Charge Enterprises Inc (CRGEQ)

[Picktool]

$CRGE 3rd Qtr Fins are out

* Reported Revenues Increased 59% to $185.9 Million
* Reported Gross Profit Increased 77% to $6.9 Million
* Wins in High-Demand Markets and Leveraging of Subsidiary Capabilities Driving Growth

NEW YORK, NY / ACCESSWIRE / November 14, 2022 / Charge Enterprises, Inc. (Nasdaq:CRGE) ("Charge" or the "Company"), today reported third quarter 2022 revenues of $185.9 million, compared with $117.0 million in the third quarter of 2021. Gross profit for the third quarter of 2022 increased to $6.9 million, compared with $3.9 million in the third quarter of 2021.

"Progress and strategic execution in our business segments are increasing as we move through the year, driving solid revenue and gross profit growth in the third quarter," stated Andrew Fox, Founder, Chairman, and Chief Executive Officer. "As our gross profit expands, we have and intend to continue to reinvest in future growth, securing the people and processes necessary to extend our reach and refine our management capabilities and best-in-class service offering while being mindful of expense control."

Fox pointed to significant progress by Charge's segments during the third quarter, including:

Auto Dealership Sector Inroads. Automakers are rolling out electric vehicle ("EV") programs and detailing to dealers' minimum investment expectations that include onsite EV charging systems; estimates range by manufacturer, with some investment expectations reaching $1.2 million for high-volume retailers. These announcements and the urgency created by the automakers represents a significant opportunity for Charge, as the EV charging stations comprise most of the required dealer investment in these programs.
Monitoring Operations Expansion. Advanced Network Services ("ANS") was awarded five contracts across five states to implement its Network Operations Center ("NOC") monitoring, which is driving growth in monthly recurring revenue ("MRR").
Infrastructure segment revenue for the first nine months of 2022 was $71.8 million. Business developments during the quarter, along with Charge's ongoing client relationships have contributed to a current overall Infrastructure segment backlog, or signed customer contracts, of approximately $90 million.

Mr. Fox said, "We remain focused and disciplined on aggressively cultivating new customer relationships, pursuing additional opportunities to drive future growth, and hiring, training and retaining talented team members with an emphasis on skill and safety."

Powerful trends are propelling the business, mitigating the impact of macro-economic pressures. Development and demand in Charge's addressable market are being driven by the Federal Government's approval of the Electric Vehicle Infrastructure Deployment Plan, as well as mandates in California and New York for all new vehicle zero-emission purchases in 2035. Similarly, demand for cell towers and electrical and power engineering services is robust as the nation invests in grid infrastructure and capabilities for increased data speed, bandwidth and efficiency."

Fox concluded, "Charge is expanding wallet share with large, high-value telecom and mobile operators and providing our growing base of target customers in emerging, rapid-growth markets with the guidance necessary to inform their decisions regarding custom end-to-end infrastructure solutions. We are positioning Charge Enterprises to be their trusted provider at the crossover of next-generation broadband and EV charging infrastructure."

Reported financial results include operations from the date of acquisition: ANS acquired on May 21, 2021; BW acquired on December 27, 2021; and EV Group Holdings ("EV Depot") acquired on January 14, 2022. Due to the timing of certain acquisitions, current quarter results are not necessarily comparable to the prior periods.

Proforma financial results include: the full three and nine months periods for all of the Company's operations, including acquisitions, for 2021 and 2022 as if they happened on the first day of the respective period. Management believes that presenting proforma results is important to understanding the Company's financial performance and provides better analysis of trends in the Company's underlying businesses as it allows for comparability to prior period results.

Reported revenues for the third quarter of 2022 increased $68.9 million to $185.9 million, and proforma revenues increased $61.2 million to $185.9 million, compared with the third quarter of 2021. The increase in reported and proforma revenues was driven by higher revenues in both of the Company's business segments.

Telecommunications: Reported revenues and proforma revenues increased $52.0 million, compared with the third quarter of 2021. The increase was driven by higher wholesale traffic volume.
Infrastructure: Reported revenues increased $16.9 million, and proforma revenues increased $9.2 million, compared with the third quarter of 2021. The more than doubling in reported revenues was due to the Company's acquisitions of BW and EV Depot and organic growth in ANS and the Company's EV charging business. The 52% increase in proforma revenues demonstrates the continued success of the Company's strategy to drive organic growth across the Company's Infrastructure business.

Reported gross profit for the third quarter of 2022 increased $3.0 million to $6.9 million, and proforma gross profit increased $0.7 million to $6.9 million, compared with the third quarter of 2021. The increase in reported and proforma gross profit was primarily driven by higher revenues, partially offset by lower gross profit in the Company's Telecommunications segment due to customer mix. Reported gross margin percentage for the third quarter of 2022 increased, compared with the third quarter of 2021, due to higher revenues in the Infrastructure segment. Proforma gross margin percentage decreased year-over-year due to the mix of revenues among the businesses, labor and cost inflation within the Infrastructure segment, and a decline in margin in the Telecommunications segment.

Reported net income for the third quarter of 2022 was $14.4 million, compared with a net loss of $25.2 million in the third quarter of 2021.Proforma net income was $14.4 million, compared with a net loss of $23.8 million in the third quarter of 2021. On a reported basis, the increase in net income was driven by the increase in gross profit and a non-cash mark-to-market derivative gain, offset by continued investments the Company is making in its people and processes to support Charge's growth strategy. The largest drivers over the prior year period were:

$7.8 million in stock-based compensation expense, which represented a modest $0.3 million increase. Sequentially stock-based compensation has declined in recent quarters, due to lower option grants in 2022, compared with 2021;
$3.5 million in general and administrative expense, which represented a $1.6 million increase, due to costs associated with the Company's uplist to the Nasdaq and higher marketing expense related to growing the business;
$4.4 million in salaries and related benefits, which represented a $1.8 million increase, driven by incremental headcount to support the corporate organization and the growth of the Infrastructure segment; and
$24.2 million in other (income) expense, net, which represented a $43.3 million increase in income. Included in the increase is a $28.7 million mark-to-market gain related to a derivative liability, partially offset by a $2.7 million loss on contingent liability related to a previously announced acquisition. Third quarter 2021 results included an $18.1 million impairment charge. Items reported in other (income) expense, net, are not related to Charge's core business operations and therefore are excluded from Adjusted EBITDA.

The reported net income of $14.4 million in the third quarter of 2022, adjusted for non-cash and certain one-time items, resulted in an Adjusted EBITDA loss of $1.7 million, compared with an Adjusted EBITDA loss of $1.0 million in the third quarter of 2021. See the Appendix for a full reconciliation.

As of September 30, 2022, Charge held $42.6 million in cash, cash equivalents and marketable securities.

Charge's CFO Leah Schweller commented, "Our third quarter performance was strong, and we delivered operating profitability in each of our business segments, despite a challenging macroeconomic environment, as our strategy capitalizes on tailwinds in both next-generation broadband and EV charging infrastructure and we prudently invest in expanding our foundation for growth.

"To extend our record of gross profit growth, we are planning projects carefully, ensuring we remain at full capacity to drive efficiencies, absorb near-term external inflationary pressures while staying nimble and opportunistic in order to expand our customer base and grow organically with existing customers. Charge is purposely structured to utilize our lower-margin, positive cash flow Telecommunications business to support our faster-growing Infrastructure segment. For the rest of the year, we remain focused on continued consistent execution, expanding our maintenance, monitoring and NOC services and managing expenses to maximize gross profit delivery."

For further details of the Company's financials, please see Charge Enterprises' Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed with the Securities and Exchange Commission on November 14, 2022 and available on Charge's website Charge | SEC Filings. Financial statements prior to December 31, 2021 were filed with the OTC Markets.

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