Q1 2022 SG Blocks Inc Earnings Call

Good day and welcome to SG blocks first quarter 2022 earnings conference call and webcast. Today's conference call is being recorded at this time I would like to turn the conference over to Stephanie Prince of PCT Advisory. Please go ahead.

Good afternoon, and thank you Douglas and thank you all for joining us for the SG blocks first quarter 2022 earnings Conference call with me on the call is Paul Galvin, Chairman and Chief Executive Officer, and acting Chief Financial Officer.

A press release detailing the company's yourselves was issued after the market closed at 401 P. M and is now available in the Investor Relations section of the company's website at SG blocks dotcom.

A replay of this conference call can be accessed in the IR section of the website as well.

Before I turn the call over to Paul Please remember that Ares remarks about future expectations plans and prospects made on today's call constitute forward looking statements.

Purposes of the Safe Harbor provisions under the private Securities Litigation Reform 1995.

SG blocks cautions that these forward looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated.

English described in the company's filings with the M D C.

Any forward looking statements made on this conference call speak only as of today's date Monday May 23 2022.

SG blocks does not intend to update any of these forward looking statements to reflect events or circumstances occurring after today.

With that I will now turn the call over to Paul Galvin C. E O S. G box cool.

Thank you Stephanie and Hello, everyone. Thank you for joining us today.

Today, I'm going to discuss the first quarter's highlights and our outlook for the year ahead.

I'll also discuss the quarter's financials.

Currently the acting Chief Financial Officer.

After a disruption in our finance Department I want you to know that we have a solid strategy for correcting the situation and it is at the most importance.

SG blocks had a good start to the year with revenue of $8 6 million in the first quarter gross profit expanded significantly to $2 5 million and we reported net income of $5 million.

These results enabled us to end the quarter with cash at roughly the same levels as yearend $13 1 million.

We continue to carry low debt levels and have $12 million.

12 million shares outstanding.

Since we last spoke on our year end conference call. Just a few weeks ago. We grew S. G. Dev Corp's active residential unit pipeline by over 100 units to approximately 4200 units and the construction pipeline is still roughly $750 million as at year end.

We are currently betting another approximately 5000 units across additional sites, we want to hit pause on phase one is S. T. Dev Corp's pipeline. When we reached 10000 residential units, which we believe we will hit this year.

The construction backlog was $7 7 million, which is related to 11 projects. We had under contract at March 31st of the 11 projects several link who prototypes, which are planned for large scale rollouts and those numbers are captured in our pipeline and not all backlog as a reminder, this backlog.

The number does not include any projects related to S Chief development Corp, and or any ongoing medical testing.

In addition to the cash on the balance sheet, we anticipate a sale.

Lago Vista site this year and together we believe these funds can well support our cash needs. We Opportunistically listed Lago Vista for sell for $15 million, just a couple of months ago.

We are also still exploring the sale of the minority stake of SG Dev Corp.

Many of you remember when we watched this subsidiary of Q1 last year.

During this first year of operation, we built its residential unit pipeline organically to its current 4200 units. We believe there will be strong interest in a minority stake, especially for investors will have the opportunity to vertically integrate.

Operationally the first quarter was active SG blocks was selected by H T. Our investors for design build contract that is expected to lead to 150 Glamping style units replacement at interactive unique exponential properties around the U S. We listed the Lago Vista development parcel.

We completed the purchase of Mclean mixed use site you Durant, Oklahoma. This is a 114 acre parcel, where we have plans to build a minimum of 300 residential units and 680000 square feet of industrial manufacturing space.

Some of this space will be for SG blocks manufacturing operations, and we will build out the rest for others. We believe there will be a strong potential interest from tenants based upon market feedback current supply chain disruptions and the growing interest in made in the U S made in the USA products.

We also led the seed round from a living the world's first luxury nomadic hospitality solution to offer hoteliers and landowners the opportunity to adjust room inventory to match demand in real time with minimal disruption to the environment.

We're contracted to build 60 units from old livings flagship hotel mobile living at Hurley House in the progressively popular Hudson Valley. It is.

Scheduled to open this summer and additional five locations are expected to open in 2023, which calls for another approximately 400 Standalone units I have also been invited to join <unk> Board, which I accepted.

We received approval to buy and build 114000 square foot manufacturing facilities on 33 acres in St. Marys, Georgia. This facility will support our 1286 acre waterfront Cumberland development.

We also signed a 10 year exclusive distribution agreement with salad Tech Industries L. L C.

They have a sustainable waste management company that is the global patent holder for the salad Tech microwave healthcare waste disinfection system. This is a unique patented system that shreds and different effects biomedical waste.

Lastly, our S. G Echo subsidiary announced its largest contract to date. The contract is for more than 100 units and is valued at about $6 million. These units are scheduled to be levered by the end of this quarter.

As I mentioned earlier revenue for the first quarter of 2022 was $8 6 million a decrease of six 5% compared to $9 2 million for the first quarter of 2021 last.

Last year's first quarter included higher construction services revenues generated from legacy projects. The medical segment generated $6 9 million in revenue or 15% year over year increase total gross profit for the quarter expanded significantly to $2 5 million compared to a point $6 million in the first quarter last year.

This reflects the increased profitability of the medical segment, which continues to allow the company to advance its own internal projects. The first of which is expected to hit our factory floors in Q4 of this year.

For the first quarter operating expenses were $2 1 million, an increase of 23% compared to $1 7 million general and administrative expenses declined slightly to $8 million compared to a year ago. This was primarily due to increased efficiencies at the medical segment offset by an increase in payroll and related expenses.

This $1 1 million, which includes stock based compensation of <unk> 6 million.

We reported operating profit of <unk> 4 million compared to a loss of $1 2 million last year net profit was <unk> 5 million compared to a net loss of $1 1 million in the first quarter of 2021.

At quarter end cash and cash equivalents totaled $13 1 million total assets were $38 million and shareholders equity was $21 6 million.

We continue to have a clean cap table, our low share count.

Long term debt includes only one note outstanding for $750000 and a lease liability of $2 4 million.

They are only 12 million shares of common stock outstanding.

Looking ahead, we expect five projects to start up in the next 12 months. Our second factory will open in August and Bulge in Oklahoma and will begin operations by fulfilling the initial low living contracts.

We also plan to begin construction during 2022 on the St. Mary's manufacturing facility to support the build out of the Cumberland and wet project.

Cumberland is expected to begin phase one construction of 1200 units in April 2023.

After that the startup construction is scheduled for Q2 2023.

For the Mclean manufacturing facility, our third and fourth factory lines.

Yeah.

The Mclean residential development that will have about 300 multifamily units totaling approximately a half million square feet and the startup of construction on the northern Barry to a 130 unit multifamily moderate income project and Fulton, Georgia.

We've been planning these projects for several years and are very excited about the upcoming launches we will generate revenue from them in several ways.

All of which we don't model. These revenue streams include manufacturing revenue estimated developed Murphy's the blended average of 175% revenue from refinancing or sale exit dollars after a hold period.

We are projecting to be cash flow positive. This year at that point, we will have incurred about $30 million in operating losses to build out our entire platform, including the development company. Many companies on NASDAQ lose hundreds of millions or more dollars before they hit breakeven and some never make any money.

I think that is a testament to our team our ingenuity that we sit here on the cusp of generating positive cash flow, while our market cap is still low we have little debt and only 12 million shares outstanding Ulta.

Ultimately.

Our goal is to achieve strong and consistent revenue growth from a diversified pipeline of projects, where we control the means of delivery and we keep getting closer to that every corner.

In closing the investments we've made over the last two years to build a strong foundation have brought us to the edge of the tipping point.

Together with the value being built into our projects our investment cash on hand cash flow from our medical segment and the initial five projects that are expected to start up over the next year, we believe that SG blocks outlook for growth is strong.

That completes our prepared remarks, thank you for joining me today.

For those that have questions. Today, you are at any time, please contact Stephanie Prince at S prints at P. C G Advisory dotcom.

It's definitely will be scheduling 15 minute calls with me for Q&A.

We look forward to speaking with you again on our second quarter call in mid August be well and stay safe and thank you.

Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.