OEG - Earnings call transcript Q3 2021 | Orbital Infrastructure Group, Inc.

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Operator

Good day, everyone. And welcome to Orbital Energy Group’s Third Quarter 2021 Conference Call. At this time, 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. to Investor conference Relations. like host, to now Beisler, John would turn over the your I

John Beisler

Relations call. of the Thank available presentation welcome for copy Group’s Events conference of to the operator. its for Orbital this the you, Good Orbital earnings Presentations Energy section and and Energy download third morning, third quarter website. this of quarter on results. press release issued the are a company everyone. Investor XXXX And Earlier page release morning, A XXXX PowerPoint accompanying Group

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

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

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

Jim O’Neil

for this you, Thank John. everyone thank to you morning. joining us And

next announced into Orbital Financial well the I’m begin, and we OEG help XX to Grindstaff Officer Chief Before as infrastructure the and Energy as the We’ve very year. couldn’t team. have Nick is him Dan in has He has will also Nick pleased XXth. very joined this within of experience was out effective Friday, past for tomorrow, transition job years industry, Group He as I done November Ford services me more over has asked his Nick in Dan and a employees of been a competent join OEG. very great become to him. all CFO. a team and tremendous work loyal ethic, anything friends. his tremendous for have job, brings greater

reside services focused a endeavors. scope, important and him third his in is into strong and C-suite is success complexity, to much the Portland that, Dan for location, foundation size remain in continues OEG where in it will continued our future to which With has completely As results increase quarter infrastructure in strategically one Houston. in and of a progress I wish friends platform. family, transforming our reflect he

the based Services results. provider and telecom quarter, Solar second our Orbital experienced our from and IMMCO, we acquisition immediate solar quarter-over-quarter early sector, Orbital a a network from distribution to Power a services. by Power telecommunication is expanded Inc. services. Charter and the XXX% full-service continued TEC, Services Services producing Orbital company Technical cooperatives and major our one in through construction or was year. Gibson utility of electric will product awarded GTS engineering Our scope for Communications design revenue In a of next OEG’s scale or In offerings demand platform acquisition also Mississippi as move project, to investor-owned utilities OPI electric the awards We prepare which of GTS’ of increase due broadband

or establishing a X expectations. the in electric our by market services infrastructure quality presence Tier exceed meet utility We rapidly as customer’s are our providing that contractor safely

the Ida Day Labor to among electric hit days. for Southern access deployed were no distribution food, water, under with seven Hurricane Louisiana OPI and shelter, to first were disaster conditions weekend. adverse several Approximately the that worked or the responders Additionally, over crews

as service the electric Technical expand, Services’ Gibson OEG’s And brand its utility to continued from foundation opportunities in increased the out for market. outlook in We builds project fortitude platform, to radios XX% me job responsibility fiber for existing the team and efforts accomplish electric telecommunication growth power and drilled foundations encouraging services of crew restoring mobilized increase and by leadership affected and a rebuild work, significant are in OEG very Foundation ability aftermath additional speed its the carry the company facilities, proud pier revenues in for you to the upgrade thank of event. our the primarily adding structures third crews heartfelt without providing provider increase its in for of quarter. to transmission safely the to XG amount hurricane any services. safety A the major quarter, a installing a incidents. substations of telecommunications your of Group, primarily capacity your Eclipse activity, and areas cellular and is to XG the due

continuing lesser outdoor in the providing a facilities to largely on indoor large while environments, construct We’re service XG venues in to environment scale. customers predominantly

telecommunication These delays margins of costs Louisiana, project locate conducted in the in the to property, including multiple North design RDOF offices and begin the stage quarter, Virginia, to in announced start upfront construction issues, multi-year RDOF and on hiring jurisdictions Alabama, coupled of we in costs states, overwhelmed a to their due the of with requests broadband state-funded supply staff infrastructure Mississippi. During construction and Carolina, and chain walkout from necessary being program. mobilization secure program permitting four with utility began equipment, of local to quarter. GTS rural to facilitate dates contractors Charter These coupled materials for construction. resulted lack the mobilize previously to the a our and shortage required contracts existing required In awards TEC with

and utilized to to restore resources delays were the services Additionally, damaged Louisiana as infrastructure. Ida aftermath due project of Mississippi Hurricane caused in

XXXX, However, expect engineering, are immediate at a And RDOF with be resulted a in little abate delays. tuck-in in throttle or construction to of RDOF significant beginning positive the resulting project and no supply is cable the news The in increase synergies, quarter. into we and chain television GTS enter in fourth drafting as full IMMCO issues we has design acquisition programs. to

by the over result new Dan? time in this backlog the the and quarter, its both enhance million, OEG scale XXXX, I the the quarter utility to a to call increased IMMCO for more will like but recorded a than and employees quarter. path by profitability. shareholders. fourth towards employees detail, third our expand million leading of to a Dan our IMMCO since I quarter doubled review which solar and quarterly and $XXX profit and for Overall, will works further engineering will and gross first wireless $XXX for will XXX is XXXX profitability more increasing first indicator We cover revenues synergies to which As services, would design financial our for added segments sequentially. new to provide turn in Ford, XXX to additional who In more results than our increasing year-end. XXX stations

Dan Ford

of in The as $XX.X for the GAAP financial Thank a million in addition both quarter review positively profit quarter everyone. you, gross these compared am of Power the CFO in and that million, margins and Orbital and many loss the addition GTS year-over-year XXXX the $XX.X economic good been across growth Total the reflects Jim. improvement for sequential coupled to were great sequential pandemic The Group. the Eclipse to Orbital results in and Nick partnered Group and a XXXX. confident of several OEG Energy the transition. operations. The serving that, Orbital the will in segment Power Foundation compares operating the growth of improved last overall delighted of Power This Gross increase includes with and XXX% third now was Orbital acquisitions IMMCO the GTS million help quarter the morning, of the With recovery also be affected profit $X.X past It’s gross will and quarter I at note Orbital IMMCO the $X.X years, of Nick reflects segments. of for with prior a revenues addition XX% Please COVID-XX Jim, third margins IMMCO July. through and I’m Solar Infrastructure of million. our quarter. a second million third Power the and and quarter to IMMCO, revenues required was reflect third for XXXX. Electric which year-over-year pleasure at improved GTS and and for and improvements gradual $X.X from Gas

the Eclipse to previously the quarter Integrated operations $XX.X Orbital was of cost million to Orbital with and this $X.X to year Power of closing increases due to backlog increase towards $XX.X SARs equity $XX.X million $X.X of $X.X quarter expense in and $X.X in saving startup partially which million, million by quarter million, with for the $X.X decrease by preparation associated quarter for increased and operations and ramp second offset $X.X increase prior third compared million Energy is The the for was loss of ramp was Group, million quarter. and vesting expense $X.X acquired included $X.X of third costs items. operating acquisition activities $X.X and and and in associated quarter Orbital increased the meet Net of to in was decrease loss of up of at million in costs, insurance compared up the Services for million Operating in the million the quarter demands. year For The of related a The IMMCO costs, second million million the Infrastructure is XXXX, based SG&A and $XX.X XXXX. of Solar for for Foundation year-over-year quarter the $XX.X SG&A SG&A GTS GTS the in compared offset the IMMCO previous $X.X Solutions million equity sequential XXXX. second million, SG&A loss million, SGNA at due to quarter Group, mentioned measures payroll segment. the in of Power to

further please For XX-Q to our details, refer filing.

million to in $XX net third cash used $X compared the million Turning trade uses and balance cash increased million by were ended accounts quarter for assets with sheet. in and quarter Increases quarter receivable cash, excluding payable in We QX for primarily accrued expenses million, million. million cash to contract operating in $X.X quarter, associated was the million. $XXX,XXX Cash and equivalents our third $XX.X $X.X the non-cash restricted increased items. compensation XXXX. $X.X of offset the of loss The $X.X increased with of the of activities to of of accounts of

proceeds $XX quarter sold and gross of at to a of $X.XX offering million shares third of the During common stock share of deducting company the commission estimated expenses. company before per its million price XX.X the for XXXX,

remaining have that over growth of preferred that, plans. fund liquidity the will under call Jim. opportunities, the or I’ll turn back million $XXX the successful to with capacity company’s OEG issue growth help acquisitions strategic execution debt will With This SEC. or stock allow to of now registration contribute the to public source including common We to S-X of

Jim O’Neil

stock early acquisition to XXXX, Power of power, service you, commissioning Services, I Orbital of Since the tuck-in of have engineering the will telecommunications Foundation renewable April and completed more we and which ago as Eclipse cooperatives, laid pursue an Gibson market strategic strategy year this service the our testing despite telecommunications with transformation starting EPC providers power, platform revenues to in Orbital platform infrastructure our this telecommunications XXXX of organically an a platform, acquisitions. both provider Last acquisition. built service Technical Inc. and two to renewable to joined two We a Telecom, and to company for the base, in $X increase served invest to COVID our be Moon synergistic the recently began Electric transform natural Solar organically tuck-in setbacks. company the into about we now T&D and from full by opportunities this and foundation markets company, time will GTS service provider electric capabilities, renewable the OEG’s and through to a acquisition and to is serve on electric a platform years Dan. service services a their acquired platform own real acquisitions, is CUI global footprint. IMMCO acquisition, a Once the capitalize is at telecommunications OEG’s Thank geographic markets. extending infrastructure provider utilities, design company the Services, our opportunistic into customer profitable and industrial a utility foundation and complete. strategic Full primarily market. transformation future priority Power municipalities, scale and which Group Orbital to electric and sub solar price gas,

and according grid accounts the all years, key with more have aging to failure of focus system to system of our distribution year, of the synergistic might electric electric acquisitions, and dynamic challenges terms this electricity of coming in result through service its efforts South primarily and revenues approximately distribution are agreements increase in grow old, accommodate the higher dependence our customers. to There services distribution utilities and a as infrastructure in point both half to weather construction its recurring released to components And potentially the infrastructure infrastructure on and second agreements underground Electric platforms will is Carolinas. is during an severe load. of in March the past reliability the master and the predictable require an XXX% in Concurrent is the service fossil electric the level this unprecedented like service electric telecommunication electric in the which far upon life over multi-year country. and interruptions under to organically We for a the transmission it X.X multi-year of nation’s results to our miles infrastructure this upgrades economy robust Texas Society capabilities fuels. the of XX% grid the miles for of aging spans. more with for of spending the XXXX reconfigure by the increasing is then reduces of card comprised XX-year the the additional year, order becomes report nation’s overhead a aging million resources throughout is backlog, years lines, well report of and XX% under and lines tuck-in geographically some are power and come. at electric with and into to you’ll meeting transmission expectancy. Capital American This will to providing in electric expanding and backbone, OPI Civil dependent infrastructure XXXX facing transmission XXX,XXX electrified December future distribution According distribution as their country events. and demand, remain upgrade and which estimated Engineers revenues majority grid is electric century from

with of We the expect experienced year. OPI’s construction pace projects second of information. next construction scale in first Slide Solar solar earnings at provide into of contains two to next start additional that opportunities for projects XXXX X a links of that both the continue will date these on growth month Orbital utility we’ve begin similar presentation our project February this year.

year. awards is revenues utility-scale contribute project robust will next we that anticipate Our construction pipeline and project solar additional

year, impacts. well As financial expected into results was expected to tepid awards where significant major mode result, project solar construction on general construction to the full now compared to this in is in is to going deliver due primarily Solar GTS industry COVID-XX next be to is Orbital a commence and positioned year.

end-to-end full provider service acquisition tuck-in recent GTS solutions further establishes XG as our of a and to wireless of Our Full customers. Moon,

completes full-service upgrade Southeast a opportunities our geographically A testing, services. provide when the with U.S. XG and RF in welcomed Full radios, providing the services GTS deploying the commissioning and up solution future. expand to the customers new forward, a opportunity network Moon is is and can XG in installs required by turn additional Going then XG for

for unprecedented and with see customers market foreseeable future to throughout the continue We opportunities beyond. broadband currently the wireless and experiencing and our believe will we are continue momentum XXXX

expect RDOF in We the awards coming months. future

XXXX provides even provide create That XX% profitability returns. of revenue CAGR additional strategy Bill geographic the to GTS increase Bill our acquiring maximizing build financial several and parts new improve remarks. Senate delivering footprint country and expand effort two-thirds solar make In in Power to Orbital. in unfolding rapidly the on that broadband to power another platform and and are summary, scale we energy. companies The wheelhouse electric, are including prepared as opportunities in areas on the of megatrends in Orbital The renewable expect to by passed includes of concludes opportunities in targets, and of execute capital. on of return synergies, recently our the and $XX XX% front our for to us. for with order in our telecom our three-year expanding the objective we continuing roughly underserved EBITDA telecom This with additional right XX%, us excited meaningful our a and invested access Solar. about originally lines These the shareholder thereby rural more other also capabilities electric meaningful We the into service opportunities House $XX and earmarked as grid, deployment strategic with building and for for Infrastructure planned, figure acquisitions billion of and nation’s billion

Operator, for please to ahead. Now I like open the go would questions. call

Operator

Campbell from Global first Alliance Our Jeffrey with Instructions] Partners. question [Operator comes

Jeffrey Campbell

I Good trails that to Jim. morning. happy Hi, with best to luck And the of in Dan enjoyed really you and working future. first say I wanted and

Dan Ford

Jeff. you, Thank

Jim O’Neil

Jeff. Good morning,

Jeffrey Campbell

Hey, Jim.

quick that’s question. the What’s noted timeline a First in $XXX.X backlog of on Slide million the X?

Jim O’Neil

how burn as year. timeline going to out is far next The as much

Jeffrey Campbell

XX-month a that it? Is Right. of as part a backlog

Jim O’Neil

a a total out art majority which And of five the say year backlog. Yes, that’s other that I to the than would off over work, lays kind that that, period. of three

would about of a So third say I the that’s backlog.

rest say, that’s that? out with agree it backlog. to I over would evenly of the you would Dan, years, So the three And lay but to it be, going would of is five most rest XX-month of

Dan Ford

got in blowing queue I’ve disclosed right that and actually up the it now.

Jeffrey Campbell

look a if Thanks. wonder on solar in the I interest can in Services we’re bottleneck. solar that Yes, which XXXX. reports utility for Slide current the I notices, for seeing particularly surge in utility-scale by the it. impacted against logistical Orbital may and further industry shortages X the could and you division comment you be Solar see component that suggest

color more your wanted I view. on get little to So a

Jim O’Neil

that’s in believe get look, piece secured the to with have throughout pervasive ships I level. for not the There the pervasive, materials outside Yes. necessary last issues record showed mean, cargo X.X that we of in that’s XX pathway on with unloaded, us, project only December. million I are starting were a this for February. a [indiscernible] LA already point. to everywhere. but that was there’s a But some so minutes But the not the solar yet we second good that yes, industry, we’ve project starting that country there a that’s night only certainly were – materials it’s believe which XX for be had are obviously that but containers

those that’s say, of any to and heard on be issues there negotiations another that projects, three but awarded we to going I We to hope supply project not be forward. are in construction. won’t chain any with not have move

supply some However, abatement issues. do see chain I to

is see which I think flow to starting we some to a thing. are good materials the market,

Jeffrey Campbell

Okay, that’s helpful.

Dan Ford

circling $XXX.X to backlog your Jeff, back is the first question, XX-month million.

is next million. then months So $XXX.X for the XX-month X that’s backlog October the and XX

Jeffrey Campbell

provide Jim, great. Power that the that What’s you going acquisition the my rapid great growth to to not? will can understand you. obviously investors TD last that importance one, Thank a And Orbital just organic Okay, and is what help management?

Jim O’Neil

question. gone you got business the platform organically record you’re base process, when use that a acquisition. lot and you just their with slower growing to piece mothership and can organically, bring than span over at you successful They people frankly, just then mean, Because to haven’t acquisitions. the that the backlog Not one takes where Well, mean, pains grow company, the And well when of through that’s And they’ve bandwidth – T&D through can longer more scale opportunities is green I can to rapidly. an done company that track power at quicker and grow it systems the business you trying as to at tuck-in gone business grow look the of both more good the those I when people established company it already a off a the oversight, a management good platform. in you a as that a doing buy you systems the we that organically can job fielding grow Gibson that’s and growing base what time. I that processes the for a largely and up mean, Gibson, significantly. home is we’re through the inefficient. with have has lot has just buy and kind right, same we and see Electric being

Jeffrey Campbell

want that after I lot power next you about that green get could Quebec wondering get to to you’re I’m resistance. really line to definition if want to sign It power this didn’t like continues see you the saying see from And just I’m line you mean it to a is, lot it. front what the When of the acquisition huge that in for final a because resistance one, of completely the high and greatest NV ask what – high-voltage couple one thinking seems I thinking of potential is where you and portion over Massachusetts, like business you’re in power. meant lie. sounds business you of make NECEC And – to example, the that’s here years.

where the Thanks. wondering growth for make this you leave acquisition, most So you I’m I’ll accessible it you and there. feel is as

Jim O’Neil

great a That’s question. Yes.

solar our work. a to the smaller revenue, of substation, recurring there’s transmission think There’s transmission and very almost that the approved construction. that there mentioned again, is and going to focus is – bigger able lot lot And requires on work. contractors awarded being that which recurring significant is a that lot a behaves projects go There’s markets would distribution, to like I be it smaller to nature. be be work the projects of in The it you will electric maintenance cyclicality there. to certain to of to predict uncertainty a

Jeffrey Campbell

the Thanks I appreciate Great. for it. questions.

Jim O’Neil

you, sure. Jeff. Yes, Thank

Operator

with Eric comes question next from Craig-Hallum. Stine Our

Jim O’Neil

Eric. morning, Good

Eric Stine

Good morning, everyone.

Jim O’Neil

Eric, Good morning.

Eric Stine

start full or been have what just telecom limiting to kind with just previous thoughts company out looking your company the of I company had Is be on finding that right Any maybe mean, So just the there? it may on point? that side. this Power prioritizing multiples on plate and the questions or time? the is it obviously with you’ve your it factors is Curious Services the Orbital for. of you type

Jim O’Neil

would evolves thrust the in front would then Well, now, I that think I think and the I we’ll as that headwind be price. stock want balance next of a But to our I will able such our sheet today would we got at our price. balance company us, think are resolve happen lot these us that the be. that that’ll great and right is make of move itself some expect it acquisitions end And we’ve forward of mean, pace look, but stock I year. companies the is to sometime, that limiting at be factor join But sheet program I think say an and of acquisition team, T&D and platform which I as with to our

Eric Stine

is you that mean, that’s a your think Services? that’s event objective, for top Got I kind you. Is XXXX clearly do Power of that –

Jim O’Neil

so. mean, hope I our top priority. I that’s

will are done, a that the So that deal as that can, we’re opportunities get immediate us to try that going try we capitalize to as on. get quickly done ahead of to because of want we to be

And as as that want so can. company scale we bring a to quickly of certainly we in-house

Eric Stine

Yes.

Okay. Maybe just capabilities, of moving mean, of are geographic telecom combination to mean, and that complimentary in with of maybe more sticking both? expansion kind and is just Gibson should I that I the and – expect maybe over thoughts smaller or with a we is is it it something place. IMMCO, that Moon acquisitions theme terms in others, where Full on,

Jim O’Neil

our both And trying you of competition to extremely are It’s as acquisitions And and smaller a going eyes well going the combination significant. in of of less, is lot as a obviously, addition be be customers in differentiate our going from the that to and multiples more they’re the new typically customers. yes, to the pay important. are synergies be to

polar services can suite we to solution the our that of So important. total customers is and extremely provide

and expanded been you working brings have capabilities you like so synergistic. do when very Moon those so and historically that it’s in geographies new IMMCO And buy that Full they also customers with, with

Eric Stine

Got you.

just turning last for Maybe – me, Okay. on one solar. to

venture. I think point or talk how announced And quantify the place recently and of of this lack business Any to your the just Jingoli in means limited because the a forward? You bonding going lot what that that of having about joint way it is maybe capabilities. to is

Jim O’Neil

on right? And bonding if get bond where only then our we to need multiple the business capacity. to a we position so, doing is we’re that that area look, of we’re Well, projects, solar, going to

the we there, with grid. team solutions but provide to the to helpful because it’s need the high very voltage they that’s so and Jingoli also substations And interconnect today can building

And so we have didn’t to that bring solution before. a the customer we can total

bonding important trying time. synergistic limitation a five the very synergistic – solar we were is because it’s very But for So on at that us if been four, one would’ve to us. projects a execute partnership to three,

Eric Stine

Thanks you. a Got lot.

Jim O’Neil

Thank Eric. you,

Operator

O’Neil Jim like questions closing this no further time. for the queue turn at in I’d showing to back to I’m remarks. call

Jim O’Neil

I’d Thank you Alpha meetings you holding all Conference we Dallas. be that Advisors Southwest this to Three Conference remind for Craig-Hallum during today. we IDEAS in week. pair one-on-one operator, participating thank the participating of virtual in you listening of investor in are be will Thursday, the conferences and Part on will we Select a like Tomorrow, and

you And call. of in fourth a look If on when with Bye full results speaking your contact Three a we’ll representative soon. or you to to and great you talk like report Have day would today’s meeting, Craig-Hallum now. many Advisors. you and year we to and please Part with our XXXX quarter forward schedule following-up we March

Operator

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

You may disconnect. now

Orbital Infrastructure (OIGBQ) 15 Nov 212021 Q3 Earnings call transcript