Q1 2021 SG Blocks Inc Earnings Call

Good day and welcome to the SG blocks incorporated first quarter 2021 without the conference call.

All participants will be in a listen only mode.

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Please note this event is being recorded.

I'd like to turn the conference over to Steven Swett of Investor Relations. Please go ahead.

Good afternoon. Thank you all for joining us for our first quarter 2021 call.

Me today is Paul Galvin, Chief Executive Officer of SG blocks.

Press release detailing our results was issued this afternoon just after market close.

Billable on our website at Www Dot SG blocks dot com.

Before I turn the call over to Paul. Please remember that certain statements made during the 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 position business strategy and plans and objectives of management for future operations of forward looking statements and so on.

The cases forward looking statements can be identified by terminology such as believes May estimate continue anticipate intend should plan expect predict potential or the negative of these terms of other similar expressions.

Based these forward looking statements largely on our current expectations and projections about future events.

Natural 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 SEC.

Which are available on our website at www dot SG blocks dot com should not rely upon forward looking statements as predictions of future events, we cannot assure you that events and circumstances reflected in the forward looking statements will be achieved or occur.

This conference call is being webcast webcast is available on the Investor Relations section of our website.

Now I'll turn the call over to Paul.

Thank you Steve.

I'm extremely pleased to report that SG blocks had another record quarter and we are on track for another record year.

The work we did in 2020 set us up to reap the benefits at the bottom line and our results demonstrate the progress we have made on all fronts for.

First quarter revenue set of new benchmark and it comes on the heels of an explosive of Q4, 2020, which produced $7 $4 million on revenue in total the past six months of generated in excess of $16 million on revenue.

And we believe we can sustain our momentum into 2021.

Last year, we made the decision to raise growth capital proactively.

Control our means of production and.

And build the pipeline for growth.

We have built out multiple verticals and we now control our own destiny by focusing on the best opportunities. We see we think our staff consultants attorneys partners on board for their focus effort.

Let me now discuss the recent activity.

In our medical testing and services vertical we are now providing innovative structures labs and testing strategies deployable at key locations for much needed point of care access to health care.

Our award winning the type of lab has proven to be highly functional and deployable as a cost effective solution to solve local health care needs.

In January we executed an agreement with national pain centers to provide COVID-19 testing.

And the passengers airport employees and the public at large near Chicago's O'hare Airport.

Our facility was subsequently re leased to a consortium of government entities at a profit demonstrating the value of our services and the location in which we can quickly deploy.

In May we announced our collaboration with stone clinical laboratories to provide COVID-19 testing services at the food network's annual wine and food Festival in Miami, South Beach for employees vendors VIP guests and attendees at the air and Sea music explosion in Miami Beach.

Still on labs, the secured an additional 43 entertainment venues and events, which required of COVID-19 testing in 2021, and we believe weighted.

We can continue our deployments with stone labs through 2021 and beyond.

In total we.

We believe testing revenue could approach $15 million to $20 million in 2021, however, our goals and the medical vertical extends far beyond the COVID-19.

We believe we can deploy a fleet of medical testing and treatment modules offering an array of best in class diagnostic testing and health care delivery.

To name a few some of these diagnostic offerings can include but are not limited to cancer diabetes, Stds U T I's and drug testing.

It is our total belief that the future of health care solutions as local nimble and point of care based and we believe we check all of those boxes.

Turning to our manufacturing activities after years of outsourcing we have transition to in house production after acquiring the SG Echo of manufacturing facility in 2020, we announced the new 10300 square foot building extension of the facility in January our plan is to grow our.

Spring footprint methodically coordinated with demand and in the most cost effective manner.

The factory will soon be near capacity and we are almost done with a number of legacy projects. These commitments were executed by prior ownership group and will be completed out of cash loss in 2020 one.

Going forward, we expect the complete future manufacturing projects at a margin of approximately 15%, especially the projects of SG development company.

Now turning to our development activities in the first quarter, we formed the S. G. The development Corp, or S. GB depth of coal to deliver single family homes town homes and for rent apartment units across the country.

<unk> will provide a host of benefits the SG blocks, including.

Keeping our manufacturing facilities near 100% capacity, providing steady and visible flow of manufacturing income to driving project fees of all sorts of three.

Potential profit sharing from asset sales upon completion.

In February we executed our first contract to acquire of Lago Vista of 50 acre site on Lake Travis on the Colorado River and thriving Austin, Texas Lago Vista will contain up to 225 condominium units as well as the amenities, including a community Center Marina.

And health club.

Earlier this month, we acquired the site and we are currently finalizing plans with groundbreaking expected in Q2 2022 of the project.

This is expected to be funded with third party debt and equity and we will partner with an experienced developer to complete the project.

Overall, we project approximately $20 million in manufacturing revenue as the project is completed over 24 months, providing S. Cheap of coal with the profit share anticipated to be low less than $5 million at the project's conclusion.

We are thrilled with the launch of STB Dev co and can't wait to share additional details on Lago Vista as well as the other projects on which we are working in the coming weeks and months.

Now we will discuss financial results.

Beginning with the income statement revenue for the first quarter 2021 is expected to be between eight point, knowing and $9 two millions of dollars compared to approximately $199000 for the first quarter of 2020.

Gross profit for the first quarter of 2021 is expected to be between 900000 and $1.2 million compared to a gross profit of approximately 46000 in the first quarter 2020.

The gross profit margin in the first quarter 2021 is expected to be between 10, and 13% compared to a gross profit margin of approximately $23 one per cent for the first quarter 2020.

The gross profit in the first quarter 2021, including the legacy contract commitments, which started and completed in the first quarter that incurred a loss of approximately $1 million due to cost escalations of materials related to COVID-19, and other indirect costs.

Operating expenses for the first quarter 2021 is expected to be approximately $2 4 million compared to approximately 795000 in the first quarter of 2020.

Embedded in the first quarter 2021 operating expenses are approximately $550000 in one time startup costs relating to the certification and opening of the Memorial Health care Laboratory and the opening and the Subletting of the Chicago area.

Testing facility as well as due diligence and business development expenses on other potential projects.

For the first quarter 2021, net loss attributable to common shareholders is expected to be between two <unk> and $2 3 million or negative <unk> 23 cents to <unk> 26 per share.

Compared to a net loss of approximately 747000 for negative 64 cents per share in the first quarter of 2020.

The net loss attributable to common shareholders includes these following items.

Approximately $500000 in non cash depreciation and amortization expenses non noncash stock compensation expense and litigation expense as explained in.

And the adjusted EBITDA loss.

Approximately 550000 of.

One time startup expenses for all newly launched companies.

And as mentioned.

An approximate $1 million of loss due to of legacy contracts submitted related to the SG EKO acquisition.

Adjusted EBITDA loss for the first quarter of 2021 is expected to be between one five and $1 8 million.

Two of loss of 527000.

And first quarter 2020.

Turning to the balance sheet.

The company had cash on cash equivalents of approximately 10 million for.

Hundreds of thousand dollars as of March 31, 2021, compared to approximately $13 million at December 31, 2020.

At March 31st 2021, the company had total assets of approximately $27 2 million compared to approximately $26 9 million at December 31 2020.

We have a strong and flexible capital structure with no debt.

And believe we are capitalized to support our working capital requirements now for closing comments.

2021 and beyond and.

In summary, the first quarter of 2021 accelerating of the trajectory from last year, we have recurring and contracted project work that provides the visibility into future revenue and earnings we control of our manufacturing facility and have plans to maintain steady activity the maximize efficiencies and margins.

We are underway with S. GB Dev co, which we believe has the potential to produce huge opportunities, allowing us to be selective of the best and most efficient sites. We look forward to reporting on other SG communities in the coming weeks and months.

The company is now positioned for a period of growth based upon our ability.

To position ourselves in the three major verticals our team is talented and hardworking, we realize our ultimate success and the financial success of our shareholders will be determined by our ability to execute on the business that we have secured we will work tirelessly to make sure. This.

Happens we appreciate the loyal support of all of our stakeholders and look forward to a successful and profitable future.

We hope that the income generated from SG depth of coach sales will offer the company potential opportunities to consider share repurchase and dividend programs.

We have an ex several times about Q&A session at the end of earnings calls.

It has been our experience there is often not much value in those sessions and there is never an opportunity for follow up questions or follow up of the answers.

We do look forward to speaking with shareholders and for the past several quarters, we of coordinated individuals or small group investor calls for the days following our release the.

These calls have proven very productive and we would encourage interested parties the context, Stephen swett of ICR of Investor Relations to coordinate an appointment should do we should you wish to speak or meet management.

Thank you Andrew.

And have a great day.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.