– Revenue Reaches $8.5 Million for Fourth
Quarter and $38.3 Million for 2021 –
– Construction Pipeline Grows to $750
Million, Including 4,100 Residential Units –
– Company Projects Positive Cash Flow for
2022 –
– 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 modular
structures, today reported financial results for the fourth quarter
and year ending December 31, 2021.
Recent Financial and Operational Highlights:
- Revenue for the fourth quarter of 2021 was $8.5 million, an
increase of 15% compared to $7.4 million for the fourth quarter of
2020. Gross profit for the fourth quarter 2021 was approximately
$0.2 million compared to $1.6 million in the fourth quarter 2020,
reflecting higher year end cost adjustments for the 2021 period and
accrued losses of $1.0 million related to additional cost of goods
sold expenses for two projects which are expected to be completed
by the end of Q2 2022.
- Revenue for the twelve months of 2021 was $38.3 million, a 338%
increase compared to $8.8 million in revenue for 2020. Gross profit
for 2021 was $2.3 million compared to $2.2 million for 2020.
- Cash and cash equivalents totaled $13.0 million at December 31,
2021, including net proceeds of approximately $10.5 million from
the equity capital raise that closed in October 2021.
- SG Blocks had 11 projects under contract with a construction
backlog that is valued at approximately $3.2 million at December
31, 2021. The Company’s backlog does not include any projects
related to recently launched SG Development Corp. and does not
include ongoing medical testing.
- SGB DevCorp. had an active residential development pipeline of
4,100 units at December 31, 2021.
- Subsequent to year end, the Company’s SG ECHO subsidiary
announced its largest contract to date valued at approximately $6
million. The contract for more than 100 units are scheduled for
delivery by the end of Q2 2022.
Paul Galvin, Chairman and Chief Executive Officer of SG Blocks,
commented, “SG Blocks had a great year in 2021 and accomplished
many of its goals. This includes generating record consecutive
increases in quarterly revenue to reach over $38 million in revenue
for the year, building a strong pipeline across our business
verticals, signing multiple partnership agreements, purchasing or
investing in several development sites, building out our management
team with industry experts, and completing a capital raise that
enabled us to conclude the year with $13 million in cash on our
balance sheet to fund future growth.”
“We ended the year on a high note, reporting fourth quarter
revenue of $8.5 million, a 15% increase over the fourth quarter
last year. Cost of revenue was higher from additional year end
adjustments as we prepare for expected growth across our revenue
streams. At year end, SGB DevCorp’s current pipeline is valued at
$750 million.”
“Looking ahead, our goals for 2022 include nearing a pipeline of
10,000 residential units inside our development company, launching
our first non-COVID-19 testing and services modules, selling the
Lago Vista site in Austin and advancing the first SGB DevCorp
projects into our factories. We are also planning to offer a
minority stake of SGB DevCorp that we believe is worth between $20
- $30 million. Together, the sale of this stake, the sale of the
Lago Vista site and cash on the balance sheet potentially totals
$40 - $50 million in cash. Additionally, we continue to progress at
all of our manufacturing sites, in line with our goal of activating
approximately 1 million square feet of Made in the USA
manufacturing space over the next 24-30 months. We’ve self-funded
many of the development projects and accretive investments inside
our pipeline in part with the capital generated from the Covid
testing site at LAX. The investments we’ve made over the last two
years to build a strong foundation have brought us to this
important junction where we are now nearing the startup of
manufacturing for the projects in our pipeline and backlog. With an
expanding number of projects and investments generating growing
revenue in the year ahead, and supported by our strong balance
sheet, we expect continued strong revenue growth in 2022 and to
generate positive cash flow for the full year,” concluded Mr.
Galvin.
Financial Results for the Three Months Ended December 31,
2021
Revenue for the fourth quarter 2021 was $8.5 million, an
increase of 15% compared to $7.4 million for the fourth quarter of
2020. The Medical segment generated $7.6 million in revenue, an 80%
year-over-year increase and generated gross profit of $2.4
million.
Total gross profit for the fourth quarter of 2021 was $0.2
million compared to $1.6 million in the fourth quarter of 2020,
reflecting higher year end cost adjustments and accrued loss
chargeback of $1.0 million related to additional cost of goods sold
expenses for two projects which are expected to be completed by the
end of Q2 2022.
Operating expenses for the fourth quarter of 2021 were $2.4
million, a decrease of 22% compared to $3.1 million in the fourth
quarter of 2020. General and administrative expenses decreased from
$1.2 million to $0.8 millon, or by 35%, compared to the year ago
fourth quarter.
The net loss attributable to common shareholders was
approximately $3.4 million, or $(0.31) per share, compared to a net
loss of $1.6 million, or $(0.19) per share, in the fourth quarter
of 2020.
The net loss attributable to common shareholders includes
approximately $0.16 million in non-cash depreciation and
amortization expenses, $0.9 million in non-cash stock compensation
expense and $1.0 million in accrued losses for two active
projects.
Adjusted EBITDA loss for the fourth quarter of 2021 was
approximately $2.4 million compared to a loss of $0.7 million in
the fourth quarter of 2020, the increase is primarily due to the
Company’s higher net loss in the quarter.
Financial Results for the Twelve Months Ended December 31,
2021
For the twelve months of 2021, revenue was $38.3 million, a 338%
increase compared to $8.8 million in revenue for 2020. The Medical
segment generated $31.5 million in revenue, a 644% year-over-year
increase, and generated gross profit of $8.9 million. For the year,
the Medical segment accounted for 82% of total revenue and the
Construction segment accounted for 18%.
Gross profit for 2021 was $2.3 million compared to $2.2 million
for 2020. Operating expenses for 2021 were $8.3 million, an
increase of 22% compared to $6.8 million for 2020. Payroll and
related expenses increased 40% in the year to $4.2 million, which
includes non-cash stock based compensation.
The net loss attributable to common shareholders was
approximately $10.8 million, or $(1.16) per share, compared to a
net loss of $4.7 million, or $(0.79) per share for the year ended
2020.
The net loss attributable to common shareholders includes
approximately $0.6 million in non-cash depreciation and
amortization expenses, $1.6 million in non-cash stock based
compensation expense, $0.6 million of litigation expenses, and $2.7
million in accrued losses for two active projects.
Adjusted EBITDA loss for 2021 was approximately $8.0 million
compared to a loss of $2.8 million for 2020. The increase is
primarily due to the Company’s higher net loss for the year offset
by higher depreciation and amoritization and stock based
compensation.
Balance Sheet Highlights
Cash and cash equivalents totaled $13.0 million as of December
31, 2021, including net proceeds of approximately $10.5 million
from the equity capital raise that closed in October 2021.
At December 31, 2022, total assets were $34.9 million compared
to $26.9 million at December 31, 2020. The Company has minimal long
term debt and shareholders equity totaled $21.7 million compared to
$18.4 million at the end of 2020.
Conference Call Information
SG Blocks will host a conference call on Monday, April 18, 2022
at 4:30 p.m. Eastern Time to discuss its results for the fourth
quarter and year ended December 31, 2021.
Date: Monday, April 18, 2022 Time: 4:30 p.m.
ET / 1:30 p.m. PT Toll-free dial-in number: 1-877-407-9716
International dial-in number: 1-201-493-6779 Conference ID:
13729175
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 Monday, May 2, 2022, 11:59 PM ET.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671 Replay ID: 13729175
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:
For the Year Ended December
31, 2021
For the Year Ended December
31, 2020
Net loss attributable to common
stockholders of SG Blocks, Inc.
$
(10,832,674
)
$
(4,692,729
)
Addback interest expense
1,254
9,275
Addback interest income
(57,266
)
(61,675
)
Addback depreciation and amortization
605,405
239,982
EBITDA (non-GAAP)
(10,283,281
)
(4,505,147
)
Addback loss on asset disposal
44,081
1,012
Addback litigation expense
570,934
461,613
Addback stock-based compensation
expense
1,647,391
1,261,215
Adjusted EBITDA (non-GAAP)
$
(8,020,875
)
$
(2,781,307
)
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 nearing a pipeline of 10,000 residential units inside the
Company’s development company, launching the Company’s first
non-COVID-19 testing and services modules, selling the Lago Vista
site, advancing the first SG Development Company projects into the
Company’s factories, offering a minority stake of SG DevCo for
between $20-$30 million, the sale of the minority stake, the Lago
Vista site and the cash on the balance sheet potentially totaling
$40 - $50 million in cash, continuing to progress at all of our
manufacturing sites, in line with our goal of activating
approximately 1 million square feet of Made in the USA
manufacturing space over the next 24-30 months, continuing strong
revenue growth in 2022 and generating positive cash flow for the
full year. 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 achieve a pipeline of 10,000 residential units
inside the Company’s development company, the Company’s ability to
launch its first non-COVID-19 testing and services modules, the
Company’s ability to effect a sale of the Lago Vista site, the
Company’s ability to advance the first SG Development Company
projects into the Company’s factories, the Company’s ability to
sell a minority stake of SG DevCo for between $20-$30 million and
to sell the Largo Vista site and generate sales proceeds as
planned, the Company’s ability to activate approximately 1 million
square feet of Made in the USA manufacturing space over the next
24-30 months, the Company’s ability to continue strong revenue
growth in 2022, the Company’s ability to generate positive cash
flow for the full year, the Company’s ability to expand within
various verticals as planned, 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, 2021 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.
- Tables Follow -
SG BLOCKS, INC. AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
December 31,
2021
2020
Assets
Current assets:
Cash and cash equivalents
$
13,024,381
$
13,010,356
Accounts receivable, net
2,917,646
2,635,608
Contract assets
41,916
1,303,136
Inventories
1,273,825
778,144
Prepaid expenses
656,279
570,775
Total current assets
17,914,047
18,298,019
Property, plant and equipment, net
6,839,943
2,683,014
Project development costs and other
non-current assets
923,172
—
Goodwill
1,309,330
1,309,330
Right-of-use asset, net
1,210,053
1,537,545
Long-term notes receivable
720,137
682,637
Intangible assets, net
2,095,232
2,218,609
Deferred contract costs, net
112,159
152,944
Investment in non-marketable
securities
200,000
—
Investment in and advances to equity
affiliates
3,599,945
—
Total Assets
$
34,924,018
$
26,882,098
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable and accrued expenses
$
7,568,851
$
3,961,961
Contract liabilities
1,437,579
1,774,740
Lease liability, current maturities
337,469
326,654
Due to affiliates
264,451
965,561
Assumed liability
5,795
200,765
Short term note payable, net
1,971,960
—
Other current liabilities
—
5,000
Total current liabilities
11,586,105
7,234,681
Long-term note payable
750,000
—
Lease liability, net of current
maturities
872,124
1,209,594
Total liabilities
13,208,229
8,444,275
Stockholders’ equity:
Preferred stock, $0.00 par value,
5,405,010 shares authorized; none issued or outstanding.
—
—
Common stock, $0.01 par value, 25,000,000
shares authorized; 11,986,873 issued and outstanding
as of December 31, 2021 and 8,596,189 issued and
outstanding as of December 31, 2020.
119,869
85,962
Additional paid-in capital
53,341,405
40,443,840
Accumulated deficit
(33,109,220
)
(22,276,546
)
Total SG Blocks, Inc. stockholders’
equity
20,352,054
18,253,256
Non-controlling interests
1,363,735
184,567
Total Stockholders' equity
21,715,789
18,437,823
Total Liabilities and Stockholders’
Equity
$
34,924,018
$
26,882,098
SG BLOCKS, INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Operations
SG BLOCKS, INC. AND
SUBSIDIARIES
Consolidated Statements of
Operations
For the Years Ended December
31,
2021
2020
Revenue:
Construction services
$
6,537,941
$
4,104,917
Engineering services
255,749
409,206
Medical revenue
31,548,012
4,241,500
Total
38,341,702
8,755,623
Cost of revenue:
Construction services
13,251,470
3,224,457
Engineering services
154,126
322,853
Medical revenue
22,607,058
2,988,134
Total
36,012,654
6,535,444
Gross profit
2,329,048
2,220,179
Operating expenses:
Payroll and related expenses
4,186,642
2,992,207
General and administrative expenses
3,788,024
3,449,849
Marketing and business development
expense
288,438
230,248
Pre-project expenses
48,794
130,707
Total
8,311,898
6,803,011
Operating loss
(5,982,850
)
(4,582,832
)
Other income (expense):
Interest expense
(1,254
)
(9,275
)
Interest income
57,266
61,675
Other income
62,602
23,282
Loss on asset disposal
(44,081
)
(1,012
)
Loss from equity affiliates
(55
)
—
Total
74,478
74,670
Loss before income taxes
(5,908,372
)
(4,508,162
)
Income tax expense
—
—
Net loss
(5,908,372
)
(4,508,162
)
Add: net profit attributable to
noncontrolling interests
4,924,302
184,567
Net loss attributable to common
stockholders of SG Blocks, Inc.
$
(10,832,674
)
$
(4,692,729
)
Net loss per share attributable to SG
Blocks, Inc. - basic and diluted:
Basic and diluted
$
(1.16
)
$
(0.79
)
Weighted average shares outstanding:
Basic and diluted
9,339,199
5,959,403
SG BLOCKS, INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Changes in Stockholders’ Equity
Consolidated Statements of
Changes in Stockholders’ Equity
$0.01 Par Value Common
Stock
Preferred
Additional Paid-in
Accumulated
SG Blocks
Stockholders'
Noncontrolling
Total Stockholders’
Shares
Amount
Stock
Capital
Deficit
Equity
Interests
Equity
Balance at January 1,
2020
1,157,890
$
11,579
$
—
$
21,932,387
$
(17,583,817
)
$
4,360,149
$
—
$
4,360,149
Stock-based compensation
—
—
—
1,261,215
—
1,261,215
—
1,261,215
Conversion of restricted stock units to
common stock
24,672
246
—
(246
)
—
—
—
—
Reverse stock split settlement
(38
)
—
—
(122
)
—
(122
)
—
(122
)
Conversion of debt exchange to common
stock
73,665
737
—
205,526
—
206,263
—
206,263
Issuance of common stock, net of issuance
costs
7,340,000
73,400
—
17,045,080
—
17,118,480
—
17,118,480
Net income (loss)
—
—
—
—
(4,692,729
)
(4,692,729
)
184,567
(4,508,162
)
Balance at December 31, 2020
8,596,189
$
85,962
$
—
$
40,443,840
$
(22,276,546
)
$
18,253,256
$
184,567
$
18,437,823
Balance at January 1, 2021
8,596,189
85,962
—
40,443,840
(22,276,546
)
18,253,256
184,567
18,437,823
Stock-based compensation
—
—
—
1,736,531
—
1,736,531
—
1,736,531
Conversion of warrants to common stock
226,300
2,263
—
704,925
—
707,188
—
707,188
Issuance of common stock, net of issuance
costs
3,164,384
31,644
—
10,456,109
—
10,487,753
—
10,487,753
Noncontrolling interest distribution
—
—
—
—
—
—
(3,745,134
)
(3,745,134
)
Net income (loss)
—
—
—
—
(10,832,674
)
(10,832,674
)
4,924,302
(5,908,372
)
Balance at December 31, 2021
11,986,873
$
119,869
$
—
$
53,341,405
$
(33,109,220
)
$
20,352,054
$
1,363,735
$
21,715,789
SG BLOCKS, INC. AND
SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows
Consolidated Statements of Cash
Flows
For the Year Ended December
31, 2021
For the Year Ended December
31, 2020
Cash flows from operating
activities:
Net income (loss)
$
(5,908,372
)
$
(4,508,162
)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation expense
398,744
50,655
Amortization of intangible assets
165,877
148,541
Amortization of deferred license costs
40,785
40,786
Bad debt expense and recoveries
167,202
10,018
Interest income on notes receivable
(37,500
)
(32,637
)
Stock-based compensation
1,647,391
1,261,215
Loss on asset disposal
44,081
1,012
Loss on equity affiliates
55
—
Changes in operating assets and
liabilities:
Accounts receivable
(449,240
)
(890,531
)
Contract assets
1,261,220
(1,166,692
)
Inventories
(495,681
)
(647,345
)
Prepaid expenses and other current
assets
(61,778
)
(489,437
)
Right of use asset
473,331
81,256
Accounts payable and accrued expenses
3,606,889
1,129,189
Contract liabilities
(337,161
)
1,236,174
Due to affiliates
(701,110
)
965,561
Other current liability
(5,000
)
5,000
Lease liability
(472,492
)
(82,553
)
Net cash used in operating activities
(662,759
)
(2,887,950
)
Cash flows used in investing
activities:
Purchase of property, plant and
equipment
(4,824,756
)
(1,568,115
)
Purchase of Echo DCL, LLC, net of cash
acquired
—
(743,168
)
Purchase of intangible asset
(42,500
)
—
Proceeds from sale of equipment
225,000
—
Advances in notes receivable
—
(650,000
)
Payment on assumed liability of acquired
assets
(194,969
)
(84,440
)
Project development costs
(630,470
)
—
Payment on security deposit
(203,562
)
—
Investment in non-marketable
securities
(200,000
)
—
Investment in and advances to equity
affiliates
(3,600,000
)
—
Net cash used in investing activities
(9,471,257
)
(3,045,723
)
Cash flows provided by financing
activities:
Proceeds from public stock offering and
other private placements, net of issuance costs
10,487,753
17,118,480
Proceeds from conversion of warrants to
common stock
707,188
—
Proceeds from short-term note payable
2,000,000
—
Payment of note issuance costs
(51,766
)
—
Proceeds from long-term note payable
750,000
200,000
Distribution paid to noncontrolling
interest
(3,745,134
)
—
Settlement of common stock from reverse
stock split
—
(122
)
Net cash provided by financing
activities
10,148,041
17,318,358
Net increase in cash and cash
equivalents
14,025
11,384,685
Cash and cash equivalents - beginning
of year
13,010,356
1,625,671
Cash and cash equivalents - end of
year
$
13,024,381
$
13,010,356
Supplemental disclosure of cash flow
information:
Cash paid during the year for Interest
$
562
$
2,614
Supplemental disclosure of non-cash
operating activities:
Non-cash conversion of long term debt
$
—
$
200,000
Non-cash conversion of interest expense of
long term debt
$
—
$
6,263
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220418005232/en/
Investors: investors@sgblocks.com
PCG Advisory Stephanie Prince sprince@pcgadvisory.com
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