Note 3 - Discontinued Operations and Sale of a Business

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

3. DISCONTINUED OPERATIONS AND SALE OF A BUSINESS

As part of the Company’s stated strategy to transform Orbital Energy Group into a diversified energy infrastructure services platform serving North American energy customers, the Company’s board of directors made the decision to divest of its Orbital Gas subsidiaries. The Orbital Gas subsidiaries provide proprietary gas measurement and sampling technologies and the integration of process control and measuring/sampling systems. They are legacy businesses that are not part of the Company’s strategy of building an infrastructure services company serving the electric power, telecommunications and renewable markets. The disposition of the Orbital Gas subsidiaries will facilitate the Company’s restructuring and cost savings initiatives and are intended to realign and simplify its business structure and better position the Company for future growth and improved profitability. In the fourth quarter the Company recorded a $9.2 million impairment related to its U.K. operations to write the value of its investment in the U.K. operations to its expected realizable value of 3 million GBP ($4.1 million on December 31, 2021).

The sale of the U.K. operations closed in May of 2022. Assets and liabilities held for sale are included in the Company's balance sheet and are described below. See Note 19. Subsequent Events for more information on the sale of the U.K. business. 

	As of		As of
	March 31,		December 31,
(in thousands)	2022		2021
Carrying amounts of the major classes of assets included in discontinued operations:
Trade accounts receivable	$	3,109	$	2,996
Inventories		547		530
Prepaid expenses and other current assets		212		114
Contract assets		835		1,141
Assets held for sale, current portion		4,703		4,781
Property and equipment		52		42
Other intangible assets		1,813		1,813
Deposits and other assets		43		43
Assets held for sale, noncurrent portion		1,908		1,898
Total assets of the disposal group classified as held for sale	$	6,611	$	6,679
Carrying amounts of the major classes of liabilities included in discontinued operations:
Accounts payable	$	1,564	$	1,657
Contract liabilities		2,537		1,414
Operating lease obligations - current portion		73		76
Accrued expenses		1,474		1,126
Liabilities held for sale, current portion		5,648		4,273
Operating lease obligations, less current portion		82		85
Other long-term liabilities		5		9
Liabilities held for sale, noncurrent portion		87		94
Total liabilities held for sale	$	5,735	$	4,367

Selected data for these discontinued businesses consisted of the following:

Reconciliation of the Major Classes of Line Items Constituting Pretax Income from

Discontinued Operations to the After-Tax Income from Discontinued Operations That Are

Presented in the Condensed Consolidated Statement of Operations

(Unaudited)

(in thousands)	For the Three Months
	Ended March 31,
Major classes of line items constituting pretax profit of discontinued operations:	2022			2021
Revenues	$	3,986		$	3,930
Cost of revenues		(2,694	)		(2,715	)
Selling, general and administrative expense		(2,139	)		(2,443	)
Depreciation and amortization		—			(432	)
(Provision) credit for bad debt		(91	)		19
Interest expense		(7	)		(2	)
Other expense		(8	)		—
Pretax income of discontinued operations		(953	)		(1,643	)
Income tax expense		—			—
Total income from discontinued operations	$	(953	)	$	(1,643	)

Net cash provided by operating activities of discontinued operations for the three months ended March 31, 2022 was $0.5 million.

There was $10 thousand net cash used in investing activities of discontinued operations for the three months ended March 31, 2022.