Orbital Infrastructure (OIGBQ) 16 May 222022 Q1 Earnings call transcript

Good day, everyone and welcome to Orbital Energy Group First Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow management's remarks.

As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. Relations. Investor Beisler, John sir. ahead, go Please

its Thank website. the you, Orbital Earlier and to section Orbital release release morning morning A the earnings copy of of under (ph). Group's first the Good this for press Energy a call. available company everyone, quarter quarter XXXX the results. in welcome is issued [Boida] Group first Newsroom XXXX this Relations Energy conference Investor

Nick the and Speaking Chief on highlights Jim are, Today, Executive will Financial as Grindstaff, today's and and management O'Neil, Vice Officer. well Chief and Officer; Chairman developments. financial first call review as recent the results quarter for

service and reliance those changes factors and the the performance from or number periods those XX, could prior others government risks statements and company's Following These in operating forward-looking statements. a such remind that made vary XXXX supply market, solutions of its from Security the those to demand cause to forward-looking answer as products, projected will results everyone services. may Securities on amended. and significant liability the projected cause providers, under like subject company significantly and in to of the and of due in political XXXX Such to actual operating Exchange budgetary and and that as and the results vary The today's contain results remarks to third-party statements competitive integrated in also to factors, agency, experience constraints, the materially new call uncertainties management in forward-looking questions. Act manufacturers, competition, are could I formal COVID future of Act other economic, increased and statements. will would fluctuations certain

Orbital as filed no that, XXXX, statements and on and the respect Chairman Jim with other the Commission. Group assumes change. the which based ahead. XX, With would Vice the of to please information that I These forward-statements to to company to of included and affect Jim, certain forms update turn materially company to O'Neil, operations circumstances CEO information Energy are are over in and these company obligation like available May with factors, its Securities Orbital has Energy. Additional could today, Exchange and go as call

John. you, XXXX us quarter results you and Good to Orbital the morning, for of Thank Energy outlook the thank our today first for rest and year. discuss Group's joining

commentary, employees customers. safe their delivery I Before for much quarterly represent thank our the recognized efficient want our and I OEG Each and of brand the begin appreciated. our very to services with employees are and my to of efforts

the first to developments of quarter. Now the

results serving to strategies. Backlog the to quarter building we towards This renewable reported make with infrastructure electric first a of revenues long-term three we our power; $XXX.X our are start off the growth end and strategy demonstrate the of We this believe progress operating great record continued morning across continue our at industries. the segments: telecommunications; that year quarterly of million, advancement reflects $XX.X was we which million. quarter

our we to based I've shareholder improving OEG importantly, indicator in milestone million for customers. see our since positive opportunities non-GAAP measure the the by of first growth of approach EBITDA, with achieved the driven lines, across solutions significant of steady been adjusted believe $X.X continue the new towards Most spending a progress quarter XXXX. and This is first company We value. of multi-year a service and existing growth with and our

market environment, demand and attributed year. driven services, electric the investor-owned our primarily robust not This delivered customers subside growth to segment in we future. a foreseeable for substation revenues of ongoing Electric for of quarter first in Our which the XX% believe fourth quarter utility increase the XXXX, power to by is our Power compared and will a very the last

and made caused quarter, project inefficiencies And scale was begin it contributing that benefits and expect very an rural XG rollout at by increase outside which Solutions quarter. on will segment many prior previously year Our come. growth XX% Fiber in quarter of awarded upgrades the the Black company place acquisition to is positive first we years Mitigation broadband installation. or a the with delays and and increase in an a to the to significant necessary enhance enhance underperformed the civil the this construction quarter aerial specializing completed enhanced the increased also to the deployments The which with is the strategic CFS persistent infrastructure Charter acquisition the are fiber our well none over due XG, telecommunication in XXXX. of customers. five the as revenues organizational TEC as the solar to on segment Telecommunication were is deployment realizing to included over our this broadband we wireless we and state our to underground spectrum that in renewable contractors end. well include plant of as the program events important CFS in a for other future with Alabama. our to largely our need and our fiber the area, capabilities Coax projects play customers outlook acquisition less in outside of get lastly, for by two in Montgomery, LTE ramp associated an Factors back construction not services RDOF increase also division this as utility America, Telecommunications subsequent project revenues rainfall segment CFS, position as strategic while the track, by this to our believe to LLC is Telecommunication Coax for least changes located In first later Bear during quarter material to plans continued customers. construction on

proven utility scale for we Robert a to overall solar As season in the the joined industry President. Solar solar as position Orbital continue Burns, company professional future success,

Robert I'm financial Orbital enhance that the infrastructure renewable In the confident success GTS’s addition forward. CEO McCracken of breakeven in OSS’s Mike in first greatly of expectations CEO. business basis to quarter addition, consolidated new exceeded OEG XXXX. role for On of and our will current their going expanded Mike roles as a Solar include EBITDA the

outlook of Our remains year unchanged. for the remainder this

renewable rollout to move XG shifting includes storm drive drivers need million XXXX, is an $XX million are telecommunications increasing year smart We for fuel million reconfirming adjusted infrastructure, $XXX electric which include, and of of the will million. which US grid to aging and state outlook the guidance EBITDA to continues changes multi-year centers, challenges electrification, electric reconfiguring exist drivers in power and grid and infrastructure. LTE infrastructure economy of enhancement that full range of revenue the the our services the smart for generation, in of our recent spectrum. to segments towards The the revenue for an nation's $XX the and world, EBITDA electric city costs, a today our spectrum the $XXX sources and range of to and supply vehicles, chain telecommunication electric the from in power the These nations infrastructure, population services of strengthen, and the fossil fuel upgrade XG deployment, the of hardening expand numerous traditional despite

awards, additional it reviewing is revenue solar segment, revenue with will we US viable the fill pipeline are of awards scale and this Our will forecast clients outlook opportunity additional move likely guidance Most still utility towards construction the specifically, we from from renewable outsourcing remains secured we despite panels and and the and construction tariff manufactured receive now. to believe project has abroad. year that headwinds solar and manufacturers panels on chain for potential our uncommitted supply increases

a Gas OEG’s Group week discontinued quick update Now of Systems nZero to sale business, the operations. UK Limited. announced our Limited Orbital gas on we Last

this are pleased concluded and strategy transaction we infrastructure our We milestone have yet achieved another in transition. is

with the Gas hope which We exclusive Orbital US LOI several finalize our months. on for potential are acquirer a next in operations, currently we to our

call the comments our Nick to for XXXX quarter his over Grindstaff, the and will I CFO, Now, our outlook. Nick? turn on

first as record infrastructure continuing toward for on profitability. indicator significant an provider from quarterly the with $XX.X million, Thank an EBITDA this income adjusted is a to was taxes has EBITDA Today strategy services $X.X revenues we company's the million a Loss adjusted XXXX. executing been positive first of as transition since of is are the of of we you, time and move net which our announced significant infrastructure quarter Jim. successfully it operations, is $XX.X million that and milestone we

performance. an EBITDA we stated is the best last of believe we financial indicator adjusted operational quarter, measure as As

continuing from to quarter GAAP release. operations, a to adjusted find EBITDA, as and will measures press reconciliation a You our non-GAAP loss both EBITDA measure of first earnings supplement a

the continuing quarter, $X.XX operations from was first For loss share. per

XX% results continuing Orbital UK our segment quarter the million December and ongoing do not These Gas our results of $X.X in the the demonstrate revenue America quarter. The I’m services. the to first today compared fourth and first North XX-Q. include XX.X% XXXX. of improvement sale. compared the disclosed to positions improved entities. XXX.X%, our our Electric discontinued as results or Power As EBITDA deliver In quarter consolidated Orbital Form or in our Power from from for were from sequentially performance EBITDA company revenues held In operations financial a providing full at in Electric reminder, for the the of increased was our the XXXX. Which of the for distribution XXXX. demand to XXXX, as included quarter is increased and continued and fourth driver assets to results Gas our operations financial quarter discontinued reclassified the much end results primary and operational segment the our quarter first Adjusted operations respectively, were of of for year be Detailed the increased $XX.X revenues adjusted will for million, XXXX of XX% in

XX.X% inefficiency million segment challenges defined Over of the the segment the ramp loss EBITDA Black EBITDA an Bear cost of $X.X adjusted over to to projects. the on $X.X segments. had revenues Renewable operational an in million BP, exist five primarily scale on The RDOF state area. adjusted construction million company inclement programs Lightsource from XXXX revenues. shortfall Telecommunication Certain the of to up $XX.X or holding was Primarily of due weather due The and of with operating outside to quarter $XX.X period margin same utility XXX.X% with of the solar fourth increased of revenues million. XX.X% increase

$X For the first quarter million. these costs were

first from Our a million decrease slight end year-end. total the X.X% of quarter XXXX, the $XXX.X at backlog of was of

we environment $XXX.X as are operating X.X% we fourth an of contract in renewals. million to increased service due burn timing of to robust backlog is the agreement quarter which fluctuate revenue believe can XX-month the business today indicator backlog in of master However, total the versus XXXX, multi-year

to has our focus that are require coupons significant impact in One principal sheet. the acquisition, months. structure have to of debt to structure optimize capital debt our while few tranches capital next to regard we cash negative a material our debt and fund tranches utmost to our We on through ability The priority strategic continue debt our this interest of organically company's to payments. These of value. Improving priorities of and have is structure high ensure growth, balance is our shareholder of aspect with XX tranches both of XX currently flow. a maximizing on and due the this top of

paid $XX the been been $XX XX, the has to to recently year-end will transaction, Our signal remaining by successful in frontline to we recently notes. reached the lenders. I'm restructuring the power reviewing remaining to performance the May the been from million XXXX quarter, performance million $XX to refinance multiple sellers with are sheets, the operational Subsequent capital markets confident of million be will and these $XX with of obligations. million a currently and debt we is with we have which be strong $XX submitted XXXX. announced proceeds equity an seller improving million agreement extended at financial term the has continued paid

quarter until agreement for This XXXX mark-to-market was and until part up portion to mark-to-market power to lock of the a of is November acquisition XX, common $XX.X XXXX. are seller's subject based price XX% As The XX, XX.X lock accounting until line subject part for are price accounting. of floor XX% non-cash the every stock the defer consideration. as front of sellers such, expires. agreement the note, the stock million up OEG the to the cost require shares a shares quarter. adjustment to subject upon November lock-up will as $X a was share established per million an of And incurred period

expect for Jim as guidance, XXXX. to strong Turning remainder commented, growth adjusted EBITDA of revenue the we and

range This for reflects of of we for such, to X%, and an full the reconfirm million a adjusted XXXX guidance, improvement $XX million year then our of million in $XX million. range full $XXX of compared $XX.X EBITDA As to year-over-year EBITDA consolidated an of the revenue XXXX, and midpoint adjusted revenue growth year guidance. to million our $XXX

Our segment guidance remains unchanged. also

As this $XX range $XXX for million, our segment expect EBITDA XX%. Telecommunication in the is million adjusted to realize segment, might between in we we believe mid-teens. it to range margin to Any Power with we storm [Technical the in the XXXX EBITDA margins in XXXX not revenues Electric guidance. expectations will Difficulty] with revenues relates this in adjusted included $XXX and In segment, excess million be revenues of

Renewable in of digit. we million with EBITDA $XXX Finally, the full to XXXX, in margins anticipate range of adjusted segment million, the for in year segment, the our mid-single for $XXX this revenues

[indiscernible] a Solar will provides solar market generated cost scale with holding the and will the operating engineering, venture XXX% for of to for Orbital profile participation, company Orbital absorb through Jingoli exists the defined utility of lower where project Solar consolidate As segments. costs margin outside Power, revenues its construction contributes segment. the which reminder, joint to solutions procurement Certain a in their

$XX these XXXX. million costs continue We to be estimate to for

non-GAAP EBITDA it measures fourth a our as in XXXX. our a press from loss quarter will both You of to adjusted release and operations, to measure EBITDA, as continuing to reconciliation GAAP a supplement find earnings expectations relates

to Now Jim. over I will turn the back call

improving Successful a current Nick. XX challenges. strategy of very is Energy top challenges. price In infrastructure our I’m remedy and execution capital the our as structure and stock results of Thank for financial Group delivering much you, Orbital conclusion, these best shareholder addressing aware

we end markets growth services. positioned drivers. believe history We industries We in currently robust and need time we're the serve in the most our are in the very with for the multi-year prolific of

We with execute call that expectations. our financial strategy the and on concludes to the now remarks, our of will Q&A. infrastructure achieving to Operator, prepared XXXX continue goal we'll our open

Thank Global. you, Your sir. [Operator Alliance is question from Jeffrey Campbell Instructions] first of

Your line open. is

Good morning, and congratulations on the strong quarter.

Thank Good you. morning, Jeff.

largely I the options else? I also about negative the in if dropped the cash was Gas I in sale something noticed related wondered that quarter, Orbital XX% SG&A statement. and just to stock saw illustrated or the flow this

G&A No. Hey, is stock time Jeff, we some -- charges just one this with is Nick. that some associated We through had as a had -- comp credits G&A credits. on side, the associated some reflected

expand assume the alters then bit be solar your it mentioned thank year? guidance, delay Okay, little XXXX expected project are you [indiscernible] delays you to of you. Can safe the the on this the morning. over up is a made to rest

those with look, and mean, completion I projects make dates Yeah. dates. to plan firm have these on we we completion

up opinion, make weather, civil most on job impact I what's and can any the hate talk project. obviously but my of aspect happened. piece, is will we to The time especially, Bear in weather yes, that's about So risky the Black production

we're we're in several through phase our project, project. that So this it schedule working I'm still on on confident of we'll the get and back way

mind, XXXX. Okay. update the And for can bearing that you maybe the cadence revenue rest in of Nick, all

I think ramp ramps higher obviously, third before, we've mean, period. be, -- would The the our cadence this revenue. quarter that And in is I revenue we about revenue expect talked

an first fourth lower. they The probably third is quarter alternate -- can second and the and and and take were second a

the delayed with quarter third from to bigger in standpoint, have quarter of obviously the revenues probably the project. Black second of conducive revenue those revenues expect third dates Bear a the we'll and we of and recognition solar with and on nature quarters mind ramp some second the in in in being So the because completion revenues

Right, that's you. helpful. Thank

contracting. Washington I the could heard high-line. about a And just you while. recent broadband in read has haven't billion that for $XXX to We with division to specifically released further infrastructure of acquisition new projects lead GTS the spending mentioned any

little would level helpful. color maybe So high I a here thought be

towards our be infrastructure acquisition funding the small doing. in And strategic worked federal customers. Look, And additive any that Tier into past, to still takes play a what None any early the than year. positioning it next with to into -- in RDOF It's on we Yeah. basically in going federal to in of us company who projects just to and probably RDOF customers geographical any for and stages the supplier to or we're GTS positions next would customers footprint. allowed a new it to of guidance effect expand year become call very other services that of the these out are that's but the we so we're X that us the over was what its funding having the has, they the to our further end was further two awards. access acquisition expand

And likely on this the hard point, could work entirely. be more would off that is -- different or a work be warrant expanded to

It’s the have as I but the with of also these rollout as XG received award, LTE legacy all of they above. RDOF mean well have XG. systems the enhancement, customers

provide those which And roll are capabilities opportunity these plant customers out significant us outside worked that once upside company they’ve these so programs. with before proven this construction for their brings customers and for

expand additional high through MSAs? level this sort I Orbital continue that is Texas, of whereas might Might to well Frontline largely of so Frontline of operating you of operations helpful. be sense outside view Frontline forward? wondering Orbital Power Just now provide this former your Meaning, an how if grow under been some business, would to is finally, wondered Power start Texas? And Power construction leadership. outside organic based power Texas look could as going of Orbital develop

to mean, look all objective our I base. of yeah, for the segments our build is client

the grow is to we with First, of have them. the care and objective clients take

Secondly would be to, expand with new customers.

the the opportunity market about we think the right and Orbital before grow to obviously necessary there I in Power to you really expand. -- margins But very is that significant bring well new sure to footprint that people making it's is legacy Group to to the now key is with customers, this as robust equipment enhance right the business. grow too on

both the certainly of we and margins the new that over provide synergies, existing practice So best broader and the is collectively clients. to I benefit Frontline power enhance solutions transfer being leadership segment think could electric to

going we're So to profitability the of objective part our very is the -- right need be about growing and primary strategic now. thoughtful the business, non-union we

Got it.

Okay. appreciate you. it. Thank I

question Our your next Eric of is Stine from Craig-Hallum.

Your line is open.

and Jim Hi, Nick.

Eric. morning, good Hey,

Good morning.

Good morning.

the thinking outlook here that visibility obviously, I’m So good XXXX, and you've for with just got, power very electric about telecom. backlog for

the of So just narrow is EBITDA range, going to solar curious, mean, given kind that's high-end low drive piece of guide. I end obviously, versus the

confirm, you -- Just about and then curious, business on XXXX just you wins again more in do that happy need to levels? additional for hit reach need completing the timeline potentially Bear? is this additional Or just solar those do to Black getting back

going make even guidance solar. right Telecommunications. wouldn’t it, that think have revenue guidance and win which happen in the times awards shortfall on we think now. more But see again I that to confidence we that this put a but as Electric that portfolio certainly the going significant have may year if opportunities solar more were move groups to one in construction. to play, the five that it the will If didn't four we're make they happen additional percentage our hit guidance -- that those with and we're through revenue So and guidance margins we two the And or EBITDA consolidated of of that Power because would than the this revenue includes solar do because without in be didn't

make in had And that's and much $XXX Power for up it it's mean, right? incremental up. to doesn't growth so million make bottom $X line, in Electric And in that. very solar, shortfall take I million the we to little to telecom

be So that the would worst-case scenario.

guidance have revenue we if in on did EBITDA is solar much very think I that in play, the even shortfalls side. the

Yeah.

those know of I'll Okay, it customer bit be of large capabilities Frontline previous a a to, states, Texas. the may understood. reach customers, it front this that other mean That's other other now a customers? on regions, But umbrella differently things large In I guess, line I something I and great. questions, -- a is the Orbital focused I that here. you or that exposed lot Frontline is in is clarify expand little just under to ask very maybe handful or in think, can

that groups without have their So or focus great made into a we with needs. look, that's consolidating on electric conscious in power segment, decision the we've us the question those and a hand to and customers

all We for the calls will proof. get time

And work get is I investor on how now. the prolific so mean, we any time. for the now. calls South all to could market right the that's right go across that’s We utility

key Our that with. have concentration a have and relationship legacy focus of a is now the we and care to with grow take with customers

So not it distribution worried but if we be another about concentration, pivot worried electric we to, if in I'm it problem. and move a could did, because happen, had immediately which concentration wouldn't if customer won’t growth about to people

you. Got

have plenty go you to there. of So room

other that just really are focus acquisition in mentioned I but other you’d can I here of platform cap to that as is just on you of going think in. structures you this any you've do level. areas? you about then utmost Or there fill you the process? believe spots mean, now a making know, maybe feel mean need that got and continue is some Okay, and you I like small the obviously high the your you mean telecom. there I the I think you are forward, mean, platform do here, --

gives highly to interested our That's areas. markets platform new for what into where recurring confidence not a model want and fragmented. we There outlook our and opportunity business. place. in our markets customers in is and service have we've is. expanding investors’ any significant We're grow are certain predictable We revenue us it multi-year Power The agreements that Telecommunication We there. in Electric the sign focus got build with certainty to and

going see and want fluctuation XX% build. to and that's we our revenue little strong margins, have not our revenues what very some going be you're At business to steady want we that to a revenues. be continue of point You're XX% solar to and margins growth in to of and

Got it. Thanks a lot.

Thank We you, Eric. Yeah. it. appreciate

you. Thank

No like over turn more would questions. And O'Neil the call back Jim closing for to to I remarks.

Well, thank a you all you certainly for very and joining have look Thank our conference first quarter time great today. with morning days. many and call this day. XXXX to your coming up in earnings forward We following you calls much of appreciate the

Thank participating. you This concludes call. conference today's for

You may now disconnect.