– Posts Record First Quarter Revenue between
$8.9 Million and $9.2 Million –
– Company Expects to be Cash Flow Positive
during the fourth quarter of 2021 –
– Management to Host Conference Call Today
at 4:30 p.m. ET –
SG Blocks, Inc. (Nasdaq: SGBX) (“SG Blocks” or the
“Company”), a leading designer, innovator and fabricator of
container-based structures, today reported its financial results
for the first quarter ending March 31, 2021.
“During the first quarter 2021, we maintained the momentum we
established in 2020, achieving another quarter of record revenue,
with continued activity across all of our verticals,” stated Paul
Galvin, SG Blocks’ Chairman and Chief Executive Officer. “These
results directly reflect the incredible effort of our team over the
past several quarters to build a pipeline of strategic
opportunities, aligning with best-in-class partners, and
positioning our balance sheet to support the accelerating pace of
activity.”
“Most exciting is our recent launch of SGB Development Corp., to
co-develop and deliver homes and apartments for sale and rent,
beginning with our first project, Lago Vista, in booming Austin,
Texas. Our development projects should have multiple benefits,
including a steady stream of manufacturing revenue for the Company,
as well as a share of potential profits on sale. We are reviewing a
number of exciting opportunities, and we look forward to
communicating additional activity shortly.”
“In our other verticals, we brought to market a viable and
cost-effective solution for point-of-care testing services to
critical travel partners, health care providers, event hosts, and
disadvantaged communities. Importantly, our vision in the medical
vertical does not stop with COVID-19 testing. We are designing and
preparing multiple specialty modules to meet urgent demands for
community health for a variety of testing and health care delivery
needs.”
Mr. Galvin concluded, “We are firing on all cylinders now, with
significant projects underway that we believe can produce steady
and growing revenue for the Company for many years to come. Also,
we have established relationships with great partners which we
believe will lead to additional projects and work for SG Blocks,
allowing us to be selective, and pursue only the best
opportunities. At this point, we know that words don’t matter, and
we are focused on execution to truly capture the potential for the
projects underway, meet our deadlines, and produce the expected
benefits to the bottom line. Based on the above we anticipate being
cash flow positive during the fourth quarter of 2021 and into
2022.”
First Quarter 2021 and Subsequent Operational
Highlights:
At March 31, 2021, the Company had 16 projects under contract,
compared to 21 projects under contract at December 31, 2020. At
March 31, 2021, the construction backlog was approximately $22.9
million, as compared to $25.1 million as of December 31, 2020. The
Company’s backlog does not include any projects related to recently
launched SG Development Corp. and does not include ongoing medical
testing.
Concentrated Market Activity
Medical Testing & Services
SG Blocks continues to provide innovative structures, labs, and
testing solutions to support the fight against, and recovery from,
the COVID-19 pandemic. Our modular solutions can be quickly and
efficiently deployed at key locations for much-needed point-of-care
patient access, to support the continue reopening and recovery of
the U.S. economy.
In January, the Company executed an agreement with National Pain
Centers to provide COVID-19 testing near O'Hare airport, supporting
the needs of passengers, airport employees and the public at-large.
This facility opened for testing in February and was subsequently
re-leased to a consortium of government entities at a profit for
the company.
Subsequent to quarter-end, in May, the Company announced that it
is working with Stone Clinical Laboratories (“Stone Labs”) to bring
COVID-19 testing at the Food Network’s annual Wine & Food
Festival in Miami’s South Beach. Additionally, the Company and
Stone Labs will offer COVID-19 testing for employees, vendors, VIP
guests and attendees at the “Air & Sea Show & Music
Explosion,” in Miami Beach. Stone Labs has secured an additional 43
entertainment events which require COVID-19 testing in 2021, and
the Company expects to continue its collaboration with Stone Labs
going forward.
Manufacturing
After years of outsourcing SG Blocks is committed to in-house
manufacturing excellence. While there are a number of legacy
project commitments that will be completed at a cash loss in 2021,
going forward, the Company expects to manufacture future projects
at a margin of approximately 15%.
After acquiring the Echo DCL manufacturing facility in Durant,
Oklahoma, in 2020, in January 2021, the Company announced a new
10,300 square foot building extension at its SG Echo manufacturing
facility in Durant, Oklahoma that will enhance the manufacturing
efficiencies of the current facility. We continue to explore all
avenues to increase our manufacturing footprint to keep pace with
our internally driven demand.
SG Development Corporation
In February, the Company announced the formation of SGB
Development Corp. (“SGBDevCo”) to deliver single family homes,
townhomes, and for-rent apartment units across the country. The
launch of SGBDevCo is expected to provide a host of benefits to SG
Blocks, including: i) keeping manufacturing near 100% capacity to
provide a steady and visible flow of manufacturing income, ii)
participation in project fees, and; iii) potential profit from
asset sales.
In February, SGBDevCo executed its first contract to acquire
Lago Vista, a 50-acre site on Lake Travis, on the Colorado River in
thriving Austin, Texas. Lago Vista is expected to consist of up to
225 one- and two-bedroom condominium units, as well as amenities
including a community center, marina and health club.
Subsequent to quarter end, in May, SGBDevCo acquired the site,
and is currently finalizing plans, with groundbreaking currently
slated for Q2 2022. The project is expected to be funded with third
party debt and equity, and the Company intends to partner with an
experienced developer to complete the project.
SG Blocks expects to capture approximately $20 million in
manufacturing revenue as the project is completed over the next 24
months. The Company also anticipates that its minority interest in
the sale of the units will be no less than $5.0 million, as units
are sold. More details will be provided in the future as plans are
finalized.
First Quarter 2021 Financial Highlights:
- Revenue for the first quarter 2021 is expected to be between
$8.9 million and $9.2 million, compared to approximately $199,000
for the first quarter of 2020. The record revenue was achieved
despite having several commercial projects that were previously
announced being delayed directly and indirectly by the COVID-19
pandemic.
- Gross profit for the first quarter 2021 is expected to be
between $0.9 million and $1.2 million, compared to a gross profit
of approximately $46,000 in the first quarter 2020. The gross
profit margin in the first quarter 2021 is expected to be between
10% and 13.6%, compared to a gross profit margin of approximately
23.1% for the first quarter 2020. The gross profit in the first
quarter 2021 included a legacy contract commitment which started
and completed in the first quarter that incurred a loss of
approximately $1.0 million due to escalations in material pricing
related to COVID-19 and indirect costs.
- Operating expenses for the first quarter 2021 is expected to be
approximately $2.4 million, compared to approximately $795,000 in
the first quarter 2020. Imbedded in the first quarter 2021
operating expenses are approximately $550,000 in one-time startup
costs relating to the certification and opening of the Memorial
Healthcare laboratory and the opening and subletting of the Chicago
Area Testing facility, as well as due diligence and business
development expenses on potential projects.
- For the first quarter 2021, net loss attributable to common
shareholders is expected to between $2.0 million and $2.3 million,
or negative ($0.23) to ($0.26) per share, compared to a net loss of
approximately $747,000, or negative ($0.64) per share, in the first
quarter 2020. The net loss attributable to common shareholders
includes the following items:
- Approximately $500,000 in non-cash depreciation and
amortization expenses, non-cash stock compensation expense and
litigation expenses as explained in the adjusted EBITDA loss;
- Approximately $550,000 of one time startup expenses for all of
the newly launched companies, and;
- Approximately $1.0 million loss due to a legacy contract
commitment related to the SG Echo acquisition.
- Adjusted EBITDA loss for the first quarter 2021 is expected to
be between $1.5 million and $1.8 million, compared to a loss of
$527,000 in the first quarter 2020.
- At March 31, 2021, the Company had total assets of
approximately $27.2 million, compared to approximately $26.9
million at December 31st, 2020.
- The Company had cash and cash equivalents of approximately
$10.5 million as of March 31, 2021, compared to approximately $13.0
million at December 31, 2020.
Conference Call Information
SG Blocks will host a conference call on Monday, May 17, 2021 at
4:30 p.m. Eastern Time to share its results for the first quarter
ended March 31, 2021.
Date: Monday, May 17, 2021 Time: 4:30 p.m.
ET, 1:30 p.m. PT Toll-free dial-in number: 1-877-300-8521
International dial-in number: 1-412-317-6026 Conference ID:
10156502 Additionally, a webcast of the conference call will be
broadcast live and available for replay at the Investors section of
the Company’s website at www.sgblocks.com.
A replay of the conference call will be available after 7:30
p.m. Eastern time through May 31, 2021.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671 Replay ID: 10156502
Use of Non-GAAP Financial Information
In addition to its results under GAAP, the Company presents
EBITDA and Adjusted EBITDA for historical periods. EBITDA and
Adjusted EBITDA are non-GAAP financial measures and have been
presented as supplemental measures of financial performance that
are not required by, or presented in accordance with, GAAP. The
Company calculates EBITDA as net income (loss) before interest
expense, income tax benefit (expense), depreciation and
amortization. It calculates Adjusted EBITDA as EBITDA before
certain non-recurring adjustments such stock-based compensation
expense. EBITDA and Adjusted EBITDA are presented because they are
important metrics used by management as one of the means by which
it assesses the Company’s financial performance. EBITDA and
Adjusted EBITDA are also frequently used by analysts, investors and
other interested parties to evaluate companies in the Company’s
industry. These measures, when used in conjunction with related
GAAP financial measures, provide investors with an additional
financial analytical framework that may be useful in assessing the
Company and its results of operations.
EBITDA and Adjusted EBITDA have certain limitations. EBITDA and
Adjusted EBITDA should not be considered as alternatives to net
income (loss), or any other measures of financial performance
derived in accordance with GAAP. These measures also should not be
construed as an inference that the Company’s future results will be
unaffected by unusual or non-recurring items for which these
non-GAAP measures make adjustments. Additionally, EBITDA and
Adjusted EBITDA are not intended to be liquidity measures because
of certain limitations, including, but not limited to: i) they do
not reflect the Company’s cash outlays for capital expenditures;
They do not reflect changes in, or cash requirements for, working
capital; and Although depreciation and amortization are non-cash
charges, the assets are being depreciated and amortized and may
have to be replaced in the future, and these non-GAAP measures do
not reflect cash requirements for such replacements.
The non-GAAP information should be read in conjunction with the
Company’s consolidated financial statements and related notes.
The following is a reconciliation of EBITDA and Adjusted EBITDA
to the nearest GAAP measure, net loss:
In evaluating EBITDA and Adjusted EBITDA, you should be aware
that in the future we will incur expenses that are the same or
similar to some of the adjustments made in our calculations, and
our presentation of EBITDA and Adjusted EBITDA should not be
construed to mean that our future results will be unaffected by
such adjustment. Management compensates for these limitations by
using EBITDA and Adjusted EBITDA as supplemental financial metrics
and in conjunction with our results prepared in accordance with
GAAP. The non-GAAP information should be read in conjunction with
our consolidated financial statements and related notes.
About SG Blocks:
SG Blocks, Inc. is a premier innovator in advancing and
promoting the use of code-engineered cargo shipping containers for
safe and sustainable construction. The firm offers a product that
exceeds many standard building code requirements, and also supports
developers, architects, builders and owners in achieving greener
construction, faster execution, and stronger buildings of higher
value. Each project starts with GreenSteelTM, the structural core
and shell of an SG Blocks building, and then is customized to
client specifications. For more information, visit
www.sgblocks.com.
Safe Harbor Statement
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. In
some cases, forward-looking statements can be identified by
terminology such as "may," "should," "potential," "continue,"
"expects," "anticipates," "intends," "plans," "believes,"
"estimates," and similar expressions. These forward-looking
statements are based on management's expectations and assumptions
as of the date of this press release and include statements
regarding the Company’s development projects having multiple
benefits, including a steady stream of manufacturing revenue and a
share of potential profits on sale, the Company communicating
additional development project activity shortly, the Company’s
projects underway producing steady and growing revenue for years to
come, the Company’s relationships with its partners leading to
additional projects and work allowing it to be selective and pursue
only the best opportunities, the Company being cash flow positive
during the fourth quarter of 2021 and into 2022, the Company
continuing its collaboration with Stone Labs going forward, the
Company manufacturing future projects at a margin of approximately
15%, SGBDevCo providing a host of benefits to SG Blocks, the
Company’s Lago Vista project providing up to 225 one- and
two-bedroom condominium units, as well as amenities including a
community center, marina and health club, the Company’s Lago Vista
project groundbreaking in Q2 2022 and being funded with third party
debt and equity, the Company partnering with an experienced
developer to complete the Lago Vista project, capturing
approximately $20 million in manufacturing revenue the Lago Vista
project as completed over the next 24 months, the Company’s
minority interest in the sale of the units being no less than $5.0
million, revenue for the three months ended March 31, 2021 being
between $8.9 million and $9.2 million, gross profit for the three
months ended March 31, 2021 being between $0.9 million and $1.2
million, operating expenses for the three months ended March 31,
2021 being approximately $2.4 million, net loss for the three
months ended March 31, 2021 being between $2.0 million and $2.3
million, or negative ($0.23) to ($0.26) per share, and Adjusted
EBITDA loss for the three months ended March 31, 2021 being between
$1.5 million and $1.8 million. While SG Blocks believes these
forward-looking statements are reasonable, undue reliance should
not be placed on any such forward-looking statements, which are
based on information available to us on the date of this release.
These forward-looking statements are subject to a number of risks
and uncertainties, many of which are difficult to predict that
could cause actual results to differ materially from current
expectations and assumptions from those set forth or implied by any
forward-looking statements. Important factors that could cause
actual results to differ materially from current expectations
include, among others, the Company’s ability to generate a steady
stream of manufacturing revenue and profits on sale from its
development projects, the Company’s ability to report additional
development project activity, the Company’s ability to produce
steady and growing revenue from its projects, the Company’s ability
to grow its relationships with its partners and pursue only the
best opportunities, the Company’s ability to be cash flow positive
during the fourth quarter of 2021 and into 2022, the Company’s
ability to continue its collaboration with Stone Labs going
forward, the Company ability to manufacturing future projects at a
margin of approximately 15%, SGBDevCo’s ability to benefit to SG
Blocks, the Company’s ability to complete the Lago Vista project as
planned and partner with an experienced developer, the Company’s
ability to capture approximately $20 million in manufacturing
revenue the Lago Vista project as completed over the next 24
months, the Company’s ability to increase the value of its minority
interest in the sale of the units, the Company’s ability to report
revenue, gross profit, operating expenses, net loss and Adjusted
EBITDA loss for the three months ended March 31, 2021 as expected,
the Company’s ability to position itself for future profitability,
the Company’s ability to maintain compliance with the NASDAQ
listing requirements, and the other factors discussed in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2020 and the Company’s subsequent filings with the SEC,
including subsequent periodic reports on Forms 10-Q and 8-K. The
information in this release is provided only as of the date of this
release, and we undertake no obligation to update any
forward-looking statements contained in this release on account of
new information, future events, or otherwise, except as required by
law.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210517005894/en/
Media: Rubenstein Public Relations Christina Levin
Account Director 212-805-3129 clevin@rubensteinpr.com
Investors: Stephen Swett (203) 682-8377
investors@sgblocks.com
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