Alpine 4 Holdings, Inc. (ALPP) announced today its Q2 2022 results and highlights.
Six months ended June 30, 2022, Consolidated Results and Highlights
- Consolidated revenues of $50.9 million, up 126% over Q2 2021
- By the end of Q2 2022 the company had proforma revenue for 2022 in excess of $100 million
- Shareholder Equity of $70.6 million up from $47.0 million in Q2 2021
- Total assets of $135.2 million up from $94.0 million in Q2 2021
- Total working capital increased to $15.6 million in Q2 2022 from $8.8 million in Q2 2021.
- Increased total inventory to $25.7 million up from $7.8 million in Q2 2021
Kent Wilson CEO had this to said, " Even though current market conditions do not necessarily represent the success Alpine 4 is currently having, the Company is presently on the cusp of various breakthroughs subsidiary wide that will propel the Company into the future. Breakthroughs in our new AX-03 battery cells, our solid-state battery powered drones US-2 and G1, and in our electronics manufacturing will bring meaningful financial results to Alpine 4 in the coming years. In Q2, Elecjet, Inc. (Elecjet) and Quality Circuit Assembly, Inc (QCA) began working with our equipment suppliers to help facilitate our proto-type solid-state battery line that will be located in QCA's new production facility in Silicon Valley, California. RCA Commercial Electronics (RCA) and Elecjet developed the POWERABLE brand of solid-state battery products, which is already garnering interest from large potential customers. The team from Vayu Aerospace Corporation (Vayu) has now completed the first block of ten G1 airframes. These airframes are ready for customization, and the Vayu team is currently reviewing several use cases with customers on how the G1 platform can work within their business model. These use cases range from military surveillance to law enforcement to the energy industry. Finally, Identified Technologies (IT) has deployed the ability to process large swaths of data in under two hours from its 3-D mapping technology. This is a reduction of almost 46 hours off of the prior iteration of their software and enables IT to have a significant competitive advantage over its closest 3-D Mapping rivals.
For Q2 2022, the Alpine 4 group of companies also continued our process improvement strategy to grow our profit margins, accelerate our sales order processes, and build free cash flow in several key sectors, including Construction Services, Manufacturing, and Technologies. The culmination of this effort resulted in several advancements in how Alpine 4 and subsidiaries perform our work in a constrained supply chain environment. Alternative Laboratories (Alt Labs) continues down their optimization path to accelerate their production capabilities with new equipment such as a $1 million gummy line for tier one clientele. Further, it has also gone through a production floor enhancement process to streamline operations as it prepares to add new types of customers. The result of these enhancements for Alt Labs is that they will bring more consistency in their margins and efficiency in the products they produce. While it doesn't show in our latest 10Q, Morris Sheet Metal (MSM) for June 2022, had its first net profitable month since January 2021. Margins continue to increase as Tom Laubhan, President of MSM, and his team have done an excellent job navigating a very difficult steel market for the past 18 months. We expect MSM to return to consistent profitability in Q4 2022. Excel Fabrication (Excel) came out of a six-month planning session led by Ed Fager, President of Excel Fabrication, and the Alpine 4 team led by Jeff Hail, our COO. This team's primary goal was to revamp our construction services and fabrication capabilities to attract more green technologies into the market. As of the writing of this letter, Excel has led high-level discussions with Elecjet and several US-based industrial companies, including Nucor Corporation, an NYSE traded American steel producer, for the use of Elecjet's battery technology in Nucor supplied construction projects. Finally, Thermal Dynamics International continues to reap the benefits of strong demand from its international customer base and the U.S. Government with rising margins resulting from the efficiencies they have created in their work processes.
As you can see, we have many wonderful and exciting things going on at Alpine 4, and our future has never been brighter. Thank you to all of you for your continued support!
Best regards,
Kent B. Wilson
President/CEO/Founder"
Financial Measures That Supplement GAAP
Alpine 4 believes it is important for shareholders, stakeholders, and inventors to be presented with non-GAAP financial measures to evaluate performance and trends of the total company and its businesses. This includes adjustments in recent periods to GAAP financial measures to increase period-to-period comparability following actions to strengthen our overall financial position and how we manage our business.
Consolidated Company Results
| Six months ended June 30, | ||||||
Dollars in thousands; per-share amounts in dollars, diluted | 2022 | 2021 | Year on Year | |||
GAAP Metrics | ||||||
Cash | $4,169 | $35,691 | $(31,523) | |||
EPS | -0.01 | -0.04 | 0.03 | |||
Revenues | $50,863 | $22,540 | $28,323 | |||
Net Profit (Loss) | $(2,150) | $(9,257) | $7,106 | |||
EBITDA | $2,311 | $(4,895) | $7,206 | |||
Non-GAAP Metrics | ||||||
*Cash | $4,169 | $35,691 | $(31,523) | |||
EPS | -0.01 | -0.05 | 0.03 | |||
Revenues (a) | $49,768 | $23,290 | $26,478 | |||
Net Profit (Loss) (b) | $(2,674) | $(7,727) | $5,052 | |||
EBITDA (c) | $1,787 | $(3,365) | $5,152 | |||
(a) Includes supply chain eliminations
(b) Excludes insurance, non-operating benefit costs, loss on write offs (accounts receivables, inventory), and debt extinguishment but includes sale of property as it was a strategic sale based on unique market timing and part of our acquisition model.
(c) Excludes insurance, interest and other financial charges, non-operating benefit costs, loss on write offs (accounts receivables, inventory, intangible assets), sale of property and debt extinguishment
*Cash as of the date of this report was approximately $7.4 million.
Results by Reporting Segment (GAAP)
The following segment discussions and variance explanations are intended to reflect management's view of the relevant comparisons of financial results.
A4 Manufacturing
(in thousands) | Organic Growth Q2 2022 | Q2 2021 | Quarter on Quarter | With Alt Labs Q2 2022 | Q2 2021 | Quarter on Quarter | Three Months Ended June 30, 2022 | Three Months Ended March 31, 2022 | Quarter on Quarter | |||||||||
Revenues | $9,396 | $8,180 | 14.9% | $16,179 | $11,296 | 43.2% | $7,530 | $8,648 | (12.9)% | |||||||||
Segment Gross Profit | $2,368 | $2,164 | 9.4% | $4,128 | $3,544 | 16.5% | $2,124 | $2,004 | 6.0% | |||||||||
Segment Profit/(Loss) Margin | 25.2% | 26.5% | (4.7)% | 25.5% | 31.4% | (18.7)% | 28.2% | 23.2% | 21.7% | |||||||||
Segment Operating Income (Loss) | $530 | $675 | (21.5)% | $(1,089) | $732 | (248.8)% | $(489) | $(653) | 25.2% | |||||||||
Segment EBITDA | $880 | $1,242 | (29.2)% | $5,554 | $1,306 | 325.2% | $5,801 | $(234) | 2,577.9% |
Quality Circuit Assembly had an organic revenue growth of $1.1 million which was an increase of 14.0% over the six months ended June 30, 2021. This increase was primarily driven by increased demand from our EV customers. The acquisition of Alternative Laboratories in May 2021 attributed to non-organic revenue growth of $3.7 million. The decline in organic margin was a function of supply chain constraints primarily within Alternative Laboratories and the Company expects margins to increase starting in Q4 2022.
A4 Defense
| Six months ended | Three months ended | ||||||||||
(in thousands) | June 30, 2022 | June 30, 2021 | Quarter on Quarter | June 30, 2022 | March 31, 2022 | Quarter on Quarter | |||||
Revenues | $5,160 | $1,145 | 350.6% | $2,472 | $2,688 | (8.0)% | |||||
Segment Gross Profit | $2,129 | $460 | 362.6% | $1,286 | $843 | 52.5% | |||||
Segment Profit Margin | 41.3% | 40.2% | 2.7% | 52.0% | $31.4% | 65.8% | |||||
Segment Operating Income | $1,207 | $4 | 33,219.8% | $784 | $423 | 85.2% | |||||
Segment EBITDA | $1,351 | $63 | 2,030.1% | $856 | $495 | 72.8% | |||||
In May 2021, the Company acquired Thermal Dynamics International ("TDI"). The Company recognized $2.5 million in revenues in the three months ended June 30, 2022. Which was 54.5% growth over Q4 2021.
A4 Technologies
| Six months ended | Three months ended | |||||||||||
(in thousands) | June 30, 2022 | June 30, 2021 | Quarter on Quarter | June 30, 2022 | March 31, 2022 | Quarter on Quarter | ||||||
Revenues | $19,050 | - | 100.0% | $9,256 | $9,794 | (5.5)% | ||||||
Segment Gross Profit | $4,981 | - | 100.0% | $2,858 | $2,122 | 34.7% | ||||||
Segment Profit Margin | 26.1% | - | 100.0% | 30.9% | 21.7% | 42.5% | ||||||
Segment Operating Income | $692 | - | 100.0% | $402 | $290 | 38.7% | ||||||
Segment EBITDA | $1,178 | - | 100.0% | $644 | $533 | 20.7% | ||||||
In November 2021 and December 2021, the Company acquired Elecjet Corp. and RCA Commercial (DTI Services Limited Liability Company) ("RCA"), respectively. During the six months ended June 30, 2022, Elecjet recognized $902 thousand in revenue while RCA recognized $18.1 million. Q2 is typically a slower quarter for RCA over Q1. The company expects Q3 and Q4 2022 to show growth over Q1 and Q2 2022.
A4 Construction Services
| Six months ended | Three months ended | |||||||||||
(in thousands) | June 30, 2022 | June 30, 2021 | Quarter on Quarter | June 30, 2022 | March 31, 2022 | Quarter on Quarter | ||||||
Revenues | $9,725 | $10,099 | (3.7)% | $5,669 | $4,056 | 39.8% | ||||||
Segment Gross Profit/(Loss) | $ 530 | $714 | (25.8)% | $165 | $365 | (54.7)% | ||||||
Segment Profit/(Loss) Margin | 5.5% | 7.1% | (22.9)% | 2.9% | 9.0% | (67.6)% | ||||||
Segment Operating Loss | $(1,028) | $(2,857) | 64.0% | $(392) | $(636) | 38.4% | ||||||
Segment EBITDA | $(500) | $(1,238) | 59.6% | $(87) | $(413) | 78.8% | ||||||
For the six months ended June 30, 2022, Construction Services saw improvements in revenues, operating loss, and EBITDA for Q2 2022 over Q2 2021. The margin compression that occurred in 2021 and has continued into 2022 was primarily due to steel prices increasing by 200%. The Company expects gross margin to rise to 17.4% by 2023 and for our Construction Services holdings to return to profitability.
A4 Aerospace
| Six months ended | Three months ended | ||||||||||
(in thousands) | June 30, 2022 | June 30, 2021 | Quarter on Quarter | June 30, 2022 | March 31, 2022 | Quarter on Quarter | |||||
Revenues | $749 | - | 100.0% | $344 | $406 | (15.4)% | |||||
Segment Gross Profit | $479 | - | 100.0% | $176 | $303 | (41.7)% | |||||
Segment Profit Margin | 64.0% | - | 100.0% | 51.4% | 74.6% | (31.2)% | |||||
Segment Operating Loss | $(1,792) | $(2,923) | 38.7% | $(941) | $(851) | (10.6)% | |||||
Segment EBITDA | $(1,207) | $(2,267) | 46.8% | $(655) | $(552) | (18.8)% | |||||
The Company acquired Vayu Aerospace in February of 2021 as a growth stage company. In October 2021 the Company also acquired Identified Technologies ("ITC"). During the three months ended June 30, 2022, A4 Aerospace recognized revenues of $344 thousand which was an increase of 32.8% over Q4 2021. This increase in revenue was driven by Vayu Aerospace's sales to ENSCO and increased revenue from its 3D mapping services from Identified Technologies. The revenue produced gross margin of 64.0%.