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QualTek Announces Fourth Quarter and Annual 2021 Financial Results

03/31/2022

- Full year 2021 results include revenue of $612.2 million and adjusted EBITDA of $60.0million

- Reported 24-month backlog at the end of Q4 2021 was $2.1 Billion, an increase of 22.0% over year end 2020

- Fourth quarter 2021 results include revenue of $147.1 million and adjusted EBITDA of $4.0 million

- Successfully completed four acquisitions and added significant new contract awards 

BLUE BELL, Pa., March 31, 2022 /PRNewswire/ -- QualTek Services Inc. ("QualTek" or the "Company") (NASDAQ: QTEK), a leading turnkey provider of infrastructure services to the North American 5G wireless, telecom, power grid modernization, and renewable energy sectors, announced today a strong 2021 fourth quarter and full-year financial results of its subsidiary QualTek HoldCo, LLC.

For the Fourth Quarter:

Fourth quarter 2021 revenue was up 11.0% to $147.1 million, compared to $132.4 million for the fourth quarter of 2020. Net loss from continuing operations for the fourth quarter 2021 was $81.1 million compared to net loss from continuing operations of $56.3 million in the fourth quarter of 2020.  Excluding one-time impairment of goodwill, Net loss from continuing operations for the fourth quarter 2021 was $28.6 million compared to a net loss from continuing operations of $27.5 million in the fourth quarter of 2020.  Fourth quarter 2021 adjusted EBITDA was $4.0 million compared to a loss of $13.5 million for the fourth quarter of 2020.  Backlog at the end of the fourth quarter was $2.1 billion which is a 22% increase over the fourth quarter 2020. 

For the Full Year:

Full year 2021 revenue was $612.2 million, a decline of 6.7% from $656.5 million for the full year 2020. Net loss from continuing operations for 2021 was $101.6 million compared to net loss from continuing operations of $94.2 million in 2020.  Excluding one-time impairment of goodwill, Net loss from continuing operations for 2021 improved to $49.1 million compared to a net loss from continuing operations of $65.4 million in 2020.  Full year 2021 adjusted EBITDA increased 356.9% to $60.0 million, compared to $13.1 million for the full year 2020. The increase in adjusted EBITDA was driven primarily by margin improvement initiatives across both the Telecom and Renewables & Recovery segments. On a pro-forma basis, assuming the recently closed acquisitions had been owned for the full year ending December 31, 2021, QualTek estimates adjusted EBITDA would be approximately 72.0 million. For the full year 2022, guidance remains unchanged.

As QualTek has indicated in the past, strong industry tailwinds including grid modernization and infrastructure improvements along with the C-band spectrum deployment are expected to drive major 5G infrastructure buildouts and provide significant growth opportunities across the business. The company is also seeing reductions in COVID-19 health and safety protocols in key regions allowing for a return to pre-covid scale and efficiency. QualTek expects continued growth in both segments during 2022 and beyond.

Scott Hisey, QualTek's Chief Executive Officer, said, "2021 was a critical year for the company.  We successfully closed our SPAC transaction creating over $80 million of additional liquidity to allow us to execute on our strategic growth plan.  Full year 2021 adjusted EBITDA grew to $60.0 million, a $47 million increase from 2020. QualTek remains on a path to be a significant industry player across the telecommunications and power industries. We successfully grew our rolling two-year backlog by 22% to $2.1 billion during the year. This growth is a testament to our strong performance and our customer's reliance on QualTek to play a critical role in building out 5G networks and participating in the long-term grid modernization initiatives. We are very excited for the future of QualTek."

Management will hold a conference call to discuss these results on Friday, April 1, 2022, at 9:00 a.m. Eastern Time. The call-in number for the conference call is 1 (888) 330 – 2454 or 1 (240) 789 - 2714 using passcode 2965812. Additionally, the call will be broadcast live over the Internet and can be accessed and replayed through the investor relations section of the Company's website at qualtekservices.com.

The following tables set forth the financial results for the periods ended December 31, 2021 and 2020:

BCP QUALTEK HOLDCO, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per unit information)





For the Years Ended December 31,


2021

2020

Revenue

$                       612,241

$                        656,524

Costs and expenses:



Cost of revenues

502,688

597,583

General and administrative

50,994

47,049

Transaction expenses

3,826

988

Loss on legal settlement

2,600

-

Change in fair value of contingent consideration

(4,780)

(7,081)

Impairment of goodwill

52,487

28,802

Depreciation and amortization

53,675

46,475

Total costs and expenses

661,490

713,816

Loss from operations

(49,249)

(57,292)

Other income (expense):



Gain on sale/ disposal of property and equipment

587

729

Interest expense

(50,477)

(37,659)

Loss on extinguishment of convertible notes

(2,436)

-

Total other expense

(52,326)

(36,930)

Loss from continuing operations

(101,575)

(94,222)

Loss from discontinued operations

(8,851)

(3,865)

Net loss

(110,426)

(98,087)

Other comprehensive income (loss):



Foreign currency translation adjustments

111

239

Comprehensive loss

$                      (110,315)

$                        (97,848)

Earnings per unit:



Basic earnings per unit from continuing operations

$                         (47.24)

$                          (48.61)

Basic earnings per unit from discontinued operations

(4.05)

(1.93)

Basic earnings per unit from net loss

$                         (51.29)

$                          (50.54)

Basic weighted average common units outstanding

2,184,696

2,005,824

 

BCP QUALTEK HOLDCO, LLC

CONSOLIDATED BALANCE SHEETS

(in thousands, except unit information)





December 31, 


2021

2020

Assets



Current assets

226,523

192,223

Property and equipment, net

50,682

33,794

Intangible assets, net

364,174

345,816

Goodwill

28,723

58,522

Other long-term assets

1,657

1,241

Non-current assets of discontinued operations

-

9,272

Total assets

$                      671,759

$                     640,868

Liabilities and (Deficit) / Equity



Current liabilities

$                      130,533

$                     139,231

Current portion of long-term debt and capital lease obligations

127,375

27,249

Current portion of contingent consideration

9,299

9,968

Capital lease obligations, net of current portion

19,851

15,959

Long-term debt, net of current portion and deferred financing fees

418,813

397,464

Contingent consideration, net of current portion

21,457

8,161

Distributions payable

11,409

11,409

Non-current liabilities of discontinued operations

-

1,793

Total (deficit) / equity

(66,978)

29,634

Total liabilities and equity

$                      671,759

$                     640,868




 

BCP QUALTEK HOLDCO, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)





For the Years Ended December 31,


2021

2020

Net cash (used in) provided by operating activities

$                            (17,942)

$                              13,457

Net cash used in investing activities

(43,532)

(3,963)

Net cash provided by (used in) financing activities

63,373

(9,712)

Effect of foreign currency exchange rate (translation) on cash

83

59

Net increase (decrease) in cash 

1,982

(159)

Cash:



Beginning of year

169

328

End of year

$                                2,151

$                                   169




 

Supplemental Disclosures and Reconciliation of Non-GAAP Disclosures

(in thousands)




For the Years Ended
December 31,

Revenue:




2021

2020

Telecom




$           498,221

$          587,614

Renewables and Recovery Logistics




114,020

68,910

Total consolidated revenue 




$           612,241

$          656,524

















For the Years Ended
December 31,

Adjusted EBITDA Reconciliation:




2021

2020

Telecom adjusted EBITDA




$            32,542

$             2,409

Renewables and Recovery Logistics adjusted EBITDA



44,869

28,943

Corporate adjusted EBITDA




(17,376)

(18,213)

Total adjusted EBITDA




$            60,035

$           13,139

Less:






Management fees




(889)

(518)

Transaction expenses




(3,826)

(988)

Loss on legal settlement




(2,600)

-

Change in fair value of contingent consideration



4,780

7,081

Impairment of goodwill




(52,487)

(28,802)

Depreciation and amortization




(53,675)

(46,475)

Interest expense




(50,477)

(37,659)

Loss on extinguishment of convertible notes



(2,436)

-

Loss from continuing operations




$         (101,575)

$          (94,222)







The following tables set forth the financial results for the three-month periods ended December 31, 2021 and 2020:

BCP QUALTEK HOLDCO, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per unit information)

(unaudited)





For the Three Months Ended December 31,


2021

2020

Revenue

$                          147,057

$                          132,444

Costs and expenses:



Cost of revenues

130,192

134,823

General and administrative

13,032

11,389

Transaction expenses

951

421

Loss on legal settlement

2,600

-

Change in fair value of contingent consideration

(236)

(7,081)

Impairment of goodwill

52,487

28,802

Depreciation and amortization

14,539

11,714

Total costs and expenses

213,565

180,068

Loss from operations

(66,508)

(47,624)

Other income (expense):



Gain on sale/ disposal of property and equipment

73

153

Interest expense

(14,699)

(8,835)

Total other expense

(14,626)

(8,682)

Loss from continuing operations

(81,134)

(56,306)

Loss from discontinued operations

(737)

(2,157)

Net loss

(81,871)

(58,463)

Other comprehensive income (loss):



Foreign currency translation adjustments

36

483

Comprehensive loss

$                           (81,835)

$                           (57,980)

Earnings per unit:



Basic earnings per unit from continuing operations

$                             (36.49)

$                             (28.46)

Basic earnings per unit from discontinued operations

(0.33)

(1.08)

Basic earnings per unit from net loss

$                             (36.82)

$                             (29.54)

Basic weighted average common units outstanding

2,223,554

2,005,824

 

Supplemental Disclosures and Reconciliation of Non-GAAP Disclosures

(in thousands)

(unaudited)




For the Three Months Ended
December 31,

Revenue:




2021

2020

Telecom




$           138,201

$          118,885

Renewables and Recovery Logistics




8,856

13,559

Total consolidated revenue 




$           147,057

$          132,444

















For the Three Months Ended
December 31,

Adjusted EBITDA Reconciliation:




2021

2020

Telecom adjusted EBITDA




$              5,635

$          (13,619)

Renewables and Recovery Logistics adjusted EBITDA



2,688

4,716

Corporate adjusted EBITDA




(4,279)

(4,585)

Total adjusted EBITDA




$              4,044

$          (13,488)

Less:






Management fees




(138)

(127)

Transaction expenses




(951)

(421)

Loss on legal settlement




(2,600)

-

Change in fair value of contingent consideration



236

7,081

Impairment of goodwill




(52,487)

(28,802)

Depreciation and amortization




(14,539)

(11,714)

Interest expense




(14,699)

(8,835)

Loss from continuing operations




$           (81,134)

$          (56,306)







About QualTek

Founded in 2012, QualTek is a leading technology-driven provider of infrastructure services to the 5G wireless, telecom, power grid modernization, and renewable energy sectors across North America. QualTek has a national footprint with more than 80 operation centers across the U.S. and a workforce of over 5,000 people. QualTek has established a nationwide operating network to enable quick responses to customer demands as well as proprietary technology infrastructure for advanced reporting and invoicing. The Company will report within two operating segments: Telecommunications and Renewables and Recovery. For more information, please visit qualtekservices.com.

Forward Looking Statements

This communication contains forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995, including statements about the financial condition, results of operations, earnings outlook and prospects of QualTek. Forward-looking statements are typically identified by words such as "plan," "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project," "continue," "could," "may," "might," "possible," "potential," "predict," "should," "would" and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements are based on the current expectations of the management of QualTek and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those discussed and identified in public filings made with the SEC by QualTek.

Should one or more of the risks or uncertainties materialize or should any of the assumptions made by the management of QualTek prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

All pro forma numbers are used for illustrative purpose only, are not forecasts and may not reflect actual results.

All subsequent written and oral forward-looking statements concerning the matters addressed in this communication and attributable to QualTek or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this communication. Except to the extent required by applicable law or regulation, QualTek undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date of this communication to reflect the occurrence of unanticipated events.

Media Contact:

QualTek IR/Communications
Gianna Lucchesi
PR@qualtekservices.com
(484) 804 - 4585

 

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