Form 8-K Orbital Energy Group, For: May 16

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Revenues of $70.3 million, compared to $41.0 million in the prior quarter and $5.6 million for the first quarter of 2021;

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Gross profit of $11.6 million compared to a gross loss of $2.5 million in the first quarter of 2021;

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Operating loss of $1.8 million, an improvement of $13.8 million from the first quarter of 2021;

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Loss from continuing operations, net of income taxes of $36.7 million, including a non-cash charge of $26.0 million. Excluding this charge, loss from continuing operations would have been $10.4 million, a $5.3 million improvement from the prior quarter and a $5.9 million improvement from the first quarter of 2021;

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Adjusted EBITDA from continuing operations was a positive $3.8 million compared to a loss of $1.2 million in the prior quarter and a loss of $9.6 million in the first quarter of 2021;

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Backlog of $513.5 million as of March 31, 2022, with $294.6 million expected to be recognized in the next twelve months.

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Named Robert Burns as President of Orbital Solar Services

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Extended maturity on portion of seller notes to December 31, 2022

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Completed a registered direct offering of $21 million;

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Completed the sale of Orbital Gas Systems Ltd.

Reconciliation of Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA from Continuing Operations for the Three Months Ended March 31, 2022 and 2021

The following table presents reconciliations of the non-GAAP financial measures of EBITDA and Adjusted EBITDA from continuing operations to loss from continuing operations, net of taxes for the three months ended March 31, 2022 and 2021. These reconciliations are intended to provide useful information to investors and analysts as they evaluate the Company's performance. EBITDA from continuing operations is defined as loss from continuing operations before interest, taxes, depreciation and amortization, and Adjusted EBITDA from continuing operations is defined as EBITDA from continuing operations adjusted for certain other items as described below. We believe that the exclusion of these items from loss from continuing operations enables management and investors to more effectively evaluate the Company's operations period over period and to identify operating trends that might not be apparent when including the excluded items. However, these measures should not be considered as an alternative to loss from continuing operations or other measures of performance that are derived in accordance with GAAP. As to certain of the items below, (i) stock-based compensation and expense may vary from period to period due to fair value adjustments from changes in market conditions, forfeiture rates, accelerated vesting and amounts granted; (ii) acquisition costs vary from period to period depending on the Company's level of acquisition activity; (iii) gains and losses loss on disposal of assets varies from period to period depending on operational wear and tear and condition of the Company's fixed assets; (iv) gains and losses on extinguishment and modification of debt varies from period to period depending on changes in the Company's financing activities and the exercise of certain debt-to-equity conversion features; and (v) fair value adjustments to equity-linked financial instrument liabilities varies from period to period depending on changes in the market price of Orbital Energy's common stock and certain assumptions used in fair valuation calculations. Because EBITDA and adjusted EBITDA from continuing operations, as defined, exclude some, but not all, items that affect loss from continuing operations, such measures may not be comparable to similarly titled measures of other companies. The most comparable GAAP financial measure, loss from continuing operations, net of income taxes and information reconciling the GAAP and non-GAAP financial measures, are included below. See notes to follow:

(a)

The calculations of EBITDA and Adjusted EBITDA from continuing operations for the three months ended March 31, 2021 have been amended to conform to the current period calculations of EBITDA and Adjusted EBITDA from continuing operations.

(b)

The amounts include non-cash expenses recognized from the vesting of stock-based compensation awards issued to employees, executives, directors and consultants for services provided, net of forfeitures. The amount for the three-month period ended March 31, 2021 includes non-cash expenses recognized from modifications to executive stock appreciation rights (SARS) compensation awards that were exchanged for restricted stock units (RSUs).

(c)

The amounts for the three months ended March 31, 2022 includes certain acquisition-related costs incurred for the acquisition of Coax Fiber Solutions, Inc.

(d)

The amounts relate to net gains or losses recognized on the disposal of the Company’s assets.

(e)

The amounts for the three months ended March 31, 2022 include the net gains and losses recognized for the modification of seller financed notes payable issued for the acquisition of Front Line Power Construction, LLC and the issuance of shares of common stock in exchange for payment on certain notes payable.

(f)

The amounts for the three months ended March 31, 2022 include fair value adjustments related to certain down-round and anti-dilutive protections on equity-linked financial instruments issued to the lenders of the Company's syndicated debt. 

Estimated EBITDA and Adjusted EBITDA from Continuing Operations for the Full Year 2022

The following table presents reconciliations of the non-GAAP financial measures of EBITDA and Adjusted EBITDA from continuing operations to loss from continuing operations, net of income taxes for the full year ending December 31, 2022. These reconciliations are intended to provide useful information to investors and analysts as they evaluate the Company's expected performance. EBITDA from continuing operations is defined as loss from continuing operations before interest, taxes, depreciation and amortization, and Adjusted EBITDA from continuing operations is defined as EBITDA from continuing operations adjusted for certain other items as described below. We believe that the exclusion of these items from loss from continuing operations enables management and investors to more effectively evaluate the Company's operations period over period and to identify operating trends that might not be apparent when including the excluded items. However, these measures should not be considered as an alternative to loss from continuing operations or other measures of performance that are derived in accordance with GAAP. As to certain of the items below, stock-based compensation expense may vary from period to period due to fair value adjustments from changes in market conditions, forfeiture rates, accelerated vesting and amounts granted. Because EBITDA and adjusted EBITDA from continuing operations, as defined, exclude some, but not all, items that affect loss from continuing operations, such measures may not be comparable to similarly titled measures of other companies. The most comparable GAAP financial measure, loss from continuing operations, net of income taxes and information reconciling the GAAP and non-GAAP financial measures, are included below. See notes to follow:

(a)

The Company incurred a loss on extinguishment of $26.0 million as a result of non-cash losses incurred during the period ended March 31, 2022 from fair value adjustments made to certain equity-linked financial instruments. The estimated financial results are reflective of an expected net impact of $0 on the Company’s financial results during the full year ending December 31, 2022 as the Company expects these factors will be offset by changes in market factors and estimated financial results from continuing operations during the full year ending December 31, 2022. Actual results of this non-cash item would not have an impact on Adjusted EBITDA from continuing operations.

(b)

These amounts include estimated state minimum tax expenses determined using the statutory tax rates of the jurisdictions where taxable income is expected to be earned. These amounts do not include federal and foreign income tax expense (benefits) as the Company does not expect to generate taxable income related to its US and foreign jurisdictions and expects valuation allowance reserves to be recognized on any deferred tax assets realized during the full year 2022.