Q3 2020 SG Blocks Inc Earnings Call
Good day, and welcome to <unk> blocks third quarter Twentytwenty earnings conference call and webcast.
Todays conference call is being recorded.
At this time I would like to turn the conference over to Steven Swett <unk> Investor Relations. Please go ahead.
Yeah.
Thank you all for joining us for our third quarter 2020 earnings Conference call.
With me today is pull Galvus, Chief Executive Officer rescue blocks and Carol cheering.
Chief Financial Officer Nasty blocks press.
Press release detailing our results was issued this afternoon, just after market close and is available on the company's website.
Www dot SG blocks dotcom.
Before I turn the call over to Paul. Please remember that certain statements made during this presentation are forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
All statements other than statements of historical facts contained in this presentation, including statements regarding the company's future operations and financial positions business strategy plans and objectives of management for future operations or looking statements and.
In some cases forward looking statements can be identified by Terminologies such as believes my estimates continue it dissipates intend should plan expects predicts potential or the negative of these terms or other similar expressions.
We have based these forward looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition results of operations business strategy and financial needs.
These forward looking statements are subject to a number of risks and uncertainties and assumptions described including those set forth in our filings with the FCC, which are available on our website at www Dot SG blocks Dot com you.
You should not rely upon forward looking statements as predictions of future events, we cannot assure you that the events and circumstances reflected in the forward looking statements will be achieved or occur.
Finally, this conference call is being webcast less cash is available in the Investor Relations section on our website.
Now I will turn the call over to Paul.
Thank you, Steve and welcome to the S.P. blocks third quarter 2020, <unk> financial results Conference call.
The third quarter with the game change from quarter for SG blocks during which we accelerated our business on every front.
We made progress and announced significant activity in all of our vertical and built on the momentum were reported in the first half of the year.
We executed in the coming quarter we.
We believe our results will demonstrate the bottom line benefit of our accomplishments. So far this year setting the stage for sustained growth in the fourth quarter and it's 2021.
But before I touch on recent activity and results from the quarter, we have many new investors and I think it's important to step back and provide a quick overview of SG blocks. We are what we do and how we are positioned at the greenest alternative for almost any project that utilize the speed.
That's two blocks is the premier innovator in design or some of the world's most iconic container based structure.
Simply put.
We re purpose shipping containers into vibrant and creative new space that can be used for any real estate you out health care office education retail lodging and so on.
The S P stands for safe and Green.
Safe because we use maritime Green certainly continues that adorable and highly resistant to manmade or natural disaster.
Green.
Because transforming these containers into usable structure is extremely environmentally friendly due to how they are built.
Here they are below the low levels of energy needed to re purpose.
And the speed with which they can be deployed.
Using SG blocks are customers eliminate the need for a less efficient highly wasteful and environmentally threatening ground up construction.
In our early days, we have to prove out the power of our unique concept. We began by building a single site stores and pop up shops for retailers, such as Puma and Starbucks.
We also built individual home and then just on larger scale infrastructure projects for retail government and defense customers.
As we continue to successfully demonstrate the efficiency of our products and our design and construction processing, we attracted more customers and our project scope expanded and evolve.
We perfected the process to engineer produce and deliver incredibly safe strong and green structures while.
While individually designing the right box for each specific use.
Develop relationships with renowned architect and design teams World class developer and builder and major real estate owners, both public and private.
We began pursuing larger customers and projects, which will offer the potential for recurring revenue streams from project sales fees and royalty.
At the same time, the importance of environmental and social responsibility in the investing world, Yes, GE took off.
The principle of P.S.G. are not new to actually blocks they.
They are ingrained in our DNA.
In fact in 2017, we were the first company to get a recycled material.
Our humble shipping container food for the purposes of construction by the ICEE see today, we offer a product that is literally conceived dog and design for an increasingly green world and we are truly in the right place at the right time.
2020 has been a year like no other with unprecedented health related and economic challenges across the globe.
But for SG blocks.
It has been in Europe tremendous opportunity.
And we are private.
Turning to recent activity.
The second and third quarters represent a seminal turnaround and expansion for the company.
Despite the challenges of the COVID-19 pandemic actually blocks worked diligently to advance several significant programs through concept into design and planning and ought to manufacturing and delivery.
From our pipeline of projects.
We believe that the revenue booked in the third quarter 2020.
Just the tip of the iceberg, which we expect to show in coming quarters as these projects mature further.
Further as we sit here today, our company benefits from a strong clean and flexible balance sheet with no debt and no significant encumbrances, which should allow a significant portion of our growth.
We flow to the bottom line for our shareholders.
These outcomes would not be possible without the tireless efforts of our staff partners outside consultant and board. We thank everyone for their hard work and dedication during difficult conditions.
Now beginning with our health care vertical actually blocks and its management team had an extensive history and the design construction and operation of medical buildings and clinic.
When the COVID-19 pandemic hit the U.S., we were ready willing and able to compete for business with our quick to deliver solutions.
The outcome from these efforts include.
On April Thirtyth, we entered into a preferred distribution agreement with other thing health care of South Korea.
Hosting producing excellent three g. PCR test for Coke at 19 with high levels of efficiency and resiliency, which we believe was deployable via container based module.
On May 20, Eightth Sq blocks announced the partnership with World renowned architectural giant grimshaw to design and produce solutions for extracting testing and lab services related to cold at 19.
On August 27, SG blocks entered the growing and lucrative CLIA lab market by forming a joint venture with established lab professionals from Boca Raton clarity lab solution.
On September 23rd in a substantial vertical integration SG blocks acquired the assets of modular factory.
Go do you see out there.
The company also has the right of first refusal to acquire the factory building and 19 acre parcel located into rants, Oklahoma.
This is where the majority of medical structures will be built and this acquisition represents a significant step in vertical integration, which brings in house, our largest source of cost of goods sold at least the better efficiency.
September 25th actually blocks announced it would partner with lots of establishing operational kopec detect lab at El <unk> Airport.
And our pace of activity has continued into the fourth quarter on October 19th Sq blocks, and dosing healthcare announced they manage kogut tests supply agreement and purchase order for 2 million Cold PCR test being stored in southern California.
On October Thirtyth, SG blocks, and Im sure announced that detect product was selected by CBS is a coveted New York Art design competition commencing in November 2020.
On November 16, SG blocks subsidiary clarity mobile venture announced it had been selected as a trusted testing partner approved by the state of Hawaii for their comprehensive travel testing program tooling from California.
Also we have received many inquiries from stakeholders.
An update on our L.A.X. project the.
The projects communications belong.
To the airport.
For security and other reason, hence our silence and respect for their needs.
However on November 17th we were pleased to announce that clarity mobile venture began providing services at LAWA inside three terminal and lob. One now that detect will be available in the first week of December when the site prep it's finished.
And today, we are pleased to announce that we have been selected by memorial Health care.
In Wayne County, Michigan to per.
Provide full service modular testing and lab facility network aimed at reducing the spread of cold at night.
The labs operated by SG blocks Lewis joint venture clarity modular venture will be used to test resident for coal hit 19, using the OWS Sangeen Binder test, which is able to deliver medical grade results in approximately three hours under.
Under the contract Wayne County will provide a capital grant of 2.7 million to ask few blocks to deliver for the Tech one unit.
Central scalable Ditech five hub.
The Ditech one units will be deployed throughout the county.
We will provide sample extraction and lab services with the capacity to process up to 7000 tests per day in a single eight hour shift.
In addition, the labs will be able to provide vaccination services at the appropriate time.
Beyond these very exciting projects that we have announced actually blocks and its partners remain extremely active in conversations with the school system airports, the cruise industry and employers regarding our highly efficient PCR tests and mobile lab.
But this only captures events unfolding in the medical vertical with SG blocks.
We also pressed ahead on business in other sectors.
Those results include but are not limited to the following week.
We executed a contract for approximately $4 million for a hospitality project in the Everglades anticipated to be completed by second quarter 2021.
We executed a contract for approximately 2.9 million for a series of buildings in new Mexico, which will be substantially complete in calendar year 2020.
Commencement of the site work by SG residential on month of fellow news, which is six buildings and 300 units of workforce housing under a license agreement in the Catskills New York.
We are nearing completion of the exciting mold living prototype.
In the vertical mobile hospitality.
And also actually blocks announced an agreement with blame for the design and delivery.
Unique electrical vehicle charging solution.
This year has been very hard.
So many there has been illness isolation.
Other challenges for too many families. It has been difficult for us all to see people, we care about being laid off.
And established businesses closing.
Many people are unsettled and rightfully so.
At SG blocks, we are most grateful for the condition of our company I guess employees.
We were capitalized and day and that has allowed us for the first time patiently execute a business strategy and to exploit longer term and recurring sales opportunities because of it.
We again want to thank our share holder partners for their patients and support.
During shareholder meetings, we often heard we needed to diversify our revenue.
We have done so and we'll now our revenue from design yeah.
Yes, our sales.
Painter sales manufacturing testing and lab services.
The testing lab revenue, our recurring which is profile changing for our company.
We continue to surround ourselves with great partners and affiliates, who share our belief in the power of our collective idea.
Container allow you to bring your technology goods and services two distinct geographic points of care and service in a unique way there is no shortage of ideas, but we continue to believe in our medical application, which we hope will include vaccination as a service in the near future and.
We continue to invest time, when TV solution as well as potentially parking solutions.
However.
For the next three quarters, we are absolutely focused on execution.
On our design plans and permits.
On deploying all Ditech unit as quickly and.
Certainly as possible.
And the professional delivery of sample collection testing and reporting services for.
Are those whose lives we are interested with.
We believe that the potential revenue from recipe blocks in the fourth quarter and beyond is substantially different and higher than previously test.
Test and service pricing very per site and based upon what services we are providing.
Our PCR solutions range in price from 50 to $120 per test in most cases, and we have several proprietary method of increasing capacity when circumstances warrant that.
Before I hand, this over to Gerald.
I would like to thank our shareholders and all stakeholders.
There are opportunities competing for time and money and we are most grateful for your interest in Sq blocks and our story.
You can always count on our 100% commitment to work.
Now I will hand, it over to Gerald.
Thank you Paul beginning with the income statement.
For the third quarter of 2020, we reported revenue of approximately $575000.
Compared to approximately $184000 for the third quarter of 2019.
This increase was driven by approximately $306000 increase in construction revenue.
Approximately $86000 increase in engineering service revenue.
Gross profit in the third quarter of 2020 was approximately $194000 compared to a gross loss of approximately $182000 a year ago quarter.
The gross profit margin in the third quarter of 2020 was approximately 34%.
Operating expenses and other costs were up 2020 was approximately $1.72 million compared.
So approximately $1.09 million in the year ago quarter.
The increase was primarily driven by higher payroll and related expenses and higher gene a expenses related to legal and consulting expenses, partially offset by lower marketing and business development expenses.
For the third quarter 2020, our net loss was approximately $1.48 million weren't negative 17 cents per share.
Compared to a net loss of approximately $1.33 million or negative four point 0.66 per share.
In the third quarter 2019.
Adjusted EBITDA loss for the third quarter of 2020 was approximately $1.02 million compared to a loss of $1.09 million in the same quarter of last year.
Turning to the balance sheet at September Thirtyth 2020, we had a total assets of $26.3 million compared to $6.6 million at December 31st 2019.
We had cash and cash equivalents of approximately $13 million as of September 30.
2020, which compares to approximately $1.6 million at December 30, Onest 2019.
At this time as Paul noted, we have a strong and flexible capital structure with no debt and we believe were significantly cash.
Capitalized to support our near term working capital requirements.
As a final note and if you have any questions or like to speak with me or our Investor Relations team you can email offset investors.
SG blocks dot com. Thank you for joining us today, and we look forward to speaking with you again next quarter.
This.
<unk> todays teleconference. You may disconnect. Your line at this time, thank you for your participation.
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