agency budgetary and political constraints, new or increased competition, changes in market demand, and the performance or reliability of our products. These factors and others could cause operating results to vary significantly from those in prior periods, and those projected in forward-looking statements. Additional information regarding these and other factors, which could materially affect the Company and its operations, are included in certain forms the Company has filed with the Securities and Exchange Commission.

 

Investor Relations:
KCSA Strategic Communications
David Hanover
T: 212-896-1220
orbital@kcsa.com  

 

 

 

 

Orbital Energy Group, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

   

September 30,

   

December 31,

 

(in thousands, except share and per share amounts)

 

2020

   

2019

 
                 

Assets:

               

Current Assets:

               

Cash and cash equivalents

  $ 4,060     $ 23,351  

Restricted cash - current

    2,562        

Trade accounts receivable, net of allowance of $63 and $47 at September 30, 2020 and December 31, 2019, respectively

    12,498       5,290  

Inventories

    1,117       1,631  

Contract assets

    6,090       2,314  

Note receivable, current portion

    44        

Prepaid expenses and other current assets

    4,263       2,215  

Assets held for sale - current

    6,482       6,893  

Total current assets

    37,116       41,694  
                 
                 

Property and equipment, less accumulated depreciation of $1,972 and $1,441 at September 30, 2020 and December 31, 2019, respectively

    5,776       4,454  

Investments

    741       4,865  

Right of use assets - Operating leases

    6,990       5,524  

Goodwill

    7,006        

Other intangible assets, net

    14,887       4,298  

Restricted cash

    1,026        

Note receivable

    3,525       3,253  

Deposits and other assets

    1,306       70  

Total assets

  $ 78,373     $ 64,158  
                 

Liabilities and Stockholders' Equity:

               

Current Liabilities:

               

Accounts payable

  $ 16,712     $ 2,904  

Notes payable, current

    3,979       473  

Line of credit

    451        

Operating lease obligations - current portion

    1,704       821  

Accrued expenses

    5,285       5,159  

Contract liabilities

    8,047       1,668  

Liabilities held for sale, current

    3,894       4,970  

Total current liabilities

    40,072       15,995  

Notes payable, less current portion

    7,383        

Operating lease obligations, less current portion

    5,282       4,852  

Contingent consideration

    720        

Other long-term liabilities

    287       194  

Total liabilities

    53,744       21,041  
                 

Commitments and contingencies

               
                 

Stockholders' Equity:

               

Preferred stock, par value $0.001; 10,000,000 shares authorized; no shares issued at September 30, 2020 or December 31, 2019

           

Common stock, par value $0.001; 325,000,000 shares authorized; 30,773,748 shares issued and 30,420,685 shares outstanding at September 30, 2020 and 28,736,436 shares issued and 28,383,373 shares outstanding at December 31, 2019

    31       29  

Additional paid-in capital

    171,344       170,106  

Treasury stock at cost; 353,063 shares held at September 30, 2020 and December 31, 2019

    (413 )     (413 )

Accumulated deficit

    (142,142 )     (122,234 )

Accumulated other comprehensive loss

    (4,191 )     (4,371 )

Total stockholders' equity

    24,629       43,117  

Total liabilities and stockholders' equity

  $ 78,373     $ 64,158  

 

 

 

Orbital Energy Group, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

   

For the Three Months

   

For the Nine Months

 

(in thousands, except share and per share amounts)

 

Ended September 30,

   

Ended September 30,

 
   

2020

   

2019

   

2020

   

2019

 
                                 

Revenues

  $ 13,615     $ 6,073     $ 27,078     $ 17,793  
                                 

Cost of revenues

    11,261       4,652       23,121       13,464  
                                 

Gross profit

    2,354       1,421       3,957       4,329  
                                 

Operating expenses:

                               

Selling, general and administrative expense

    7,179       4,793       21,158       14,092  

Depreciation and amortization

    1,454       365       3,285       1,154  

Research and development

    6       20       51       123  

Provision for bad debt

    15       (18 )     23       110  

Other operating (income) expense

    23       (11 )     23       (13 )
                                 

Total operating expenses

    8,677       5,149       24,540       15,466  
                                 

Continuing loss from operations

    (6,323 )     (3,728 )     (20,583 )     (11,137 )
                                 

Other (expense) income

    860       (461 )     62       (566 )

Interest expense

    (333 )     (4 )     (469 )     (35 )
                                 

Loss from continuing operations before income taxes and equity in net loss of affiliate

    (5,796 )     (4,193 )     (20,990 )     (11,738 )

Net loss of affiliate

          (354 )     (4,806 )     (710 )

Loss from continuing operations before taxes

    (5,796 )     (4,547 )     (25,796 )     (12,448 )
                                 

Income tax benefit

    (61 )     (1,311 )     (3,211 )     (1,765 )
                                 

Loss from continuing operations, net of income taxes

    (5,735 )     (3,236 )     (22,585 )     (10,683 )
                                 

Discontinued operations

                               

Income from operations of discontinued power and electromechanical businesses

    3,403       3,948       3,512       6,236  

Income tax expense

    870       1,024       835       1,133  

Income from discontinued operations, net of income taxes

    2,533       2,924       2,677       5,103  
                                 

Net loss

  $ (3,202 )   $ (312 )   $ (19,908 )   $ (5,580 )
                                 

Basic and diluted weighted average common shares outstanding

    30,430,422       28,691,206       29,761,135       28,636,918  
                                 

Loss from continuing operations per common share - basic and diluted

  $ (0.19 )   $ (0.11 )   $ (0.76 )   $ (0.37 )
                                 

Income from discontinued operations - basic and diluted

  $ 0.08     $ 0.10     $ 0.09     $ 0.18  
                                 

Loss per common share - basic and diluted

  $ (0.11 )   $ (0.01 )   $ (0.67 )   $ (0.19 )

 

 

 

Orbital Energy Group, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

   

For the Nine Months

 

(in thousands)

 

Ended September 30,

 
   

2020

   

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net loss

  $ (19,908 )   $ (5,580 )

Adjustments to reconcile net loss to net cash used in operating activities:

               

Depreciation

    573       645  

Amortization of intangibles

    3,043       1,326  

Amortization of note receivable discount

    (214 )      

Stock issued and stock to be issued for compensation, royalties and services

    12       155  

Non-cash loss on equity method investment in affiliate

    4,806       710  

Non-cash fair value gain on equity method investment purchase

          (629 )

Gain on sale of business

    (14 )     (3,631 )

Provision for bad debt expense

    23       90  

Deferred income taxes

    (1,195 )     (644 )

Inventory reserve

    (185 )     135  

Non-cash unrealized foreign currency losses

    516       614  

Gain on disposal of assets

    23       (13 )

Change in operating assets and liabilities, net of effects of acquisition:

               

Trade accounts receivable

    (3,273 )     1,196  

Inventories

    2,601       (31 )

Contract assets

    (526 )     (891 )

Prepaid expenses and other current assets

    286       362  

Right of use assets - Operating leases

    (1,157 )     743  

Deposits and other assets

    (1,184 )     (248 )

Accounts payable

    351       2,406  

Operating lease liabilities

    1,005       (687 )

Accrued expenses

    1,264       (122 )

Refund liabilities

          (367 )

Contract liabilities

    3,227       246  

NET CASH USED IN OPERATING ACTIVITIES

    (9,926 )     (4,215 )
                 

CASH FLOWS FROM INVESTING ACTIVITIES:

               

Cash paid for acquisition, net of cash received

    (2,981 )      

Purchases of property and equipment

    (1,474 )     (278 )

Cash paid for working capital adjustment on Power group disposition

    (2,804 )      
Sale of discontinued operations, net of cash     (227 )      

Proceeds from sale of property and equipment

    94       14  

Purchase of other intangible assets

    (10 )     (269 )

Purchase of convertible notes receivable

    (260 )      
Purchase of investments     (210 )     (1,615 )

Proceeds from notes receivable

          313  

Proceeds from sale of restricted investment

          400  
Proceeds from electromechanical components business sale           4,696  

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

    (7,872 )     3,261  
                 

CASH FLOWS FROM FINANCING ACTIVITIES:

               

Proceeds from overdraft facility

          6,842  

Payments on overdraft facility

          (8,208 )

Proceeds from line of credit

    100       20,889  

Payments on line of credit

    (99 )     (21,188 )

Payments on financing lease obligations

    (3 )     (3 )

Proceeds from notes payable

    3,864        

Payments on notes payable

    (1,747 )     (88 )

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

    2,115       (1,756 )
                 

Effect of exchange rate changes on cash

    (20 )     (64 )

Net decrease in cash, cash equivalents and restricted cash

    (15,703 )     (2,774 )

Cash, cash equivalents and restricted cash at beginning of period

    23,351       4,502  
                 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

  $ 7,648     $ 1,728  

 

 

 

Reconciliation of Non-GAAP Financial Measures

 

EBITDA, Adjusted EBITDA and Adjusted Net Income (loss) are non-GAAP financial measures and are reconciled in the table below. These non-GAAP financial measures do not represent funds available for management's discretionary use and is not intended to represent cash flow from operations. EBITDA, Adjusted EBITDA and Adjusted Net Income (loss) should not be construed as a substitute for net loss or as a better measure of liquidity than cash flow from operating activities, which is determined in accordance with United States generally accepted accounting principles ("GAAP"). EBITDA, Adjusted EBITDA and Adjusted Net Income (loss) exclude components that are significant in understanding and assessing the company's results of operations and cash flows. In addition, EBITDA, Adjusted EBITDA and Adjusted Net Income (loss) are not terms defined by GAAP and as a result our measure of EBITDA, Adjusted EBITDA and Adjusted Net Income (loss) might not be comparable to similarly titled measures used by other companies. However, EBITDA, Adjusted EBITDA and Adjusted Net Income (loss) are used by management to evaluate, assess and benchmark the company's operational results and the company believes EBITDA, Adjusted EBITDA, and Adjusted Net Income (loss) are relevant and useful information which are often reported and widely used by analysts, investors and other interested parties in the Company's industry. Accordingly, the Company is disclosing this information to permit a more comprehensive analysis of its operating performance, to provide an additional measure of performance and liquidity and to provide additional information with respect to the Company's ability to meet future debt service, capital expenditure and working capital requirements. Adjusted Net Income (loss) eliminates the amortization expenses associated with intangible assets acquired with Orbital Gas Systems Limited, CUI-Canada and Reach Construction as well as non-cash expenses associated with impairments, Gains on sale of businesses, non-cash gains and losses related to the Company's equity method investment in VPS and stock and stock options for compensation, royalties and services during the period.

 

(in thousands)

 

For the Three Months Ended

   

For the Nine Months Ended

 

(Unaudited)

 

September 30,

   

September 30,

 
   

2020

   

2019

   

2020

   

2019

 

EBITDA:

                               

Net loss

  $ (3,202 )   $ (312 )   $ (19,908 )   $ (5,580 )

Plus Interest expense

    333       105       469       309  

Plus: (Benefit) provision for taxes

    809       (287 )     (2,376 )     (632 )

Plus: Depreciation and amortization

    1,581       602       3,616       1,971  

EBITDA

  $ (479 )   $ 108     $ (18,199 )   $ (3,932 )
                                 
                                 

Adjusted EBITDA:

                               
Minus: Gain on disposal of discontinued operation     (14 )     (3,631 )     (14 )     (3,631 )

Plus: Bad debt

    15       (48 )     23       90  

Plus: Stock and stock to be issued for compensation, royalties and services

    5       44       12       155  

Plus: Pretax gain on assets contributed as part of the purchase of VPS

                      (629 )

Plus: Non-cash loss on equity method investment in VPS

          354       4,806       710  

Adjusted EBITDA

  $ (473 )   $ (3,173 )   $ (13,372 )   $ (7,237 )
                                 

Adjusted net income (loss):

                               
                                 

Net loss

  $ (3,202 )   $ (312 )   $ (19,908 )   $ (5,580 )
Minus: Gain on disposal of discontinued operation     (14 )     (3,631 )     (14 )     (3,631 )

Plus: Amortization expense of Orbital, CUI-Canada and Reach Construction acquisition intangibles

    1,316       286       2,872       883  

Plus: Stock and stock to be issued for compensation, royalties and services

    5       44       12       155  

Minus: Pretax gain on assets contributed as part of the purchase of VPS

                      (629 )

Plus: Non-cash loss on equity method investment in VPS

          354       4,806       710  

Adjusted net loss

  $ (1,895 )   $ (3,259 )   $ (12,232 )   $ (8,092 )