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CleanSpark Reports Second Quarter FY2022 Financial Results

CLSK

Second quarter revenue of $41.6 million, net loss of $(0.17) million and Adjusted EBITDA of $22.5 million; Company continues to execute its strategic plan and make significant headway in mining operations

LAS VEGAS, May 10, 2022 /PRNewswire/ -- CleanSpark, Inc. (Nasdaq: CLSK) (the "Company"), a sustainable bitcoin mining and energy technology company, today reported financial results for the three and six months ended March 31, 2022.

"The theme for this quarter has been operational and financial execution," said Zach Bradford, Chief Executive Officer. "While the whole industry faced macro headwinds, primarily driven by a lower average bitcoin price, we continued to execute on our infrastructure-first strategy. We have line-of-sight on 600MW of power, driven in large part by the recent agreement we signed with Lancium at the end of the quarter. We continue to make strides in our commitment to ESG principles, most notably by working on attracting and retaining a diverse and highly qualified workforce. As for our capital strategy, our growth capex was funded 100% from the conversion of bitcoin. We have not utilized the shelf offering since November and we continue to right size our capital structure through means of non-dilutive capital."

Q2 Financial Highlights

Financial Results for the Three Months Ended March 31, 2022

  • Revenues for the quarter grew to $41.6 million, an increase of $33.5 million, or 4x, from $8.1 million for the same prior year period.
  • The Company recognized a net loss for the three months ended March 31, 2022, of $(0.17) million or $(0.00) basic loss per share compared to net income of $7.4 million or $0.28 basic earnings per share for the same prior year period.
  • Adjusted EBITDA1 improved significantly to $22.5 million, compared to Adjusted EBITDA1 of $1.9 million from the same prior year period.
  • The Company also saw sequential revenues grow slightly in the second quarter compared to the previous quarter. Revenues increased $0.4 million, or 1%, from the first quarter. Net loss for the second quarter was $(0.17) million, reversing net income of $14.5 million in the first quarter. Adjusted EBITDA1 was $22.5 million, decreasing 7.2% from $24.2 million in the first quarter.

Balance Sheet Highlights as of March 31, 2022

Assets

  • Cash: $1.9 million
  • Digital Currency: $17.0 million
  • Total Current assets: $42.0 million
  • Total Mining assets (including prepaid deposits & deployed miners): $326.0 million
  • Total Assets: $424.8 million

Liabilities and Stockholders' equity

  • Current Liabilities: $22.6 million
  • Total Liabilities: $23.9 million
  • Total Stockholders' Equity: $400.9 million

The Company had working capital of $19.4 million and no long-term debt as of March 31, 2022.

Investor Conference Call and Webcast

The Company will hold its second quarter 2022 earnings presentation and business update for investors and analysts today, May 10, 2022, at 1:30 p.m. PST/4:30 p.m. EST.

Webcast URL: https://www.cleanspark.com/investor-relations/clsk-earnings

Participant Dial-in (Toll free): 1-877-270-2148

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.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts contained in this press release may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "targets," "projects," "contemplates," "believes," "estimates," "forecasts," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions. Forward-looking statements contained in this press release, but are not limited to statements regarding our future results of operations and financial position, industry and business trends, equity compensation, business strategy, plans, market growth and our objectives for future operations.

The forward-looking statements in this press release are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our 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 its digital currency mining activities; the volatile and unpredictable cycles in the emerging and evolving industries in which we operate, 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; the successful deployment of energy solutions for residential and commercial applications; the expectations of future revenue growth may not be realized; ongoing demand for the Company's software products and related services; the impact of global pandemics (including COVID-19) on logistics and shipping and the demand for our products and services; 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 press release are based upon information available to us as of the date of this press release, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this press release with the understanding that our actual future results, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this press release. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this press release, whether as a result of any new information, future events or otherwise.

Non-GAAP Measures

Adjusted EBITDA is not a measurement of financial performance under generally accepted accounting principles in the United States ("GAAP"). Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company's non-cash operating expenses, CleanSpark management believes that providing a non-GAAP financial measure that excludes non-cash and non-recurring expenses allows for meaningful comparisons between the Company's core business operating results and those of other companies, as well as providing 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.

The Company's Adjusted EBITDA measure may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in its industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. The Company's Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to operating income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. Our management does not consider Adjusted EBITDA to be a substitute for, or superior to, the information provided by GAAP financial results.

We are providing supplemental financial measures for (i) non-GAAP adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") that excludes the impact of interest, taxes, depreciation, amortization, our share-based compensation expense, and impairment of assets, unrealized gains/losses on securities, certain financing costs, other non-cash items, certain non-recurring expenses, and impacts related to discontinued operations; and (ii) non-GAAP Adjusted EBITDA that excludes the impact of interest, taxes, depreciation, amortization, our share-based compensation expense, and impairment of assets, unrealized gains/losses on securities, certain financing costs, other non-cash items, and impacts related to discontinued operations. These supplemental financial measures are not measurements of financial performance under GAAP and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies. Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate our business performance and to help make operating decisions.

We believe that these non-GAAP financial measures are also useful to investors and analysts in comparing our performance across reporting periods on a consistent basis. Adjusted EBITDA excludes (i) impacts of interest, taxes, and depreciation; (ii) significant non-cash expenses such as our share-based compensation expense, unrealized gains/losses on securities, certain financing costs, other non-cash items that we believe are not reflective of our general business performance, and for which the accounting requires management judgment, and the resulting expenses could vary significantly in comparison to other companies; (iii) significant impairment losses related to long-lived and digital assets, which include our bitcoin for which the accounting requires significant estimates and judgment, and the resulting expenses could vary significantly in comparison to other companies; and (iv) and impacts related to discontinued operations that would not be applicable to our future business activities.

Non-GAAP financial measures are subject to material limitations as they are not in accordance with, or a substitute for, measurements prepared in accordance with GAAP. For example, we expect 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.

We have also excluded impairment losses on assets, including impairments of our digital currency our non-GAAP financial measures, which may continue to occur in future periods as a result of our continued holdings of significant amounts of bitcoin. Our non-GAAP financial measures are not meant to be considered in isolation and should be read only in conjunction with our Consolidated Financial Statements, which have been prepared in accordance with GAAP. We rely primarily on such Consolidated Financial Statements to understand, manage, and evaluate our business performance and use the non-GAAP financial measures only supplementally.

About CleanSpark

CleanSpark, Inc., a Nevada corporation, is a sustainable bitcoin mining and energy technology company that is solving modern energy challenges. For more information about the Company, please visit the Company's website at https://www.cleanspark.com/investor-relations.

CLEANSPARK, INC.

CONSOLIDATED BALANCE SHEETS




March 31,
2022
(Unaudited)



September 30,
2021


ASSETS







Current assets







Cash and cash equivalents, including restricted cash


$

1,912,947



$

18,040,327


Accounts receivable, net



6,836,253




2,619,957


Inventory



1,259,423




2,672,744


Prepaid expense and other current assets



10,316,242




5,129,047


Digital currency



17,045,640




23,603,210


Derivative investment asset



3,794,359




4,905,656


Investment in equity security



250,000




260,772


Investment in debt security, AFS, at fair value



541,200




494,608


Total current assets


$

41,956,064



$

57,726,321









Property and equipment, net


$

276,330,089



$

137,674,739


Operating lease right of use asset



1,353,557




1,488,240


Intangible assets, net



10,262,761




12,699,177


Deposits on mining equipment



69,902,321




87,959,910


Other long-term assets



5,943,314




875,536


Goodwill



19,049,198




19,049,198


Total assets


$

424,797,304



$

317,473,121









LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities







Accounts payable and accrued liabilities


$

21,385,732



$

7,975,263


Contract liabilities



188,929




296,964


Operating lease liability



321,600




256,195


Finance lease liability



345,817




413,798


Acquisition liability



-




300,000


Contingent consideration



-




820,802


Dividends payable



335,439




-


Total current liabilities



22,577,517




10,063,022


Long-term liabilities







Operating lease liability, net of current portion



1,043,931




1,235,325


Finance lease liability, net of current portion



257,952




458,308


Total liabilities


$

23,879,400



$

11,756,655









Stockholders' equity







Common stock; $0.001 par value; 100,000,000 shares authorized; 41,290,587 and
37,395,945 shares issued and outstanding as of March 31, 2022, and
September 30, 2021, respectively



41,291




37,394


Preferred stock; $0.001 par value; 10,000,000 shares authorized; Series A
shares; 2,000,000 authorized; 1,750,000 and 1,750,000 issued and outstanding
as of March 31, 2022, and September 30, 2021, respectively



1,750




1,750


Additional paid-in capital



525,246,200




444,074,832


Accumulated other comprehensive income (loss)



41,200




(5,392)


Accumulated deficit



(124,412,537)




(138,392,118)


Total stockholders' equity



400,917,904




305,716,466









Total liabilities and stockholders' equity


$

424,797,304



$

317,473,121


CLEANSPARK, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)




For the three months ended



For the six months ended




March 31,
2022



March 31,
2021



March 31,
2022



March 31,
2021


Revenues, net













Digital currency mining revenue, net


$

36,965,739



$

6,715,792



$

73,940,317



$

7,449,202


Energy hardware, software and services revenue



4,585,971




1,313,530




8,556,181




2,827,233


Other services revenue



86,282




90,366




383,463




100,824


Total revenues, net



41,637,992




8,119,688




82,879,961




10,377,258















Costs and expenses













Cost of revenues (exclusive of depreciation and amortization shown below)



12,127,120




1,537,683




20,925,046




2,879,197


Professional fees



900,976




2,456,554




4,218,795




4,169,277


Payroll expenses



10,542,025




3,262,097




19,425,072




6,576,298


General and administrative expenses



3,182,946




1,243,154




5,071,046




2,193,293


(Gain) on disposal of assets



(920,861)







(642,691)





Other impairment expense (related to Digital Currency)



811,345







7,033,691





Depreciation and amortization



11,661,633




2,117,172




19,359,201




3,226,263


Total costs and expenses



38,305,184




10,616,660




75,390,160




19,044,328















Income (loss) from operations



3,332,808




(2,496,972)




7,489,801




(8,667,070)















Other income (expense)













Other income



308,038




541,576




308,038




541,576


Change in fair value of contingent consideration



290,249







345,791





Realized gain (loss) on sale of digital currency



(2,733,882)




585,709




7,260,909




635,627


Realized gain on sale of equity security









665





Unrealized gain (loss) on equity security






343,000




(1,847)




269,500


Unrealized gain (loss) on derivative security



(1,410,146)




8,400,629




(1,111,297)




7,380,135


Interest income



51,782




54,479




85,253




102,463


Interest expense



(9,584)




(28,381)




(62,293)




(29,721)


Total other income (expense)



(3,503,543)




9,897,012




6,825,219




8,899,580















Income (loss) before income tax (expense) or benefit



(170,735)




7,400,040




14,315,020




232,510


Income tax (expense) or benefit













Net income (loss)


$

(170,735)



$

7,400,040



$

14,315,020



$

232,510















Preferred stock dividends



20,828



$

177,505




335,439



$

177,505















Net income (loss) attributable to common shareholders


$

(191,563)



$

7,222,535



$

13,979,581



$

55,005















Other comprehensive income



28,479







46,592


















Total comprehensive income (loss) attributable to common shareholders


$

(163,084)



$

7,222,535



$

14,026,173



$

55,005















Income (loss) per common share - basic


$

(0.00)



$

0.28



$

0.34



$

0.00















Weighted average common shares outstanding - basic



41,336,342




25,925,259




40,802,319




24,025,557















Income (loss) per common share - diluted


$

(0.00)



$

0.22



$

0.34



$

0.00















Weighted average common shares outstanding - diluted



41,336,342




32,697,863




40,861,052




30,798,161















CLEANSPARK, INC.

RECONCILIATION OF ADJUSTED EBITDA

(UNAUDITED)




Three months ended March 31,




2022



2021


Revenues, net







Digital currency mining revenue, net


$

36,965,739



$

6,715,792


Energy hardware, software and services revenue



4,585,971




1,313,530


Other services revenue



86,282




90,366


Total revenues, net


$

41,637,992



$

8,119,688









Net income (loss)


$

(170,735)



$

7,400,040


Adjustments:









Other impairment expense (related to Digital Currency)


$

811,345



$


Depreciation and amortization



11,661,633




2,117,172


Stock based compensation



6,583,999




849,015


Change in fair value of contingent consideration



(290,249)





Other income






(10,407)


Realized loss (gain) on sale of digital currency



2,733,882




(585,709)


Unrealized gain on equity security






(343,000)


Unrealized loss (gain) on derivative security



1,410,146




(8,400,629)


Interest income


(51,782)



(88,391)


Interest expense


9,584



62,293


Gain on disposal of assets


(920,861)




One-time legal fees related to litigation


116,377



1,429,725


One-time legal fees related to financing & business development transactions


41,047




Severance expenses


571,729




PPP debt forgiveness




(531,169)


Total Adjusted EBITDA


$

22,506,115



$

1,898,940











Three months ended

December 31, 2021



Revenues, net





Digital currency mining revenue, net


$

36,974,578



Energy hardware, software and services revenue



3,970,210



Other services revenue



297,181



Total revenues, net


$

41,241,969








Net income


$

14,485,755



Adjustments:






Other impairment expense (related to Digital Currency)


$

6,222,346



Depreciation and amortization



7,697,568



Stock based compensation



5,749,107



Change in fair value of contingent consideration



(55,542)



Realized gain on sale of digital currency



(9,994,791)



Realized gain on sale of equity security



(665)



Unrealized loss on equity security



1,847



Unrealized gain on derivative security



(298,849)



Interest income


(33,471)



Interest expense


52,709



Loss on disposal of assets


278,170



One-time legal fees related to litigation


136,092



Total Adjusted EBITDA


$

24,240,276








Investor Relations Contact
Matt Schultz, Executive Chairman
ir@cleanspark.com

Media Contacts
Isaac Holyoak
pr@cleanspark.com

BlocksBridge Consulting
Nishant Sharma
cleanspark@blocksbridge.com

Cision View original content:https://www.prnewswire.com/news-releases/cleanspark-reports-second-quarter-fy2022-financial-results-301544436.html

SOURCE CleanSpark, Inc.



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