10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39568

Radius Global Infrastructure, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

88-1807259

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

3 Bala Plaza East, Suite 502

 

Bala Cynwyd, Pennsylvania

19004

(Address of principal executive offices)

(Zip Code)

(610) 660-4910

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, par value $0.0001 per share

RADI

Nasdaq Global Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of August 3, 2023, there were 99,717,040 shares of Class A Common Stock outstanding.

 

 


 

 

Cautionary Note Regarding Forward-Looking Statements

We make forward-looking statements in this Quarterly Report on Form 10-Q (this “Quarterly Report”) within the meaning of 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”), that are subject to risks and uncertainties. For these statements, we claim the protections of the safe harbor for forward-looking statements contained in such Sections. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, capital expenditures, results of operations, plans and objectives, macroeconomic conditions and our proposed transaction with certain affiliates of EQT Active Core Infrastructure fund (“EQT”) and Public Sector Pension Investment Board (“PSP”). In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believe,” “expect,” “anticipate,” “estimate,” “outlook,” “plan,” “continue,” “intend,” “should,” “may,” “will” or similar expressions, their negative or other variations or comparable terminology.

Forward-looking statements are subject to significant risks and uncertainties and are based on current beliefs, assumptions and expectations based upon our historical performance and on our current plans, estimates and expectations in light of information available to us. Any forward-looking statement speaks only as of the date on which it is made. Except as required by law, we are not obligated to, and do not intend to, publicly update or revise any forward-looking statements made herein after the date of this Quarterly Report, whether as a result of new information, future events or otherwise. Forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy, liquidity and proposed transaction with affiliates of EQT and PSP. Actual results may differ materially from those set forth in the forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

Certain important factors that we think could cause our actual results to differ materially from expected results are summarized below. Other factors besides those listed could also adversely affect us. We operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for management to predict all such risks and uncertainties or how they may affect us. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Important factors that could cause our actual results to differ materially from those indicated in these statements include, but are not limited to:

our proposed transaction with certain affiliates of EQT and PSP may not be completed in a timely manner or at all, including the risk that the last remaining direct foreign investment approval is not obtained, is delayed or is subject to unanticipated conditions that could adversely affect us or our ability to satisfy the conditions of the proposed transaction;
the possibility that any or all of the various conditions to the consummation of the proposed transaction may not be satisfied or waived, including the failure (a) to receive the last remaining required direct foreign investment approval (or any conditions, limitations or restrictions placed on such approvals) and (b) to satisfy conditions related to (i) there being no event of default under certain of the Company’s existing debt facilities, (ii) certain waivers of change of control provisions under certain of the debt agreements of the Company and its subsidiaries being in full force and effect at the closing, including the possibility that such waivers fail to be in full force and effect at the closing because any two of William H. Berkman, Scott G. Bruce and Richard I. Goldstein have ceased to continue in their current capacities as Chief Executive Officer, President and Chief Operating Officer of the Company, respectively, at the closing and (iii) the Company having a specified minimum cash balance and the Company or any of its subsidiaries having an additional specified amount of additional cash, in each case at the closing;
the possibility that compliance with the minimum cash condition to the consummation of the proposed transaction may limit the growth of the Company’s business, depending on the availability to the Company of other sources of capital that are permitted under the terms of the Merger Agreement;
the occurrence of any event, change or other circumstance that could give rise to the termination of the proposed transaction, including in circumstances that would require us to pay a termination fee or other expenses;
the effect of the announcement or pendency of the proposed transaction on our ability to retain and hire key personnel, our ability to maintain the relationships with our customers, suppliers and others with whom we do business, or our operating results and business generally;
risks related to the proposed transaction diverting management’s attention from our ongoing business operations;
the risk that stockholder litigation in connection with the proposed transaction may result in significant costs of defense, indemnification and liability;

i


 

 

the extent that wireless carriers (mobile network operators, or “MNOs”) or tower companies consolidate their operations, exit the wireless communications business or share site infrastructure to a significant degree;
the extent that new technologies reduce demand for wireless infrastructure;
competition to acquire assets;
whether the Tenant Leases for the wireless communication tower, antennae or other digital communications infrastructure located on our real property interests are renewed with similar rates or at all;
the extent of unexpected lease cancellations, given that most of the Tenant Leases associated with our assets may be terminated upon limited notice by the MNO or tower company and unexpected lease cancellations could materially impact cash flow from operations;
economic, political, cultural, and regulatory risks and other risks to our operations, including risks associated with fluctuations in foreign currency exchange rates and local inflation rates;
the effect of the Electronic Communications Code in the United Kingdom, which may limit the amount of lease income we generate in the United Kingdom;
the extent that we continue to grow at an accelerated rate, which may prevent us from achieving profitability or positive cash flow at a company level (as determined in accordance with GAAP) for the foreseeable future, particularly given our history of net losses and negative net cash flow;
the fact that we have incurred a significant amount of debt and may in the future incur additional indebtedness;
the extent that the terms of our debt agreements limit our flexibility in operating our business;
the extent that unfavorable capital markets environments impair our growth strategy, which requires access to new capital;
the adverse effect that increased market interest rates may have on our interest costs, the value of our assets and on the growth of our business;
the adverse effect that perceived health risks from radio frequency energy may have on the demand for wireless communication services;
our ability to protect and enforce our real property interests in, or contractual rights to, the revenue streams generated by leases on our communications sites;
the loss, consolidation or financial instability of any of our limited number of customers;
our ability to pay dividends or satisfy our financial obligations;
whether we are required to issue additional shares of Class A Common Stock pursuant to the terms of the Series A Founder Preferred Stock or the APW OpCo LLC Agreement or upon the exercise of options granted to employees to acquire shares of Class A Common Stock, which would dilute the interests of holders of our Class A Common Stock;
the possibility that securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our securities adversely;
the possibility that we have established human capital goals and objectives that we may be unable to achieve or that are too optimistic; and
the other risks and uncertainties described under “Risk Factors” in Part I, Item 1A of the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “Annual Report”).

The risks included here are not exhaustive and should be read in conjunction with the other cautionary statements that are included elsewhere in this Quarterly Report, in the “Risk Factors” section of the Annual Report, and in our other filings with the Securities and Exchange Commission. Other sections of this Quarterly Report may include additional factors that could adversely affect our business and financial performance. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

ii


 

 

References in this Quarterly Report to “Radius,” the “Company,” “we,” “our,” or “us” mean Radius Global Infrastructure, Inc. together with its subsidiaries except where the context otherwise requires. Any capitalized terms not otherwise defined above have been defined elsewhere in this Quarterly Report.

iii


 

 

RADIUS GLOBAL INFRASTRUCTURE, INC.

TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

2

 

 

 

Item 1.

Unaudited Condensed Consolidated Financial Statements

2

 

 

 

 

Condensed Consolidated Balance Sheets at June 30, 2023 and December 31, 2022

2

 

 

 

 

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022

3

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2023 and 2022

4

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022

5

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022

7

 

 

 

 

Notes to Condensed Consolidated Financial Statements

8

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

 

 

 

Item 3.

Quantitative and Qualitative Disclosure about Market Risk

33

 

 

 

Item 4.

Controls and Procedures

34

 

 

 

PART II.

OTHER INFORMATION

35

 

 

 

Item 1.

Legal Proceedings

35

 

 

 

Item 1A.

Risk Factors

36

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

36

 

 

 

Item 5.

Other Information

36

 

 

 

Item 6.

Exhibits

37

 

 

 

Signatures

38

 

1


 

 

PART I. FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

RADIUS GLOBAL INFRASTRUCTURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except share amounts)

 

 

 

June 30,
2023

 

 

December 31,
2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

282,012

 

 

$

224,258

 

Restricted cash

 

 

2,817

 

 

 

1,971

 

Short-term investments

 

 

19,914

 

 

 

39,205

 

Total cash, cash equivalents, restricted cash, and short-term investments

 

 

304,743

 

 

 

265,434

 

Trade receivables, net

 

 

10,496

 

 

 

8,200

 

Prepaid expenses and other current assets

 

 

29,091

 

 

 

28,773

 

Total current assets

 

 

344,330

 

 

 

302,407

 

Real property interests, net:

 

 

 

 

 

 

Right-of-use assets - finance leases, net

 

 

458,401

 

 

 

379,052

 

Telecom real property interests, net

 

 

1,651,931

 

 

 

1,569,676

 

Real property interests, net

 

 

2,110,332

 

 

 

1,948,728

 

Intangible assets, net

 

 

12,239

 

 

 

12,121

 

Property and equipment, net

 

 

1,222

 

 

 

1,241

 

Goodwill

 

 

80,509

 

 

 

80,509

 

Deferred tax asset

 

 

1,636

 

 

 

306

 

Restricted cash, long-term

 

 

53,766

 

 

 

88,054

 

Other long-term assets

 

 

18,552

 

 

 

20,124

 

Total assets

 

$

2,622,586

 

 

$

2,453,490

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

55,383

 

 

$

48,767

 

Rent received in advance

 

 

33,781

 

 

 

26,551

 

Finance lease liabilities, current

 

 

13,355

 

 

 

15,589

 

Telecom real property interest liabilities, current

 

 

6,549

 

 

 

7,975

 

Total current liabilities

 

 

109,068

 

 

 

98,882

 

Finance lease liabilities

 

 

22,766

 

 

 

22,277

 

Telecom real property interest liabilities

 

 

1,252

 

 

 

4,483

 

Long-term debt, net of debt discount and deferred financing costs

 

 

1,692,943

 

 

 

1,503,352

 

Deferred tax liability

 

 

147,073

 

 

 

131,229

 

Other long-term liabilities

 

 

12,318

 

 

 

10,473

 

Total liabilities

 

 

1,985,420

 

 

 

1,770,696

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Series A Founder Preferred Stock, $0.0001 par value; 1,600,000 shares authorized; 1,600,000
   shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

 

 

 

 

 

 

Series B Founder Preferred Stock, $0.0001 par value; 1,386,033 shares authorized; 1,386,033
   shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

 

 

 

 

 

 

Class A Common Stock, $0.0001 par value; 1,590,000,000 shares authorized; 99,717,040 and
  
95,283,563 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

 

 

10

 

 

 

10

 

Class B Common Stock, $0.0001 par value; 200,000,000 shares authorized; 10,255,811 and
   
12,795,694 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

1,088,385

 

 

 

1,060,055

 

Accumulated other comprehensive loss

 

 

(51,324

)

 

 

(85,936

)

Accumulated deficit

 

 

(426,260

)

 

 

(338,819

)

Total stockholders’ equity attributable to Radius Global Infrastructure, Inc.

 

 

610,811

 

 

 

635,310

 

Noncontrolling interest

 

 

26,355

 

 

 

47,484

 

Total liabilities and stockholders’ equity

 

$

2,622,586

 

 

$

2,453,490

 

 

See accompanying notes to condensed consolidated financial statements.

2


 

 

RADIUS GLOBAL INFRASTRUCTURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in thousands, except share and per share amounts)

 

 

 

Three months
ended
June 30,
2023

 

 

Six months
ended
June 30,
2023

 

 

Three months
ended
June 30,
2022

 

 

Six months
ended
June 30,
2022

 

Revenue

 

$

42,475

 

 

$

83,689

 

 

$

32,568

 

 

$

63,167

 

Cost of service

 

 

2,421

 

 

 

4,313

 

 

 

2,027

 

 

 

2,868

 

Gross profit

 

 

40,054

 

 

 

79,376

 

 

 

30,541

 

 

 

60,299

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

25,486

 

 

 

54,950

 

 

 

21,205

 

 

 

43,892

 

Share-based compensation

 

 

5,389

 

 

 

10,573

 

 

 

5,496

 

 

 

10,088

 

Amortization and depreciation

 

 

23,950

 

 

 

47,035

 

 

 

19,324

 

 

 

38,075

 

Impairment - decommissions

 

 

1,500

 

 

 

2,550

 

 

 

1,272

 

 

 

2,037

 

Total operating expenses

 

 

56,325

 

 

 

115,108

 

 

 

47,297

 

 

 

94,092

 

Operating loss

 

 

(16,271

)

 

 

(35,732

)

 

 

(16,756

)

 

 

(33,793

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Realized and unrealized gain (loss) on foreign currency debt

 

 

(11,982

)

 

 

(27,461

)

 

 

58,667

 

 

 

82,899

 

Interest expense

 

 

(18,957

)

 

 

(36,628

)

 

 

(16,714

)

 

 

(32,812

)

Other income (expense), net

 

 

3,751

 

 

 

6,966

 

 

 

(3,164

)

 

 

(2,072

)

Gain on extinguishment of debt

 

 

 

 

 

 

 

 

942

 

 

 

942

 

Total other income (expense), net

 

 

(27,188

)

 

 

(57,123

)

 

 

39,731

 

 

 

48,957

 

Income (loss) before income tax expense (benefit)

 

 

(43,459

)

 

 

(92,855

)

 

 

22,975

 

 

 

15,164

 

Income tax expense (benefit)

 

 

(201

)

 

 

(1,785

)

 

 

(577

)

 

 

(3,743

)

Net income (loss)

 

 

(43,258

)

 

 

(91,070

)

 

 

23,552

 

 

 

18,907

 

Net income (loss) attributable to noncontrolling interest

 

 

(1,402

)

 

 

(3,629

)

 

 

1,385

 

 

 

1,177

 

Net income (loss) attributable to stockholders

 

 

(41,856

)

 

 

(87,441

)

 

 

22,167

 

 

 

17,730

 

Stock dividend payment to holders of Series A Founders Preferred Stock

 

 

 

 

 

 

 

 

(40,832

)

 

 

(40,832

)

Net loss attributable to common stockholders

 

$

(41,856

)

 

$

(87,441

)

 

$

(18,665

)

 

$

(23,102

)

 

 

 

 

 

 

 

 

 

 

 

 

Loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.43

)

 

$

(0.90

)

 

$

(0.20

)

 

$

(0.25

)

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

98,315,969

 

 

 

97,075,883

 

 

 

93,506,412

 

 

 

92,809,563

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

3


 

 

RADIUS GLOBAL INFRASTRUCTURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

(in thousands)

 

 

 

Three months
ended
June 30,
2023

 

 

Six months
ended
June 30,
2023

 

 

Three months
ended
June 30,
2022

 

 

Six months
ended
June 30,
2022

 

Net income (loss)

 

$

(43,258

)

 

$

(91,070

)

 

$

23,552

 

 

$

18,907

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

12,891

 

 

 

34,285

 

 

 

(63,046

)

 

 

(77,968

)

Unrealized gain on interest rate derivative

 

 

407

 

 

 

327

 

 

 

 

 

 

 

Comprehensive loss

 

$

(29,960

)

 

$

(56,458

)

 

$

(39,494

)

 

$

(59,061

)

 

See accompanying notes to condensed consolidated financial statements.

4


 

RADIUS GLOBAL INFRASTRUCTURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(in thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended June 30, 2023 and 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A Founder
Preferred Stock

 

 

Series B Founder
Preferred Stock

 

 

Common Shares

 

 

Class B Shares

 

 

Additional

 

 

Accumulated
other

 

 

 

 

 

 

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

paid-in
capital

 

 

comprehensive
income (loss)

 

 

Accumulated
deficit

 

 

Noncontrolling
interest

 

 

stockholders'
equity

 

Balance at March 31, 2023

 

 

1,600,000

 

 

$

-

 

 

 

1,386,033

 

 

$

-

 

 

 

99,541,524

 

 

$

10

 

 

 

10,378,327

 

 

$

-

 

 

$

1,082,943

 

 

$

(64,622

)

 

$

(384,404

)

 

$

27,757

 

 

$

661,684

 

Exercise of stock options

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,000

 

 

 

-

 

 

 

 

 

 

 

 

 

53

 

 

 

 

 

 

 

 

 

 

 

 

53

 

Share-based compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

172,516

 

 

 

-

 

 

 

(122,516

)

 

 

 

 

 

5,389

 

 

 

 

 

 

 

 

 

 

 

 

5,389

 

Foreign currency translation adjustment

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,891

 

 

 

 

 

 

 

 

 

12,891

 

Unrealized gain on interest rate derivative

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

407

 

 

 

 

 

 

 

 

 

407

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(41,856

)

 

 

(1,402

)

 

 

(43,258

)

Balance at June 30, 2023

 

 

1,600,000

 

 

$

-

 

 

 

1,386,033

 

 

$

-

 

 

 

99,717,040

 

 

$

10

 

 

 

10,255,811

 

 

$

-

 

 

$

1,088,385

 

 

$

(51,324

)

 

$

(426,260

)

 

$

26,355

 

 

$

637,166