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Soluna Reports Fourth Quarter and Full Year 2023 Results

 Quarterly Adjusted EBITDA tops $1.0 million, marking a second straight quarter of gains

Successful business model diversification

Quarterly Gross Profit Best in 4 years at $4.3 million

Soluna Holdings, Inc. (“SHI” or the “Company”), (NASDAQ: SLNH), a developer of green data centers for intensive computing applications including Bitcoin mining and AI, announced financial results for the full year ended December 31, 2023.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240402401707/en/

FY 2023 Adjusted EBITDA by Quarter (Photo: Business Wire)

FY 2023 Adjusted EBITDA by Quarter (Photo: Business Wire)

"We are delighted to announce fourth quarter 2023 results, which were the culmination of 18 months of incredible execution by our operating team. We delivered record revenue and project-level profit, a direct result of the ramping up of our flagship Project Dorothy data center, and the new architecture of our business model aimed at revenue diversification," said John Belizaire, CEO of Soluna Holdings.

Fourth Quarter Finance and Operations Highlights:

  • Record Revenue – Revenue ramped to $10.1 million compared to third quarter 2023 revenue of $5.8 million, a 75% increase due to the ramp of Project Dorothy. It was the highest quarter in the past 16 quarters.
  • Record Gross Profit – Gross profit grew to $4.3 million, the highest profit quarter since the inception of the crypto segment in Q2 of 2020.
  • 2nd Consecutive Positive EBITDA Quarter – Fourth quarter 2023 Adjusted EBITDA topped $1.0 million, up from $405 thousand in the third quarter of 2023.
  • Stronger Balance Sheet – Current Cash & Restricted Cash as of December 31, 2023 was $9.4 million.
  • Substantial Ramp of Flagship in Second Half – During this period, Project Dorothy 1A and 1B generated $13.7 million of revenue, which made up 65% of the Company’s total full year revenue.
  • Success in Diversification of Model – the Company completed a series of architectural changes to the business to diversify the business across four key areas, now including hosting, mining, ancillary services, and artificial intelligence. This greatly decreases the company’s direct exposure to the volatility of Bitcoin Mining.

Belizaire continued, "2023 involved steering our ship through turbulent waters, while simultaneously rebuilding the ship to sail towards new horizons. 2024 presents numerous opportunities for the Company. I am honored to lead a company with some of the most resilient people in the industry. I am grateful for the patience our shareholders have shown and the support our financial backers have continued to provide."

"While there is more work ahead for our team, we ended 2023 on much better footing. We have proven that our business model – integrating with Renewable Power Plants – works and creates the industry’s greenest, most profitable data centers. It is great to be focused on growth again."

Fiscal Year 2023 Financial Results:

  • The strong fourth quarter results of $10.1 million in revenue represented a 75% increase as compared to the third quarter 2023, had a significant positive impact on our full fiscal year results.
  • Total 2023 revenue was $21.1 million, a decrease of $7.5 million or 26% as compared to 2022 – The decrease was due mainly to the impacts of the strategic realignment of the Company’s business from a primarily Bitcoin mining focus to a more diversified revenue stream that includes hosting, mining and ancillary services. The negative impacts of winding down our less efficient mining activities during the first half of the year were offset in part by the positive impacts of ramping up our hosting and more efficient mining activities during the second half of the year. Ramping up during the second half included the design, permitting, construction and energization of Project Dorothy 1A and 1B, securing hosting clients, and acquiring miners. During this period, Project Dorothy 1A and 1B generated $13.7 million of revenue, which made up 65% of the Company’s total full year revenue.
  • The total cost of revenue decreased $20.7 million from $36.5 million to $15.8 million – from 128% to 75% as a percentage of revenue in 2022 compared to 2023 respectively, primarily driven by closing higher cost facilities, switching to a data hosting model from a proprietary mining model at Project Sophie and energizing the lower cost Project Dorothy site.

FY 2023 Revenue & Cost of Revenue by Project Site

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Project Dorothy 1B

 

 

Project Dorothy 1A

 

 

Project Sophie

 

 

Project Marie

 

 

Other

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cryptocurrency mining revenue

 

$

6,849

 

 

$

-

 

 

$

2,984

 

 

$

769

 

 

$

-

 

 

$

10,602

 

Data hosting revenue

 

 

-

 

 

 

6,876

 

 

 

3,021

 

 

 

276

 

 

 

23

 

 

 

10,196

 

Demand response services

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

268

 

 

 

268

 

Total revenue

 

$

6,849

 

 

$

6,876

 

 

$

6,005

 

 

$

1,045

 

 

$

291

 

 

$

21,066

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of cryptocurrency mining, exclusive of depreciation

 

$

3,358

 

 

$

-

 

 

 

2,206

 

 

 

801

 

 

 

-

 

 

 

6,365

 

Cost of data hosting revenue, exclusive of depreciation

 

 

-

 

 

 

4,366

 

 

 

1,030

 

 

 

205

 

 

 

-

 

 

 

5,601

 

Cost of revenue- depreciation

 

 

1,816

 

 

 

755

 

 

 

1,154

 

 

 

136

 

 

 

2

 

 

 

3,863

 

Total cost of revenue

 

$

5,174

 

 

$

5,121

 

 

$

4,390

 

 

$

1,142

 

 

$

2

 

 

$

15,829

 

FY 2022 Revenue & Cost of Revenue by Project Site

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Project Dorothy 1B

 

 

Project Dorothy 1A

 

 

Project Sophie

 

 

Project Marie

 

 

Other

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cryptocurrency mining revenue

 

$

-

 

 

$

-

 

 

$

13,221

 

 

$

10,028

 

 

$

1,160

 

 

$

24,409

 

Data hosting revenue

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,131

 

 

 

7

 

 

 

4,138

 

Demand response services

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Total revenue

 

$

-

 

 

$

-

 

 

$

13,221

 

 

$

14,159

 

 

$

1,167

 

 

$

28,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of cryptocurrency mining, exclusive of depreciation

 

$

54

 

 

$

-

 

 

 

7,471

 

 

 

6,048

 

 

 

653

 

 

 

14,226

 

Cost of data hosting revenue, exclusive of depreciation

 

 

-

 

 

 

54

 

 

 

-

 

 

 

3,518

 

 

 

-

 

 

 

3,572

 

Cost of revenue- depreciation

 

 

-

 

 

 

-

 

 

 

10,597

 

 

 

7,813

 

 

 

298

 

 

 

18,708

 

Total cost of revenue

 

$

54

 

 

$

54

 

 

$

18,068

 

 

$

17,379

 

 

$

951

 

 

$

36,506

 

  • General and administrative expenses, excluding depreciation and amortization, for the year ended on December 31, 2023, decreased by $3.8 million, or 20% – to $15.4 million from $19.2 million for the year ending on December 31, 2022. Stock-based compensation costs were $3.7 million for 2023 for 2022.
  • Salary and wages decreased by approximately $1.4 million during the year ending on December 31, 2023 – compared to the year ending on December 31, 2022, due to a reduction in employee recruitment fees, headcount and personnel costs, and employee-related expenses, i.e. travel.
  • Legal fees decreased by approximately $1.1 million during the year ending on December 31, 2023 – compared to the year ending on December 31, 2022, due to less development agreements related to Project Dorothy. In addition, potential capital raising activities did not occur and other corporate related legal matters were less intensive during the year ending on December 31, 2023.
  • Consulting and professional services decreased by $1.6 million during the year ending on December 31, 2023 – compared to the year ending on December 31, 2022, due to required valuations of complex transactions, advisory fees for complex accounting research matters, and pipeline development project costs, in which the Company involved multiple consultants to help build out future plans incurred in 2022 which did not recur in 2023.
  • Adjusted EBITDA improved to $(3.5) million for 2023 compared to $(4.6) million in 2022 – For the three months ended December 31, 2023, Adjusted EBITDA increased by 157% or $0.6 million to $1.0 million compared to $0.4 million in the three months ended September 30, 2023.

The audited financial statements and 10K are available online.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Soluna Holdings, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Soluna’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, further information regarding which is included in the Company's filings with the Securities and Exchange Commission. All information provided in this press release is as of the date of the press release, and Soluna Holdings, Inc. undertakes no duty to update such information, except as required under applicable law.

Non GAAP Measures

In addition to figures prepared in accordance with GAAP, Soluna from time to time presents alternative non-GAAP performance measures, e.g., EBITDA, adjusted EBITDA, adjusted net profit/loss, adjusted earnings per share, free cash flow, both on a company basis and on a project-level basis. Project level measures may not take into account a full allocation of corporate expenses. These measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. Alternative performance measures are not subject to GAAP or any other generally accepted accounting principle. Other companies may define these terms in different ways. See our annual report on Form 10-K for the year ended December 31, 2023 for an explanation of how management uses these measures in evaluating its operations.

About Soluna Holdings, Inc (SLNH)

Soluna is on a mission to make renewable energy a global superpower using computing as a catalyst. The company designs, develops and operates digital infrastructure that transforms surplus renewable energy into global computing resources. Soluna’s pioneering data centers are strategically co-located with wind, solar, or hydroelectric power plants to support high-performance computing applications including Bitcoin Mining, Generative AI, and other compute intensive applications. Soluna’s proprietary software MaestroOS(™) helps energize a greener grid while delivering cost-effective and sustainable computing solutions, and superior returns. To learn more visit solunacomputing.com. Follow us on X (formerly Twitter) at @SolunaHoldings.

Soluna Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

As of December 31, 2023 and December 31, 2022

(Dollars in thousands, except per share)

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash

 

$

6,368

 

 

$

1,136

 

Restricted cash

 

 

2,999

 

 

 

685

 

Accounts receivable

 

 

2,948

 

 

 

320

 

Notes receivable

 

 

446

 

 

 

219

 

Prepaid expenses and other current assets

 

 

1,416

 

 

 

1,107

 

Equipment held for sale

 

 

107

 

 

 

295

 

Total Current Assets

 

 

14,284

 

 

 

3,762

 

Restricted cash, noncurrent

 

 

1,000

 

 

 

-

 

Other assets

 

 

2,954

 

 

 

1,150

 

Deposits and credits on equipment

 

 

1,028

 

 

 

1,175

 

Property, plant and equipment, net

 

 

44,572

 

 

 

42,209

 

Intangible assets, net

 

 

27,007

 

 

 

36,432

 

Operating lease right-of-use assets

 

 

431

 

 

 

233

 

Total Assets

 

$

91,276

 

 

$

84,961

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,099

 

 

$

3,548

 

Accrued liabilities

 

 

4,906

 

 

 

2,721

 

Line of credit

 

 

-

 

 

 

350

 

Convertible notes payable

 

 

8,474

 

 

 

11,737

 

Current portion of debt

 

 

10,864

 

 

 

10,546

 

Income tax payable

 

 

24

 

 

 

-

 

Deferred revenue

 

 

-

 

 

 

453

 

Customer deposits-current

 

 

1,588

 

 

 

-

 

Operating lease liability

 

 

220

 

 

 

161

 

Total Current Liabilities

 

 

28,175

 

 

 

29,516

 

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

499

 

 

 

203

 

Customer deposits- long-term

 

 

1,248

 

 

 

-

 

Operating lease liability

 

 

216

 

 

 

84

 

Deferred tax liability, net

 

 

7,779

 

 

 

8,886

 

Total Liabilities

 

 

37,917

 

 

 

38,689

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

9.0% Series A Cumulative Perpetual Preferred Stock, par value $0.001 per share, $25.00 liquidation preference; authorized 6,040,000; 3,061,245 shares issued and outstanding as of December 31, 2023 and December 31, 2022

 

 

3

 

 

 

3

 

Series B Preferred Stock, par value $0.0001 per share, authorized 187,500; 62,500 shares issued and outstanding as of December 31, 2023 and December 31, 2022

 

 

 

 

 

 

Common stock, par value $0.001 per share, authorized 75,000,000; 2,546,361 shares issued and 2,505,620 shares outstanding as of December 31, 2023 and 788,578 shares issued and 747,837 shares outstanding as of December 31, 2022(1)

 

 

3

 

 

 

1

 

Additional paid-in capital

 

 

291,276

 

 

 

277,429

 

Accumulated deficit

 

 

(250,970

)

 

 

(221,769

)

Common stock in treasury, at cost, 40,741 shares at December 31, 2023 and December 31, 2022(1)

 

 

(13,798

)

 

 

(13,798

)

Total Soluna Holdings, Inc. Stockholders’ Equity

 

 

26,514

 

 

 

41,866

 

Non-Controlling Interest

 

 

26,845

 

 

 

4,406

 

Total Stockholders’ Equity

 

 

53,359

 

 

 

46,272

 

Total Liabilities and Stockholders’ Equity

 

$

91,276

 

 

$

84,961

 

(1)

Prior period results have been adjusted to reflect the Reverse Stock Split of the Common Stock at a ratio of 1-for-25 that became effective October 13, 2023. See Note 2, “Accounting Policies,” for details.

Soluna Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations

For the Years Ended December 31, 2023 and 2022

(Dollars in thousands, except per share)

 

 

Year Ended

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Cryptocurrency mining revenue

 

$

10,602

 

 

$

24,409

 

Data hosting revenue

 

 

10,196

 

 

 

4,138

 

Demand response services

 

 

268

 

 

 

-

 

Total revenue

 

 

21,066

 

 

 

28,547

 

Operating costs:

 

 

 

 

 

 

 

 

Cost of cryptocurrency mining revenue, exclusive of depreciation

 

 

6,365

 

 

 

14,226

 

Cost of data hosting revenue, exclusive of depreciation

 

 

5,601

 

 

 

3,572

 

Costs of revenue-depreciation

 

 

3,863

 

 

 

18,708

 

Total costs of revenue

 

 

15,829

 

 

 

36,506

 

Operating expenses:

 

 

 

 

 

 

 

 

General and administrative expenses, exclusive of depreciation and amortization

 

 

15,390

 

 

 

19,203

 

Depreciation and amortization associated with general and administrative expenses

 

 

9,513

 

 

 

9,506

 

Total general and administrative expenses

 

 

24,903

 

 

 

28,709

 

Impairment on equity investment

 

 

-

 

 

 

750

 

Impairment on fixed assets

 

 

575

 

 

 

47,372

 

Operating loss

 

 

(20,241

)

 

 

(84,790

)

Interest expense

 

 

(2,748

)

 

 

(8,375

)

Loss on debt extinguishment and revaluation, net

 

 

(3,904

)

 

 

(11,130

)

Loss on sale of fixed assets

 

 

(398

)

 

 

(4,089

)

Other (expense) income, net

 

 

(1,479

)

 

 

22

 

Loss before income taxes from continuing operations

 

 

(28,770

)

 

 

(108,362

)

Income tax benefit from continuing operations

 

 

1,067

 

 

 

1,346

 

Net loss from continuing operations

 

 

(27,703

)

 

 

(107,016

)

Income before income taxes from discontinued operations (including gain on sale of MTI Instruments of $7,751 for year ended December 31, 2022)

 

 

-

 

 

 

7,851

 

Income tax benefit from discontinued operations

 

 

-

 

 

 

70

 

Net income from discontinued operations

 

 

-

 

 

 

7,921

 

Net loss

 

 

(27,703

)

 

 

(99,095

)

(Less) Net income (loss) attributable to non-controlling interest

 

 

1,498

 

 

 

(380

)

Net loss attributable to Soluna Holdings, Inc.

 

$

(29,201

)

 

$

(98,715

)

 

 

 

 

 

 

 

 

 

Basic and Diluted (loss) earnings per common share (1):

 

 

 

 

 

 

 

 

Net loss from continuing operations attributable to Soluna Holdings, Inc. per share (Basic & Diluted)

 

$

(27.79

)

 

$

(187.63

)

Net income from discontinued operations per share (Basic & Diluted)

 

$

-

 

 

$

13.22

 

Basic & Diluted loss per share

 

$

(27.79

)

 

$

(174.41

)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding (Basic and Diluted)

 

 

1,313,718

 

 

 

599,301

 

(1)

Prior period results have been adjusted to reflect the Reverse Stock Split of the Common Stock at a ratio of 1-for-25 that became effective October 13, 2023. See Note 2, “Accounting Policies,” for details.

 

Soluna Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Year Ended December 31, 2023 and 2022

(Dollars in thousands)

 

 

Year Ended December 31,

 

 

 

2023

 

 

2022

 

Operating Activities

 

 

 

 

 

 

 

 

Net loss

 

$

(27,703

)

 

$

(99,095

)

Net income from discontinued operations (including gain on sale of MTI Instruments of $7,751 for the year ended December 31, 2022)

 

 

-

 

 

 

(7,921

)

Net loss from continuing operations

 

 

(27,703

)

 

 

(107,016

)

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation expense

 

 

3,894

 

 

 

18,731

 

Amortization expense

 

 

9,483

 

 

 

9,483

 

Stock-based compensation

 

 

4,225

 

 

 

3,673

 

Consultant stock compensation

 

 

87

 

 

 

179

 

Deferred income taxes

 

 

(1,107

)

 

 

(1,388

)

Impairment on fixed assets

 

 

575

 

 

 

47,372

 

Amortization of operating lease asset

 

 

238

 

 

 

202

 

Impairment on equity investment

 

 

-

 

 

 

750

 

Loss on debt extinguishment and revaluation, net

 

 

3,904

 

 

 

11,130

 

Amortization on deferred financing costs and discount on notes

 

 

753

 

 

 

6,538

 

Loss on sale of fixed assets

 

 

398

 

 

 

4,089

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(2,620

)

 

 

211

 

Prepaid expenses and other current assets

 

 

(306

)

 

 

146

 

Other long-term assets

 

 

(304

)

 

 

(29

)

Accounts payable

 

 

(862

)

 

 

553

 

Deferred revenue

 

 

(453

)

 

 

137

 

Customer deposits

 

 

2,836

 

 

 

-

 

Operating lease liabilities

 

 

(234

)

 

 

(197

)

Other liabilities

 

 

320

 

 

 

(308

)

Accrued liabilities

 

 

3,889

 

 

 

(374

)

Net cash used in provided by operating activities

 

 

(2,987

)

 

 

(6,118

)

Net cash provided by operating activities- discontinued operations

 

 

-

 

 

 

369

 

Investing Activities

 

 

 

 

 

 

 

 

Purchases of property, plant, and equipment

 

 

(12,705

)

 

 

(63,684

)

Purchases of intangible assets

 

 

(58

)

 

 

(76

)

Proceeds from disposal on property, plant, and equipment

 

 

2,286

 

 

 

2,605

 

Deposits of equipment, net

 

 

147

 

 

 

6,441

 

Net cash used in investing activities

 

 

(10,330

)

 

 

(54,714

)

Net cash provided by investing activities- discontinued operations

 

 

-

 

 

 

9,084

 

Financing Activities

 

 

 

 

 

 

 

 

Proceeds from preferred offerings

 

 

-

 

 

 

16,658

 

Proceeds from common stock offering

 

 

817

 

 

 

2,858

 

Proceeds from notes and debt issuance

 

 

3,100

 

 

 

30,543

 

Costs of preferred offering

 

 

-

 

 

 

(1,910

)

Costs of common stock offering

 

 

(10

)

 

 

(504

)

Costs of notes and short-term debt issuance

 

 

(1,057

)

 

 

(2,078

)

Cash dividend distribution on preferred stock

 

 

-

 

 

 

(3,852

)

Payments on NYDIG loans and line of credit

 

 

(350

)

 

 

(4,491

)

Contributions from non-controlling interest

 

 

20,365

 

 

 

4,786

 

Distributions for non-controlling interest

 

 

(1,002

)

 

 

-

 

Proceeds from stock option exercises

 

 

-

 

 

 

153

 

Proceeds from common stock warrant exercises

 

 

-

 

 

 

779

 

Net cash provided by financing activities

 

 

21,863

 

 

 

42,942

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash & restricted cash-continuing operations

 

 

8,546

 

 

 

(17,890

)

Increase in cash & restricted cash- discontinued operations

 

 

-

 

 

 

9,453

 

Cash & restricted cash – beginning of period

 

 

1,821

 

 

 

10,258

 

Cash & restricted cash – end of period

 

$

10,367

 

 

$

1,821

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information

 

 

 

 

 

 

 

 

Interest paid on NYDIG loans and line of credit

 

 

6

 

 

 

1,311

 

Interest paid on Navitas loan

 

 

204

 

 

 

-

 

Interest paid on convertible noteholder default

 

 

617

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Noncash investing and financing activities:

 

 

 

 

 

 

 

 

Notes converted to common stock

 

 

6,013

 

 

 

3,295

 

Noncash disposal of NYDIG collateralized equipment

 

 

3,137

 

 

 

-

 

Noncash non-controlling interest contribution

 

 

2,095

 

 

 

-

 

Interest and penalty settled through repossession of collateralized equipment

 

 

1,773

 

 

 

-

 

Warrant consideration in relation to convertible notes and debt

 

 

1,637

 

 

 

14,602

 

Non-controlling interest membership distribution accrual

 

 

517

 

 

 

-

 

Noncash activity right-of use assets obtained in exchange for lease obligations

 

 

403

 

 

 

20

 

Promissory note conversion to common or preferred shares

 

 

845

 

 

 

15,236

 

Noncash proceed on sale of equipment

 

 

240

 

 

 

210

 

Series B preferred dividend prefunded warrant and common stock issuance

 

 

656

 

 

 

-

 

Noncash equipment financing

 

 

-

 

 

 

4,620

 

Proceed receivable from sale of MTI Instruments

 

 

-

 

 

 

295

 

Non-GAAP Measures

In addition to financial measures calculated in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), we also use “Adjusted EBITDA.” Adjusted EBITDA is a non-GAAP financial measure defined as net income (loss) from continuing operations before interest, taxes, depreciation and amortization (“EBITDA”) adjusted to eliminate the effects of certain non-cash, non-recurring items, that we believe do not reflect our ongoing strategic business operations. Management believes that Adjusted EBITDA results in a performance measurement that represents a key indicator of the Company’s business operations of cryptocurrency mining and hosting customers engaged in cryptocurrency mining.

We believe Adjusted EBITDA can be an important financial measure because it allows management, investors, and the Board to evaluate and compare our operating results, including our return on capital and operating efficiencies, from period-to-period by making such adjustments. 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 U.S. GAAP. For example, we expect that stock-based compensation costs, which is excluded from the non-GAAP financial measures, 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. Similarly, we expect that depreciation and amortization of fixed assets will continue to be a recurring expense over the term of the useful life of the assets.

Adjusted EBITDA is provided in addition to and should not be considered to be a substitute for, or superior to net income, the comparable measure calculated in accordance with U.S. GAAP. Further, Adjusted EBITDA should not be considered as an alternative to revenue growth, net income, diluted earnings per share or any other performance measure calculated in accordance with U.S. GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measures either in isolation or as substitutes for analyzing our results as reported under U.S. GAAP.

Reconciliations of Adjusted EBITDA to net income from continuing operations, the most comparable U.S. GAAP financial metric, for historical periods are presented in the table below:

(Dollars in thousands)

 

Years Ended

December 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Net loss from continuing operations

 

$

(27,703

)

 

$

(107,016

)

Interest expense

 

 

2,748

 

 

 

8,375

 

Income tax (benefit) expense

 

 

(1,067

)

 

 

(1,346

)

Depreciation and amortization

 

 

13,376

 

 

 

28,214

 

EBITDA

 

 

(12,646

)

 

 

(71,773

)

 

 

 

 

 

 

 

 

 

Adjustments: Non-cash items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation costs

 

 

4,312

 

 

 

3,852

 

Loss on sale of fixed assets

 

 

398

 

 

 

4,089

 

Loss on debt extinguishment and revaluation, net

 

 

3,904

 

 

 

11,130

 

Impairment of equity investment

 

 

-

 

 

 

750

 

Impairment on fixed assets

 

 

575

 

 

 

47,372

 

Adjusted EBITDA

 

$

(3,457

)

 

$

(4,580

)

Stock based compensation costs represented approximately $3.4 million non-cash restricted stock units and $908 thousand non-cash stock options for the year ended December 31, 2023 to members of our Board of Directors and certain Company employees compared to non-cash restricted stock units of approximately $2.6 million to members of our Board of Directors and certain Company employees for the year ended December 31, 2022 and non-cash stock options of approximately $1.2 million for the year ended December 31, 2022.

The following table represents the Adjusted EBITDA activity between each three-month period for the year ended December 31, 2023.

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

Three months ended

March 31,

2023

 

 

Three months ended

June 30,

2023

 

 

Three months ended

September 30,

2023

 

 

Three months ended

December 31,

2023

 

 

Year ended

December 31,

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from continuing operations

 

$

(7,432

)

 

$

(9,257

)

 

$

(6,016

)

 

$

(4,998

)

 

$

(27,703

)

Interest expense, net

 

 

1,374

 

 

 

486

 

 

 

495

 

 

 

393

 

 

 

2,748

 

Income tax (benefit) expense from continuing operations

 

 

(547

)

 

 

(547

)

 

 

569

 

 

 

(542

)

 

 

(1,067

)

Depreciation and amortization

 

 

3,002

 

 

 

2,918

 

 

 

3,579

 

 

 

3,877

 

 

 

13,376

 

EBITDA

 

 

(3,603

)

 

 

(6,400

)

 

 

(1,373

)

 

 

(1,270

)

 

 

(12,646

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments: Non-cash items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation costs

 

 

879

 

 

 

2,232

 

 

 

595

 

 

 

606

 

 

 

4,312

 

Loss (gain) on sale of fixed assets

 

 

78

 

 

 

(48

)

 

 

373

 

 

 

(5

)

 

 

398

 

Impairment on fixed assets

 

 

209

 

 

 

169

 

 

 

41

 

 

 

156

 

 

 

575

 

Loss on debt extinguishment and revaluation, net

 

 

(473

)

 

 

2,054

 

 

 

769

 

 

 

1,554

 

 

 

3,904

 

Adjusted EBITDA

 

$

(2,910

)

 

$

(1,993

)

 

$

405

 

 

$

1,041

 

 

$

(3,457

)

 

 

The following table represents the Adjusted EBITDA activity between each three-month period for the year ended December 31, 2022.

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

Three months ended

March 31,

2022

 

 

Three months ended

June 30,

2022

 

 

Three months ended

September 30,

2022

 

 

Three months ended

December 31,

2022

 

 

Year ended

December 31,

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from continuing operations

 

$

(9,132

)

 

$

(14,104

)

 

$

(56,143

)

 

$

(27,637

)

 

$

(107,016

)

Interest expense, net

 

 

2,880

 

 

 

3,305

 

 

 

1,671

 

 

 

519

 

 

 

8,375

 

Income tax benefit from continuing operations

 

 

(547

)

 

 

(251

)

 

 

(547

)

 

 

(1

)

 

 

(1,346

)

Depreciation and amortization

 

 

6,697

 

 

 

7,914

 

 

 

8,388

 

 

 

5,215

 

 

 

28,214

 

EBITDA

 

 

(102

)

 

 

(3,136

)

 

 

(46,631

)

 

 

(21,904

)

 

 

(71,773

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments: Non-cash items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation costs

 

 

955

 

 

 

1,064

 

 

 

890

 

 

 

943

 

 

 

3,852

 

Loss on sale of fixed assets

 

 

-

 

 

 

1,618

 

 

 

988

 

 

 

1,483

 

 

 

4,089

 

Impairment on fixed assets

 

 

-

 

 

 

750

 

 

 

28,086

 

 

 

18,536

 

 

 

47,372

 

Loss (gain) on debt extinguishment and revaluation, net

 

 

-

 

 

 

-

 

 

 

12,317

 

 

 

(1,187

)

 

 

11,130

 

Impairment on equity investment

 

 

-

 

 

 

-

 

 

 

750

 

 

 

-

 

 

 

750

 

Adjusted EBITDA

 

$

853

 

 

$

296

 

 

$

(3,600

)

 

$

(2,129

)

 

$

(4,580

)

 

Contacts

David Michaels

Chief Financial Officer

Soluna Holdings, Inc.

David@soluna.io

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