Orbital Infrastructure (OIGBQ) 16 Nov 222022 Q3 Earnings call transcript

Good morning, everyone, and welcome to the Orbital Infrastructure Group's Third Quarter 2022 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Kevin McGrath, Investor Relations. Please go ahead, sir.

good quarter and XXXX and Infrastructure to Colby, third Group's conference you, morning, welcome everyone, Orbital Thank call. earnings Earlier a this XXXX press issued results. release for morning, its third the Company quarter section available of copy Newsroom Investor website. this is of A in Company's the release under the the Relations

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

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

press certain are website A of call, the section available conference these third earnings during non-GAAP release. our to addition, this will measures. measures we reconciliation our XXXX of make on Investors quarter financial in financial In non-GAAP reference

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

for Thank discuss today you Orbital you, XXXX Good Group's quarter thank joining third Kevin. to and morning, Infrastructure results. us

Before employees manner. want our in serving I employees begin much represent and our for recognized to customers with thank and OIG Each I our of brand the efficient appreciated. very commentary, and safe my our are and quarterly recognize a efforts

our the with third this to developments guidance of disappointed that both of month, we revenue XXXX. and full-year we I were Earlier am EBITDA quarter. guidance Now reducing the for the announced revision. our downward

Renewables segment, much in revision solar contributor the guidance quarter is strategy made milestones in have positioned to specifically primary infrastructure our now the year The year progress in advancing Black our our company was losses and several this the near we future. throughout the the for for Bear downward However, and shortfall on to ongoing believe accomplish project.

Telecommunications Bear in XX% our of progress year. approximately end performance Power this expect segments the year. are completed substantially the this We by the on on have achieved which to we throughout this project, be complete Black Full has we Electric project and overshadowed

EBITDA our were from quarter Revenues our was the and for Renewables segment is adjusted X.X% for million. revenues. continuing quarter losses, negative million, adjusted $XX.X results. $XX.X of third the Without the operations consolidated a Our EBITDA

and and meet XXXX. and quarter the provide expand services the Power to customers million, of maintain, equipment substation from continue to revenues to to was infrastructure. million EBITDA continues expected infrastructure Our specialized perform $X.X Electric provide third Power distribution utility our were for and as Electric resources segment demand upgrade to we increasing investor-owned the $XX.X adjusted as electric skilled

on this on expect power from segment did hardening, of of and Electric We renewables aging In distribution over as of a next to experience a we system. period in deferred fossil grid elevated revenues our infrastructure, customers growth to deploying a CapEx reconfiguration are cybersecurity the profitable quarter, customers the reduction address fuel the grid of record as segment several-week temperatures storm in period and electric Power several due for to the third sources during summer record generation. levels the areas load electric maintenance high critical years

these to in segment generated under Profitable million maintenance Opportunity spectrum infrastructure happen municipalities significant Rural opportunity or growth and come growth that platform, tuck-in from our profitable year. centers. increase revenue and deploy segment be the us allowing to conditions in wireless customers the can defer Telecommunications this and million the XG is the customers and rural expanded in infrastructure population The in Fund, attributed throughout acquired and does at but into this additional segment. momentum and to new to areas, our we in materializing Telecommunication services for three revenues spending geographies. are RDOF Digital in times existing acquisitions segment decision synergies to significantly EBITDA broadened when which will provide customers' and of XG/LTE nation the adjusted lacking $XX.X conditions is meaningful to third unusual, Telecommunications Our for for has with will be quarter large many warrant. $X.X and this capabilities, build years broadband provide

for of EBITDA was Turning to loss Renewables $XX.X Revenues segment. our this and were quarter million year. $XX million of the third adjusted a

the were with losses on Bear associated solar Black the primarily performance project. mentioned, As

mechanical abandon revised strategy EPC this for year civil services utility-scale been Renewables of segment was XXXX. quarter solar reason renewables that to project the deferred pursue performance in as solar, the annual the uncommitted The poor well solar developers guidance We are have construction into on revision fourth a financial in model. making expected to and our as contract subcontractor price progress our fixed primary and opportunities as

expected addition, did in services Eastern from increases Electric our the customer Power In not an for materialize. price distribution U.S. existing

place the equity Electric declined to have work does our margin for believe expectations. us with restructure that consistently that value the solution and Group. Demand future years. strong, This the providers year-end we gives not two Power dynamic ongoing with revenues have we I over more recognize quarter. selective with CFO, Nick result, by balance now our detail call a Renewables our the confidence will Electric and of sheet. prior services profitable Grindstaff, balance turn to to efforts I over our our for structure market the the our capital Orbital's challenges for financial be prudent increased segments have information was underlying a be meeting Orbital Telecommunications conversations on in to restructuring is segment in As capital and toward Infrastructure performance, Nick? Power continues to us it and infrastructure the Despite past coupled guidance. sheet, will provide

Thank adjusted million. revenues you, continuing of operations of million third we an Today, was of $XX.X income million loss quarter the for XXXX. with net $XX.X taxes $XXX.X EBITDA quarterly announced Jim. of Loss from

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

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

loss share. quarter, compares for third $X.XX GAAP per third For from continuing a to share. This quarter XXXX continuing loss the from operations of per was of operations $X.XX the

million our reclassified Gas in our As third Telecommunications quarter of do quarter third million third $X been of the as million in in quarter operations the to in for Black XX-Q. compared million as organic operations compared $XX.X for of quarter was our continuing project. across and segment a and in the of our quarter a $XX.X is second or margin XX.X% sustained in for the Orbital a revenues the $XX.X to XXXX. in million not due for operating XXXX. Bear include XXXX, in year. loss this the compared was increase quarter results results I'm Adjusted million consolidated XXXX. million adjusted results to have and XXXX, of for adjusted discontinued North our the $XX.X with quarter second the revenues in Electric slight are or losses million the In in or Form XXXX. had to compared associated discontinued of and losses providing Power segment primarily from Electric the million which the Power Renewables segments. EBITDA EBITDA a December quarter entity, would sold as quarter growth third third the $X.X EBITDA Without today $X.X $XX.X our Adjusted revenues This last included to the Detailed million EBITDA disclosed of loss of reminder, $X.X revenues are financial decrease of segment EBITDA to of In Renewables of was segment an from The X.X%. quarter adjusted the segment, our all America of from $XX.X operations third XX.X% to loss were acquisitions the

result discussed, a maintenance margin period unfavorable are quarter. Jim primarily deferred the of the in trends of revenue the As and

EBITDA revenues on synergies of through adjusted compared $X.X of The of an in $XX.X Over over in in EBITDA and the from of compared quarter of had in programs tuck-in construction XX.X% to of and of These a XXXX. $XX.X increases revenues million, absorption quarter and to million Telecommunications million segment second as revenues the second costs EBITDA same quarter loss XXXX. or to million of period, area, of primarily revenues the of or Renewables organic loss adjusted $XX increased fixed due $XX.X five-state ramp-up $XX.X growth. adjusted million revenues million million XX.X% RDOF and segment the of the EBITDA adjusted to the $X.X with $X.X are million operational acquisitions

As previously segment. operating the the primary outside disappointing this contributor Black of defined on issues was the Certain to stated, Bear company segments. the project performance holding exist costs for results operational

backlog of X.X% significant Telecommunications the for backlog at these near decrease second quarter Power to as utility by in third from these offset this X.X% in of quarter, costs XX.X% This $XXX.X a million. and increasing third for scale segments end an the is $X.X a contracts was in year. respectively. Electric decrease is Electric segments, Renewables and Power the the we Telecommunications quarters services The X.X% over were increase in in the the and in For EPC of increase segment the of due provide the million Total backlog the indication completion, quarter solar markets. sequential demand backlog XXXX,

continues cash our flow. Substantial on puts talked underway the to have pressure be efforts a debt service sheet. restructure to about We balance factor that the

of is in attractive segments improvement both Continued and performance providers. Telecommunication the and Power our equity to debt Electric

with process believe we provide capital position this more of stages to coming the advanced the multiple providers information in in a in are to We definitive weeks. will be and market the

on in guidance its and contributing primarily to million Turning company segment was a Renewables million uncommitted full-year a range announced XXXX. the to was losses range To the the $XXX to lesser quarter the incurred the deferred lowered range $X for reduction in Also million. in guidance Black guidance $XXX project. due guidance. Bear XXXX. work third the financial EBITDA being an extent, in its to This work of previous $XXX full-year to $XXX million adjusted objectives. company million there meet year its to XXXX was On in lowered its to XXXX, November X, segment to full-year deferred did maintenance range quarter for customer not a reduction that million the Power consolidated million its the and updated for previous The of revenue remainder million the $XX profitability from from of our $XX electric Electric a XXXX to $X of distribution of

is Our follows. segment guidance as

the range to million relates Electric margins in adjusted In million Telecommunications mid-teens. to with Power margin we million for EBITDA adjusted segment EBITDA the $XXX this million excess range will segment, segment, of XXXX it $XX with As revenues $XX our in XX%. of the to we in believe expect be expectations to $XXX between revenues

this the We range full-year anticipate these for of holding million. defined material time. XXXX. million operating $XXX million of costs Finally, losses be estimate Certain Renewables of do not segment's this segment in XXXX, for $XXX costs additional company $XX our the to We anticipate at revenues in exist the outlook for we segments. outside to

I back over Now Jim. to call turn the will

years The have of primarily result in and you, stock poor believe single for sheet will current shift our are profitability these predictable These Renewables significantly will to I the we a Electric Thank in providing a debt positioned believe continue disappointing the growth we price fixed Nick. EPC segments exists and balance and segment, segment. that performed away structure profitable to highly quarter. is construction throughout provide Telecommunications and from our a forward. with attributed services to the that EPC quarter in Coupled to Renewables year, third improve Power the price confident beyond project are in very results solution come. burdensome challenged balance today. the the I'm performance close are that recurring We going sheet expectations segments

that call self-fund Our revised balance our action best believe positive flow now growth, provide us which cash remarks. to business significantly ability Operator, Q&A. momentum our the achieve and we organic model our concludes is will price. open to to sheet restructured improve force and prepared I'll the the stock of in

line from of Stine Instructions] the Your Eric comes first from [Operator Craig-Hallum. question

Your line open. is

and Jim Nick. Hi,

Eric. morning, Good Hey.

Eric. Hi,

Good morning.

in got how the first maybe and to on So I that visibility fourth I by a we'll your are ring-fenced solution have just the about here capital things end guess, year-end, all, structure know year? as the quarter-to-date – But we wrapped challenges EBITDA, be maybe up into the obviously of think of the you've to tuned stay does pretty there and improvement hear of imply by solar guess, step-up I that's kind in meaningful good guidance mean, will quarter, solar, and just but related I confidence trended that.

when has GTS on So XX synergies we significantly on about and threefold up Like be caused two come. around their is for odd-off margins the be are doing opportunities, said to ago. telecom the months these shortfalls about years Electric many run electric Eric, and And bought ramp as three-week after expectations. a call, expect which during from selling to have them gone grown were to we telecom we we will beyond I well. that leverage period. third the up quarter believe rate real on They're Power or back that continue

Solar, as out we experiencing. losses when recognize two the or you as them of you the losses expect projects, so were that EPC provided we ago weeks book. On those are closed

isn't a non-XX number. that So

EPC and close quarter good completion feel into recurring that quarter. nature new So another new project segment about the as we model the feel with streams not the to revenue of to that did the the continuation into of we which we certainly, we and move Telecommunication being feel on next solar, EPC good going And third Electric – our really hopefully like fixed-price pursue won't about. I the in and Power have revenue opportunities, really we business the year,

thing obviously, more then of guess, the shift miss-bid, get maybe first mean, must the And obviously, to all, that or issues. but to, have know, of close or you've making you. I changes operational this don't some past from mean, Got maybe a just trying I EPC, I book executional the solar challenges. changes, made I segment, in you're been away just

people to just color maybe give so So confidence... there some

the you're mean challenges had were I we job. And some I operational on. gate. when of EPC of project projects behind out catch-up challenges happens, we We these was the above. bid it because can't on mode. the mean a all always on it's some competitively the lowest in the had And Look, get that you bidder.

a renewables jobs Bear the through got in mechanical challenge. that's much changes some but to on. The finish under we standpoint, civil contract and is spring one our more confident and So the leadership scope particularly about, risk strategy structures made that we're Black to been pursuing a of we're and these get from new we've better work I'm pursue

project be Happy both both the better. should quarter project, first done – going Happy other be should of by is the done. The much next end by but done But projects year. yes, be the The should

the in pretty does mean still same mean, the work. sometimes then I and tough visibility this much be materially this know And high can last that? of anyways. EPC, you given I does mean away that it's change and very lumpy involvement? given me. is But Okay. level all I Or does role it while change visibility maybe from a have for getting new this at one change the I

think when in not It's visibility have I somewhat. visibility lumpy. telecom. actually improves EPC still you're the pursuing I those – But project, electric and it we think power an very be can

we're Now many provide going to to services providers. different EPC

be That pretty there customers two EPC we better diversity visibility of on the well, be – So the projects can It one of should time. some may be versus lumpiness. lumpy. the work can for at that or a still opportunities and being because

Okay. Thank you.

Thank you, Eric.

Eric. Thanks,

comes from Global. Alliance from Your question of next Campbell Jeffrey line the

line open. is Your

Good morning.

morning, Good Jeff.

Jim, you the the to the model talk old how current renewables current has in it? business of backlog? about legacy first, the And still backlog can relation much in

Yes, that close We're that would construction We needs of actually remaining go will were But be there. our all are the of we on off. and contracts EPC Happy driving. associated projects. Bear right we some some the have mechanical, doing scope still that I opportunities into new hopeful to transacted do legacy that's work, that in primarily would renewables all and to the backlog. now that Renewables quarter Black all is model, this file say with we're burning have Those completed backlog signing opportunities

is us likely mean as a like idea enough. to it lower look like? margins helpful. of That’s better contractor of but chunk going I look just of kind you can might and what high what will Fair revenue, it give level, guidance a as was EPC? margins? to Meaning, compared be levels as wondering, some I revenue Or special prior with

civil you will construct risk. on do taking a single-digit mean because But with be our partner, level more better. I the venture joint margin and in for we you splitting scope margins, of were have risk. XX% expecting some the we you should margins make margins build Typically, shoot contingency mechanical return. high project, typically or when EPC new since you're be But EPC do in for some better work more will were at scope about they the providing under you project projects, we margins better. a that actually Ironically, project our an

model. expected risky would So we're pursuing, this double less what I the in would EPC say the be have close will that to margin strategy we

going Okay. be And model, partner that joint can't implies that that you're not correct? contractor a anything. venture having and going the to special with new forward display Is

That correct. is

ask question And great just you a levels you as little Or less the be as to earlier. are similar but on margins. Should a again we types contractor? a of answer since gave to the discussed revenue likely they special bit lumpy lower expect

trying kind for get of revenue? some Just to feel

the quarter Yes. going want to signed do I February. and call. So we I call get earnings are as few more ramp. build million end color EPC of $XX right to some on could the expect the our you to probably an we end million those up, on it's a which fourth momentum, expected can the our that fourth to some meaningful quarter backlog But comparable provide backlog we're need I build mean of that if have But we're And to to have obviously, provider, to projects by meaningful going of to some would looking $XX expect at we're we at in that what announce now in us in to range. right? do – – on segment

sounds currently? Is projects like running regard Thank to on wondered, just great. Okay. new it bidding the helpful. I you. No, is it that's itself business telecommunications, With any

of trying where I We're growth would not we customers XX% majority, any to needs forward. the satisfy trying built bidding say It's do XX% what relationships, is work. we've meet to current on going to greater negotiated. our actually their all

needs we it's negotiating just their is in we, good going lot customers now, what telecommunication of to do growth not forward. environment So a because continue we most to both of in and We're – with to be bid. a meet power and is do what right partnering electric

expect That's heavy good. the Power in last question been And to Electric season windfall in of we any my we've U.S.? Southeast kind is, that Okay. the the performance hurricane due do experiencing

believe, work did going the hurricane. that we it's so to stated we release, they the on we customers release in had get work we but So in the critical that that non-accruals much are, that nature press the during didn't for, at I

maybe any I windfall. for don't we'll margins. with were So weeks there'll be have good We Obviously, think there some probably non-accruals. two

to be it but will material. going not additive, So it's be

Great. all the and the Thanks it. answers Okay. Appreciate questions. for

you, Thank Jim.

Jim. Thanks,

are now no this the Jim will at O'Neil, turn closing time. call questions remarks. over back to further CEO, There I for

hope the and all we with quarter in you third everybody call today. on Thank following Thank a great you day, We has and goodbye. forward our up future. for to many participating look of you,

This concludes conference call. today's

disconnect. now may You