Orbital Energy Group, Inc. (OEG) Misses Q2 EPS by 10c, Revenues Miss

Orbital Energy Group, Inc. (NASDAQ: OEG) reported Q2 EPS of ($0.33), $0.10 worse than the analyst estimate of ($0.23). Revenue for the quarter came in at $7.8 million versus the consensus estimate of $11.4 million.

Financial and Operating Highlights:

• Reported total revenues of $7.8 million for the second quarter of 2020, compared to $6.3 million for the second quarter of 2019, an increase of 24%;
• Gross profit was $1.0 million for the second quarter of 2020, compared to $1.7 million for the second quarter of 2019, the decline mainly due to late-stage start-up costs at the Company's Orbital Power Services group and COVID-19 related business impacts; it is expected to improve throughout the remainder of 2020;
• Gross margin was 13.4% for the second quarter of 2020, compared to 27.5% for the second quarter of 2019, respectively;
• Operating loss was $7.2 million for the second quarter of 2020, compared to $3.2 million in the prior year period, mainly due to higher SG&A associated with Orbital Power Services start-up costs and the addition of Reach Construction Group ("Reach") during the quarter;
• Recorded an impairment charge of $3.5 million related to its equity method investment in Virtual Power Systems ("VPS") during the quarter;
• Held Cash and cash equivalents of $4.4 million and Restricted cash of $3.6 million as of June 30, 2020;
• Total backlog was $46.4 million at June 30, 2020, up from $9.5 million at March 31, 2020, reflecting inclusion of Reach contractual backlog and growth of Orbital Power Services;
• Completed the acquisition of Reach, an engineering, procurement and construction ("EPC") company with expertise in the utility scale solar renewable energy industry; and
• Consummated the Company's name change to Orbital Energy Group, Inc., listed for trading under ticker symbol 'OEG' as of May 11, 2020.

Commentary

"We continued our transformation into a diversified energy infrastructure services company during the second quarter despite a challenging global environment," said Jim O'Neil, vice chairman and CEO of Orbital Energy. "Specifically, we finalized our platform acquisition of Reach Construction Group, marking our entry into the rapidly growing solar and renewable energy market. While entering this new industry segment, we also continued to expand our Orbital Gas Systems operations into the field of biomethane and renewable energy production. Simultaneously, we remained focused on developing our new Orbital Power Services division, which provides electric transmission and distribution services. Following the acquisition of Reach and concurrent with these other actions, we implemented our corporate name change to Orbital Energy Group, which we believe reflects our strategic repositioning and progress in becoming an energy services infrastructure provider."

Mr. O'Neil continued, "Towards the end of the quarter, we began to see a resurgence of customer activity, reflecting the reopening of the U.S. and U.K. economies and decreasing impact of COVID-19, as many businesses have quickly adapted to this new environment. As a result, many previously delayed customer projects have started to resume. We are very encouraged by this recent uptick in customer activity, both in our North America and U.K. operations. Despite the near-term difficulties we've faced during this pandemic, we continue to see the long-term benefits from the acquisition of Reach Construction and expect it to add substantial revenues and positive net earnings to Orbital Energy Group. As operating conditions continue to steadily improve, we have the assets in place to capitalize on this momentum and deliver long-term value to our shareholders as we continue to build a diversified energy infrastructure services platform for growth."

For earnings history and earnings-related data on Orbital Energy Group, Inc. (OEG) click here.

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