Second quarter revenue of $42.5 million, GAAP net loss of $(18.5) million and Adjusted EBITDA of $12.7 million; Mined 1,871 Bitcoin, a 109% increase over same prior year period
LAS VEGAS, May 10, 2023 /PRNewswire/ -- CleanSpark, Inc. (Nasdaq: CLSK) (the "Company"), America's Bitcoin Miner™, today reported financial results for the three and six months ended March 31, 2023.
"This has been a quarter of execution as we've made major progress toward achieving our stated year-end target of 16 EH/s," said Chief Executive Officer Zach Bradford. "Our planned expansions are proceeding according to timelines, with Washington expected to be fully operational next month and with the Sandersville land already graded and ready to start construction. Importantly, we've acquired 99% of the machines, either under contract or in transit, to fill these facilities. The addition of these machines into our fleet, most of which are Bitmain's XPs, are expected to make us one of the most efficient miners on the network, positioning us to take optimal advantage of halving next year."
"The rebound in bitcoin prices translated to greater gross profit margins and cash flow in the second quarter," said Chief Financial Officer Gary A. Vecchiarelli. "Our increased gross profit margins and stable cost structure resulted in 30% adjusted EBITDA margins and will also help grow our bitcoin balance going forward."
Q2 Financial Highlights
Financial Results for the Three Months Ended March 31, 2023
Balance Sheet Highlights as of March 31, 2023
Assets
Liabilities and Stockholders' Equity
The Company's liquidity, in cash and bitcoin, was approximately $15.6 million as of March 31, 2023. The Company's debt totaled $17.6 million at March 31, 2023, as the Company paid down $1.9 million or approximately 11% of its outstanding debt in the second quarter.
*See "Non-GAAP Measure" and "Reconciliation of Adjusted EBITDA" below.
Investor Conference Call and Webcast
The Company will hold its second quarter 2023 earnings presentation and business update for investors and analysts today, May 10, 2023, at 1:30 p.m. PT / 4:30 p.m. ET.
Webcast URL: https://www.cleanspark.com/investor-relations/clsk-earnings
The webcast will be accessible for at least 30 days on the Company's website and a transcript of the call will be available on the Company's website following the call.
About CleanSpark
CleanSpark (NASDAQ: CLSK) is America's Bitcoin Miner. Since 2014, we've helped people achieve energy independence for their homes and businesses. In 2020, we transitioned that expertise to develop sustainable infrastructure for Bitcoin, an essential tool for financial independence and inclusion. We strive to leave the planet better than we found it by sourcing and investing in low-carbon energy, like wind, solar, nuclear, and hydro. We cultivate trust and transparency among our employees, the communities we operate in, and the people around the world who depend on Bitcoin. CleanSpark holds the 44th spot on the Financial Times' 2022 List of the 500 Fastest Growing Companies in the Americas and ranks thirteenth on Deloitte's Fast 500. For more information about CleanSpark, please visit our website at www.cleanspark.com.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding expectations for growth in the Company's bitcoin holdings and other statements regarding the Company's expectations, beliefs, plans, intentions, and strategies. The Company has tried to identify these forward-looking statements by using words such as "expect," "anticipate," "believe," "could," "should," "estimate," "intend," "may," "will," "plan," "goal" and similar terms and phrases, but such words, terms and phrases are not the exclusive means of identifying such statements. We have based these forward-looking statements largely on the Company's current expectations and projections about future events and financial trends that we believe may affect the Company's business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to: the success of the Company's bitcoin mining activities; the volatility of bitcoin value and energy prices; disruptions in the crypto asset markets; market perception of the Company's business and the crypto asset markets generally; increasing difficulty rates for bitcoin mining; bitcoin halving; new or additional governmental regulation; the anticipated delivery dates of new miners; the ability to successfully deploy new miners; the dependency on utility rate structures and government incentive programs; dependency on third-party power providers for expansion efforts and power rates; the ability to successfully integrate newly acquired operations; the risk that future revenue growth may not be realized; the impact of global pandemics (including COVID-19) and inflation on logistics and shipping; security and cybersecurity threats and hacks; and other risks described in the Company's prior press releases and in its filings with the Securities and Exchange Commission (SEC), including under the heading "Risk Factors" in the Company's Annual Report on Form 10-K and any subsequent filings with the SEC. The forward-looking statements in this release are inherently uncertain, and investors are cautioned not to unduly rely upon these statements. We undertake no obligation to revise or update these forward-looking statements or any of the foregoing factors, except as expressly required by applicable law.
Non-GAAP Measure
The Company presents adjusted EBITDA, which is not a measurement of financial performance under generally accepted accounting principles in the United States ("GAAP"). The Company's non-GAAP "Adjusted EBITDA" excludes (i) impacts of interest, taxes, and depreciation; (ii) the Company's share-based compensation expense, unrealized gains/losses on securities, and, changes in the fair value of contingent consideration with respect to previously completed acquisitions, all of which are non-cash items that the Company believes are not reflective of the Company's general business performance, and for which the accounting requires management judgment, and the resulting expenses could vary significantly in comparison to other companies; (iii) non-cash impairment losses related to long-lived assets (including goodwill); (iv) realized gains and losses on sales of equity securities, the amounts of which are directly related to the unrealized gains and losses that are also excluded; (v) legal fees related to litigation and various transactions, which fees management does not believe are reflective of the Company's ongoing operating activities; (vi) gains and losses on disposal of assets, the majority of which are related to obsolete or unrepairable machines that are no longer deployed; (vii) gains and losses related to discontinued operations that would not be applicable to the Company's future business activities; and (viii) severance expenses. The Company previously excluded non-cash impairment losses related to digital assets and realized gains and losses on sales of bitcoin from our calculation of adjusted EBITDA, but has determined such items are part of the Company's normal ongoing operations and will no longer be excluding them from our calculation of adjusted EBITDA.
Management believes that providing this non-GAAP financial measure that excludes these items allows for meaningful comparisons between the Company's core business operating results and those of other companies, and provides the Company with an important tool for financial and operational decision making and for evaluating its own core business operating results over different periods of time. In addition to management's internal use of non-GAAP adjusted EBITDA, management believes that adjusted EBITDA is also useful to investors and analysts in comparing the Company's performance across reporting periods on a consistent basis. Management believes the foregoing to be the case even though some of the excluded items involve cash outlays and some of them recur on a regular basis (although management does not believe any of such items are normal operating expenses necessary to generate our bitcoin related revenues). For example, the Company expects that share-based compensation expense, which is excluded from adjusted EBITDA, will continue to be a significant recurring expense over the coming years and is an important part of the compensation provided to certain employees, officers, and directors. Additionally, management does not consider any of the excluded items to be expenses necessary to generate the Company's bitcoin related revenue.
The Company's adjusted EBITDA measure may not be directly comparable to similar measures provided by other companies in our industry, as other companies in the Company's industry may calculate non-GAAP financial results differently. The Company's adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to operating (loss) income or any other measure of performance derived in accordance with GAAP. Although management utilizes internally and presents adjusted EBITDA, the Company only utilizes that measure supplementally and does not consider it to be a substitute for, or superior to, the information provided by GAAP financial results.
Accordingly, adjusted EBITDA is not meant to be considered in isolation of, and should be read in conjunction with, the information contained in the Company's Consolidated Financial Statements, which have been prepared in accordance with GAAP.
CLEANSPARK, INC. CONSOLIDATED BALANCE SHEETS ($ in thousands, except par value and share amounts) | ||||||||
March 31, | September 30, | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 10,345 | $ | 20,463 | ||||
Accounts receivable, net | 47 | 27 | ||||||
Inventory | 746 | 216 | ||||||
Prepaid expense and other current assets | 8,702 | 7,931 | ||||||
Bitcoin | 5,267 | 11,147 | ||||||
Derivative investment asset | 1,741 | 2,956 | ||||||
Investment in debt security, AFS, at fair value | 668 | 610 | ||||||
Current assets held for sale | 5,390 | 7,426 | ||||||
Total current assets | $ | 32,906 | $ | 50,776 | ||||
Property and equipment, net | $ | 440,253 | $ | 376,781 | ||||
Operating lease right of use asset | 5,402 | 551 | ||||||
Intangible assets, net | 5,696 | 6,485 | ||||||
Deposits on mining equipment | 34,020 | 12,497 | ||||||
Other long-term asset | 4,640 | 3,990 | ||||||
Goodwill | 8,043 | — | ||||||
Long-term assets held for sale | 593 | 1,545 | ||||||
Total assets | $ | 531,553 | $ | 452,625 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 31,334 | $ | 24,662 | ||||
Operating lease liability | 119 | 113 | ||||||
Finance lease liability | 216 | 260 | ||||||
Contingent consideration | 2,000 | — | ||||||
Current portion of long-term loans payable | 7,248 | 7,786 | ||||||
Dividends payable | 21 | 21 | ||||||
Current liabilities held for sale | 344 | 1,199 | ||||||
Total current liabilities | $ | 41,282 | $ | 34,041 | ||||
Long-term liabilities | ||||||||
Operating lease liability, net of current portion | 5,522 | 447 | ||||||
Finance lease liability, net of current portion | 71 | 180 | ||||||
Loans payable, net of current portion | 10,371 | 13,433 | ||||||
Long-term liabilities held for sale | 426 | 512 | ||||||
Total liabilities | $ | 57,672 | $ | 48,613 | ||||
CLEANSPARK, INC. CONSOLIDATED BALANCE SHEETS (continued) ($ in thousands, except par value and share amounts | ||||||||
March 31, | September 30, | |||||||
(Unaudited) | ||||||||
Stockholders' equity | ||||||||
Common stock; $0.001 par value; 300,000,000 shares authorized; 96,950,555 and | 97 | 56 | ||||||
Preferred stock; $0.001 par value; 10,000,000 shares authorized; Series A | 2 | 2 | ||||||
Additional paid-in capital | 717,159 | 599,898 | ||||||
Accumulated other comprehensive income | 168 | 110 | ||||||
Accumulated deficit | (243,545) | (196,054) | ||||||
Total stockholders' equity | 473,881 | 404,012 | ||||||
Total liabilities and stockholders' equity | $ | 531,553 | $ | 452,625 | ||||
CLEANSPARK, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited, in thousands, except per share and share amounts) | ||||||||||||||||
For the three months ended | For the six months ended | |||||||||||||||
March 31, | March 31, | March 31, | March 31, | |||||||||||||
Revenues, net | ||||||||||||||||
Bitcoin mining revenue, net | $ | 42,488 | $ | 36,965 | $ | 70,234 | $ | 73,940 | ||||||||
Other services revenue | 58 | 233 | 131 | 383 | ||||||||||||
Total revenues, net | $ | 42,546 | $ | 37,198 | $ | 70,365 | $ | 74,323 | ||||||||
Costs and expenses | ||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization shown below) | 22,082 | 8,684 | 42,498 | 14,320 | ||||||||||||
Professional fees | 3,750 | 1,059 | 6,581 | 4,161 | ||||||||||||
Payroll expenses | 9,750 | 8,806 | 19,552 | 16,134 | ||||||||||||
General and administrative expenses | 4,329 | 2,773 | 8,053 | 4,589 | ||||||||||||
Loss (gain) on disposal of assets | 3 | (921) | 3 | (643) | ||||||||||||
Other impairment expense (related to bitcoin) | 194 | 812 | 277 | 7,034 | ||||||||||||
Realized (gain) loss on sale of bitcoin | (1,422) | 2,734 | (905) | (7,261) | ||||||||||||
Depreciation and amortization | 21,346 | 10,452 | 40,675 | 17,879 | ||||||||||||
Total costs and expenses | $ | 60,032 | $ | 34,399 | $ | 116,734 | $ | 56,213 | ||||||||
(Loss) Income from operations | (17,486) | 2,799 | (46,369) | 18,110 | ||||||||||||
Other income (expense) | ||||||||||||||||
Other income | 11 | 308 | 11 | 308 | ||||||||||||
Change in fair value of contingent consideration | — | 291 | 485 | 346 | ||||||||||||
Realized gain on sale of equity security | — | — | — | 1 | ||||||||||||
Unrealized loss on equity security | — | — | — | (2) | ||||||||||||
Unrealized (loss) gain on derivative security | 56 | (1,410) | (1,215) | (1,111) | ||||||||||||
Interest income | 52 | 52 | 122 | 85 | ||||||||||||
Interest expense | (799) | (8) | (1,688) | (61) | ||||||||||||
Total other (expense) income | (680) | (767) | (2,285) | (434) | ||||||||||||
(Loss) Income before income tax (expense) or benefit | (18,166) | 2,032 | (48,654) | 17,676 | ||||||||||||
Income tax expense | — | — | — | — | ||||||||||||
(Loss) income from continuing operations | $ | (18,166) | $ | 2,032 | $ | (48,654) | $ | 17,676 | ||||||||
Discontinued operations | ||||||||||||||||
Income (loss) from discontinued operations | $ | (294) | $ | (2,203) | $ | 1,163 | $ | (3,361) | ||||||||
Income tax (expense) or benefit | — | — | — | — | ||||||||||||
Income (loss) on discontinued operations | $ | (294) | $ | (2,203) | $ | 1,163 | $ | (3,361) | ||||||||
Net (loss) income | $ | (18,460) | $ | (171) | $ | (47,491) | $ | 14,315 | ||||||||
Preferred stock dividends | — | 20 | — | 335 | ||||||||||||
Net (loss) income attributable to common shareholders | $ | (18,460) | $ | (191) | $ | (47,491) | $ | 13,980 | ||||||||
Other comprehensive income | 29 | 28 | 58 | 46 | ||||||||||||
Total comprehensive (loss) income attributable to common shareholders | $ | (18,431) | $ | (163) | $ | (47,433) | $ | 14,026 | ||||||||
CLEANSPARK, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (continued) (Unaudited, in thousands, except per share and share amounts) | ||||||||||||||||
For the three months ended | For the six months ended | |||||||||||||||
March 31, | March 31, | March 31, | March 31, | |||||||||||||
(Loss) income from continuing operations per common share - basic | $ | (0.23) | $ | 0.05 | $ | (0.66) | $ | 0.42 | ||||||||
Weighted average common shares outstanding - basic | 80,469,471 | 41,336,342 | 73,450,877 | 40,802,319 | ||||||||||||
(Loss) income from continuing operations per common share - diluted | (0.23) | 0.05 | (0.66) | 0.42 | ||||||||||||
Weighted average common shares outstanding - diluted | 80,469,471 | 41,395,075 | 74,032,082 | 40,861,052 | ||||||||||||
(Loss) income on discontinued operations per common share - basic | $ | (0.00) | $ | (0.05) | $ | 0.02 | $ | (0.08) | ||||||||
Weighted average common shares outstanding - basic | 80,469,471 | 41,336,342 | 73,450,877 | 40,802,319 | ||||||||||||
(Loss) income on discontinued operations per common share - diluted | $ | (0.00) | $ | (0.05) | $ | 0.02 | $ | (0.08) | ||||||||
Weighted average common shares outstanding - diluted | 80,469,471 | 41,395,075 | 74,032,082 | 40,861,052 | ||||||||||||
CLEANSPARK, INC. RECONCILIATION OF ADJUSTED EBITDA (UNAUDITED) | ||||||||||||||
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Revenues, net | ||||||||||||||
Bitcoin mining, net | $ | 42,488 | $ | 36,965 | ||||||||||
Other services revenue | 58 | 233 | ||||||||||||
Total revenues, net | $ | 42,546 | $ | 37,198 | ||||||||||
Net (loss) income | $ | (18,460) | $ | (171) | ||||||||||
Adjustments: | ||||||||||||||
Loss on discontinued operations | $ | 294 | $ | 2,203 | ||||||||||
Depreciation and amortization | 21,346 | 10,452 | ||||||||||||
Share-based compensation expense | 5,743 | 6,554 | ||||||||||||
Change in fair value of contingent consideration | — | (291) | ||||||||||||
Unrealized (gain) loss on derivative security | (56) | 1,410 | ||||||||||||
Interest income | (52) | (52) | ||||||||||||
Interest expense | 799 | 8 | ||||||||||||
Loss (gain) on disposal of assets | 3 | (921) | ||||||||||||
Litigation related expenses | 3,056 | 116 | ||||||||||||
Legal fees related to financing & business development transactions | 48 | 41 | ||||||||||||
Severance related expenses | — | 289 | ||||||||||||
Total Adjusted EBITDA* | $ | 12,721 | $ | 19,638 | ||||||||||
Three months ended December 31, 2022 | ||||||||||||||
Revenues, net | ||||||||||||||
Bitcoin mining, net | $ | 27,746 | ||||||||||||
Other services revenue | 73 | |||||||||||||
Total revenues, net | $ | 27,819 | ||||||||||||
Net loss | $ | (29,031) | ||||||||||||
Adjustments: | ||||||||||||||
Gain on discontinued operations | $ | (1,457) | ||||||||||||
Depreciation and amortization | 19,329 | |||||||||||||
Share-based compensation expense | 5,878 | |||||||||||||
Change in fair value of contingent consideration | (485) | |||||||||||||
Unrealized loss on derivative security | 1,271 | |||||||||||||
Interest income | (70) | |||||||||||||
Interest expense | 889 | |||||||||||||
Litigation related expenses | 1,163 | |||||||||||||
Legal fees related to financing & business development transactions | 542 | |||||||||||||
Total Adjusted EBITDA | $ | (1,971) | ||||||||||||
* Does not exclude non-cash impairment losses related to digital assets in the amounts of $194, $812 and $83 for three months ended March 31, 2023, the three months ended March 31, 2022, and the three months ended December 31, 2022, respectively, or realized gains (losses) on sales of bitcoin in the amounts of $1,422, ($2,734) and ($517) for three months ended March 31, 2023, the three months ended March 31, 2022 and the three months ended December 31, 2022, respectively. |
Investor Relations Contact
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