Charge Enterprises Reports Third Quarter 2022 Financial Results

• Reported Revenues Increased 59% to $185.9 Million
• Reported Gross Profit Increased 77% to $6.9 Million
• Wins in High-Demand Markets and Leveraging of Subsidiary Capabilities Driving Growth

NEW YORK, NY / ACCESSWIRE / November 14, 2022 / Charge Enterprises, Inc. (NASDAQ:CRGE) ("Charge" or the "Company"), today reported third quarter 2022 revenues of $185.9 million, compared with $117.0 million in the third quarter of 2021. Gross profit for the third quarter of 2022 increased to $6.9 million, compared with $3.9 million in the third quarter of 2021.

"Progress and strategic execution in our business segments are increasing as we move through the year, driving solid revenue and gross profit growth in the third quarter," stated Andrew Fox, Founder, Chairman, and Chief Executive Officer. "As our gross profit expands, we have and intend to continue to reinvest in future growth, securing the people and processes necessary to extend our reach and refine our management capabilities and best-in-class service offering while being mindful of expense control."

Fox pointed to significant progress by Charge's segments during the third quarter, including:

• Auto Dealership Sector Inroads. Automakers are rolling out electric vehicle ("EV") programs and detailing to dealers' minimum investment expectations that include onsite EV charging systems; estimates range by manufacturer, with some investment expectations reaching $1.2 million for high-volume retailers. These announcements and the urgency created by the automakers represents a significant opportunity for Charge, as the EV charging stations comprise most of the required dealer investment in these programs.
• Monitoring Operations Expansion. Advanced Network Services ("ANS") was awarded five contracts across five states to implement its Network Operations Center ("NOC") monitoring, which is driving growth in monthly recurring revenue ("MRR").
• Infrastructure segment revenue for the first nine months of 2022 was $71.8 million. Business developments during the quarter, along with Charge's ongoing client relationships have contributed to a current overall Infrastructure segment backlog, or signed customer contracts, of approximately $90 million.

Mr. Fox said, "We remain focused and disciplined on aggressively cultivating new customer relationships, pursuing additional opportunities to drive future growth, and hiring, training and retaining talented team members with an emphasis on skill and safety."

Powerful trends are propelling the business, mitigating the impact of macro-economic pressures. Development and demand in Charge's addressable market are being driven by the Federal Government's approval of the Electric Vehicle Infrastructure Deployment Plan, as well as mandates in California and New York for all new vehicle zero-emission purchases in 2035. Similarly, demand for cell towers and electrical and power engineering services is robust as the nation invests in grid infrastructure and capabilities for increased data speed, bandwidth and efficiency."

Fox concluded, "Charge is expanding wallet share with large, high-value telecom and mobile operators and providing our growing base of target customers in emerging, rapid-growth markets with the guidance necessary to inform their decisions regarding custom end-to-end infrastructure solutions. We are positioning Charge Enterprises to be their trusted provider at the crossover of next-generation broadband and EV charging infrastructure."

Third Quarter 2022 Results - Selected Financial Information

⁽¹⁾ Adjusted EBITDA represents income (loss) before interest, income taxes, depreciation and amortization, and amortization of debt discount and debt issue costs adjusted for stock-based compensation, loss on impairment, (income) loss from investments, net, change in fair value of derivative liabilities, other (income) expense, net, and foreign exchange adjustments. Refer to Appendix for definition and complete non-GAAP reconciliation for Adjusted EBITDA.

Reported financial results include operations from the date of acquisition: ANS acquired on May 21, 2021; BW acquired on December 27, 2021; and EV Group Holdings ("EV Depot") acquired on January 14, 2022. Due to the timing of certain acquisitions, current quarter results are not necessarily comparable to the prior periods.

Proforma financial results include: the full three and nine months periods for all of the Company's operations, including acquisitions, for 2021 and 2022 as if they happened on the first day of the respective period. Management believes that presenting proforma results is important to understanding the Company's financial performance and provides better analysis of trends in the Company's underlying businesses as it allows for comparability to prior period results.

Reported revenues for the third quarter of 2022 increased $68.9 million to $185.9 million, and proforma revenues increased $61.2 million to $185.9 million, compared with the third quarter of 2021. The increase in reported and proforma revenues was driven by higher revenues in both of the Company's business segments.

• Telecommunications: Reported revenues and proforma revenues increased $52.0 million, compared with the third quarter of 2021. The increase was driven by higher wholesale traffic volume.
• Infrastructure: Reported revenues increased $16.9 million, and proforma revenues increased $9.2 million, compared with the third quarter of 2021. The more than doubling in reported revenues was due to the Company's acquisitions of BW and EV Depot and organic growth in ANS and the Company's EV charging business. The 52% increase in proforma revenues demonstrates the continued success of the Company's strategy to drive organic growth across the Company's Infrastructure business.

Reported gross profit for the third quarter of 2022 increased $3.0 million to $6.9 million, and proforma gross profit increased $0.7 million to $6.9 million, compared with the third quarter of 2021. The increase in reported and proforma gross profit was primarily driven by higher revenues, partially offset by lower gross profit in the Company's Telecommunications segment due to customer mix. Reported gross margin percentage for the third quarter of 2022 increased, compared with the third quarter of 2021, due to higher revenues in the Infrastructure segment. Proforma gross margin percentage decreased year-over-year due to the mix of revenues among the businesses, labor and cost inflation within the Infrastructure segment, and a decline in margin in the Telecommunications segment.

Reported net income for the third quarter of 2022 was $14.4 million, compared with a net loss of $25.2 million in the third quarter of 2021.Proforma net income was $14.4 million, compared with a net loss of $23.8 million in the third quarter of 2021. On a reported basis, the increase in net income was driven by the increase in gross profit and a non-cash mark-to-market derivative gain, offset by continued investments the Company is making in its people and processes to support Charge's growth strategy. The largest drivers over the prior year period were:

• $7.8 million in stock-based compensation expense, which represented a modest $0.3 million increase. Sequentially stock-based compensation has declined in recent quarters, due to lower option grants in 2022, compared with 2021;
• $3.5 million in general and administrative expense, which represented a $1.6 million increase, due to costs associated with the Company's uplist to the Nasdaq and higher marketing expense related to growing the business;
• $4.4 million in salaries and related benefits, which represented a $1.8 million increase, driven by incremental headcount to support the corporate organization and the growth of the Infrastructure segment; and
• $24.2 million in other (income) expense, net, which represented a $43.3 million increase in income. Included in the increase is a $28.7 million mark-to-market gain related to a derivative liability, partially offset by a $2.7 million loss on contingent liability related to a previously announced acquisition. Third quarter 2021 results included an $18.1 million impairment charge. Items reported in other (income) expense, net, are not related to Charge's core business operations and therefore are excluded from Adjusted EBITDA.

The reported net income of $14.4 million in the third quarter of 2022, adjusted for non-cash and certain one-time items, resulted in an Adjusted EBITDA loss of $1.7 million, compared with an Adjusted EBITDA loss of $1.0 million in the third quarter of 2021. See the Appendix for a full reconciliation.

As of September 30, 2022, Charge held $42.6 million in cash, cash equivalents and marketable securities.

Charge's CFO Leah Schweller commented, "Our third quarter performance was strong, and we delivered operating profitability in each of our business segments, despite a challenging macroeconomic environment, as our strategy capitalizes on tailwinds in both next-generation broadband and EV charging infrastructure and we prudently invest in expanding our foundation for growth.

"To extend our record of gross profit growth, we are planning projects carefully, ensuring we remain at full capacity to drive efficiencies, absorb near-term external inflationary pressures while staying nimble and opportunistic in order to expand our customer base and grow organically with existing customers. Charge is purposely structured to utilize our lower-margin, positive cash flow Telecommunications business to support our faster-growing Infrastructure segment. For the rest of the year, we remain focused on continued consistent execution, expanding our maintenance, monitoring and NOC services and managing expenses to maximize gross profit delivery."

For further details of the Company's financials, please see Charge Enterprises' Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed with the Securities and Exchange Commission on November 14, 2022 and available on Charge's website Charge | SEC Filings. Financial statements prior to December 31, 2021 were filed with the OTC Markets.

About Charge Enterprises, Inc.

Charge Enterprises, Inc. (NASDAQ:CRGE) ("Charge" or the "Company"), consisting of a portfolio of global businesses with the vision of connecting people everywhere with communications and electric vehicle ("EV") charging infrastructure.

Telecommunications

Our Telecommunications business ("Telecommunications") provides routing of both voice and data to Carriers and Mobile Network Operators ("MNOs") globally for over two decades and is poised to selectively add products and services to this long-established business.

Infrastructure

Our Infrastructure business ("Infrastructure") primarily focuses on two fast growing sectors: electric vehicle ("EV") charging, and Telecommunications Network 5G, including cell tower, small cell, and in-building applications. Solutions for these two sectors include: Design and Engineering, Equipment Specification and Sourcing, Installation, Data and Software Solutions, and Service and Maintenance.

To learn more about Charge, visit Charge Enterprises, Inc. and follow us on LinkedIn and Twitter.

Notice Regarding Forward-Looking Information

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect current expectations or beliefs regarding future events or Charge's future performance. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates", "targets" or "believes", or variations of, or the negatives of, such words and phrases or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. All forward-looking statements, including those herein, are qualified by this cautionary statement.

Although Charge believes that the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements involve risks and uncertainties, and actual results may differ materially from any future results expressed or implied by such forward-looking statements. Such risks and uncertainties include the business plans and strategies of Charge, Charge's future business development, market acceptance of electric vehicles, Charge's ability to generate profits and positive cash flow, changes in government regulations and government incentives, subsidies, or other favorable government policies, rising interest rates and the impact on investments by our customers, and other risks discussed in Charge's filings with the U.S. Securities and Exchange Commission ("SEC"). Readers are cautioned that the foregoing list of risks and uncertainties is not exhaustive of the factors that may affect forward-looking statements. Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this press release speak only as of the date of this press release or as of the date or dates specified in such statements. For more information on us, investors are encouraged to review our public filings with the SEC, including the factors described in the section captioned "Risk Factors" of Charge's Annual Report on Form 10-K filed with the SEC on March 29, 2022, as well as subsequent reports we file from time to time with the SEC which are available on the SEC's website at www.sec.gov. Charge disclaims any intention or obligation to update or revise any forward- looking information, whether as a result of new information, future events or otherwise, other than as required by law.

Notice Regarding Non-GAAP Measures

The press release includes both financial measures in accordance with U.S. generally accepted accounting principles ("GAAP"), as well as non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP. See the Appendix for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures. These non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.

Contacts:

Investor Relations:

Christine Cannella (954) 298-6518
[email protected]

Carolyn Capaccio, CFA (212) 838-3777
[email protected]

Media:

Jeff Kuhlman (571) 246-3857
[email protected]

APPENDIX

CHARGE ENTERPRISES, INC.
CONSOLIDATED RESULTS OF OPERATIONS

CHARGE ENTERPRISES, INC.
SEGMENT RESULTS OF OPERATIONS

Telecommunications

Infrastructure

Non-Operating Corporate

CHARGE ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

CHARGE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

CHARGE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Non-GAAP Measures

In this press release, the Company has supplemented the presentation of its financial results calculated in accordance with U.S. generally accepted accounting principles ("GAAP") with the following financial measures that are not calculated in accordance with GAAP: EBITDA and Adjusted EBITDA. Management uses both GAAP and non-GAAP measures to assist in making business decisions and assessing overall performance. The Company's measurement of these non-GAAP financial measures may be different from similarly titled financial measures used by others and therefore may not be comparable. These non-GAAP financial measures should not be considered superior to the GAAP measures in the tables included within this material.

Certain information presented in this press release reflects adjustments to GAAP measures such as EBITDA and Adjusted EBITDA as an additional way of assessing certain aspects of the Company's operations that, when viewed with the GAAP financial measures, provide a more complete understanding of its on-going business. EBITDA is defined as income (loss) before interest, income taxes, depreciation and amortization, and amortization of debt discount and debt issue costs. Adjusted EBITDA represents EBITDA adjusted for stock-based compensation, income (loss) from investments, net, other (income) expense, net, and foreign exchange adjustments.

CHARGE ENTERPRISES, INC.
NON-GAAP RECONCILIATION

SOURCE: Charge Enterprises Inc.