Q2 2022 SG Blocks Inc Earnings Call
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Greetings and welcome to SG Block's second quarter earnings call. I'm Mark Moran, CEO of Equity Animal. I'll be the host of our call today. I'm here with Paul Galvin, Chairman and CEO of the company.
If you aren't doing so already, it's easy to participate in the call on Twitter Spaces. On Twitter, go to "@sgblocks", and select the space titled SGVX2Q22 Our Names Call. As a reminder, if you want to ask a question, you will need to join the Twitter Space on a mobile device.
If you want to listen, you can join the Twitter space on a personal computer.
SGBlocks is also making this call available to listeners through traditional landline and webcasting.
At this time, all participants are in a listen-only mode. A question-and-answer session will follow. This conference is being recorded.
A press release detailing the company's results was issued after the market closed at 4.05 PM and is now available in the investor relations section of the company's website at www.sgblocks.com.
A replay of this conference call will be available for 30 days immediately after this call on the SGBlocks Twitter page.
Before I turn the call over to Paul, please remember that various remarks about future expectations, plans, and progress made on today's call constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.
SG Blocks cautions that these forward-looking statements are subject to risks and uncertainties that may cause their actual results to differ materially from those indicated, including risks described in the company's filings with the SEC.
These forward-looking statements are subject to a number of risks and uncertainties.
And any forward-looking statements made on this conference call only as of today's date Monday, August 15th, 2022. SGBlocks does not intend to update any of these forward-looking statements to reflect events or circumstances that occur after today. Now, it's my pleasure and privilege to introduce Paul Galvin, Chairman and CEO of SGBlocks. Paul, take it away.
Thank you, Mark, and welcome to all.
We're excited to be hosting our first ever on-screen event. Thank you.
Given that many joining us today may not be aware of SGBLOCKS and our mission, I want to first start off by explaining what that means.
The SMG in our case stands for Safe and Good.
Our mission begins.
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to grow deeper and deeper into our backlog of approximately 700,000 people.
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We are looking to have the opportunity to express our vision.
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Thank you very much for your time and allow us to have our discussion.
We are back with Mr. Cole.
Thanks, Paul. With the conclusion of the company's prepared remarks, we'll now open the floor for the question and answer portion. As a reminder, to ask a question, you must be participating via Twitter Spaces on a mobile device.
For our first question, we're going to bring up based capital.
Yes...
I had a question on you were speaking to some different companies were partnered with in building out like Taco Bell and some others. And so I'd love to know.
If there's any thoughts around
next sector that you'd like to spend.
or
different sectors into expanding into root system.
Sure.
Um
We have.
Had some very good success in the quick-serve restaurants
Some interesting names in our pipeline, but under NDA, what we offer those companies is
are Footprint store walk up truck door
stoin.
If they're not going up property.
and you are to be.,
We could potentially save the family food and reserve restaurants between four to seven weeks.
opening time which is
Lastly, we've had a lot of great fun and success working in the food market and we'll see people creating some interesting venues.
You can see a lot of them on our website. I won't single any one in particular out.
Fantastic, thanks very much Base Capital. Next up, we're going to bring Wolf up to the stage to ask a question. Wolf, you're up.
Awesome. Thanks, Mark. Appreciate you doing this on here, Galvin. My question is around the concentrated revenue. So I was just looking through, it looks like over 70% of the reported revenue in the last 10K was coming from a single client. It looks like, yes, 77% was coming from one customer of the revenue. I know you're working to diversify the streams of revenue. I'm just curious how you're camping down on the...
risk of that revenue concentration? Sure, and that's a great question. It's one we have in the toolbox.
Our goal was never to become a full-time testing company. Our goal was to prove that points of care medicine is strategically done and to know how we can utilize positive outcomes wherever they are placed.
We generated a tremendous amount of revenue from the CLIA lab operated at LAX Airport. We used that money to...
by the real estate for our factories and by the real estate for our development company and to buy into projects that will fill our factories. There's always been an anticipated tapering off.
of COVID revenue.
from the airport location.
And part of that strategy.
had a major milestone last week when
We're a
with the local airport staff in support of Long Beach.
and a progressive leadership, their president, a primary care, a point of testing, and a point of care services for 10,000 members. figura strips for a state-owned state-owned government.
at the Port D'Alene and the—
And for firies, we think that as a model, for things going forward, we think that as a real shift scenario is going to be a more competitive solution.
and this type of intervention will help people help when young healthy.
The early diagnostic tests would be focused to be talking about more broadly.
So we don't necessarily anticipate COVID testing revenue to go away. We see it being right sized and we see it being replaced with more steady, air predictable revenue and that.
Co-testing revenue to go away. We see being right-sized and we placed with steady predictable revenue and that's proper though to ven evolved
Okay, perfect. One quick follow-up question. Just talking about the industry of morale. So engineering and construction industry has really had a nice good right for COVID that industry added around $900, in Q1 2020. And in pulling over 7 million people, there was a bunch of tailways that I saw. There was a lot of mortgage rates. There was real estate, economy, infrastructure, stimulus, and more. Now we're starting to see labor.
as mother pieces in the sector that could affect SG blocks and then of course the rising inflation, never gets down the inflation. Jaki get down the inflation on the
hold too much, but of course that affects the cost material such as one or another piece. So, as the wind test for the industry is helpful if there's any adjustments you're making.
One is just understand we're going to have to be flexible around and have a good team at the factories, both the builders and the manufacturing experts. At this time, we have no major supply chain issues. Our team is not... We have to be flexible around and have a good team at the factories, both the builders and
Well in best practices we have multiple scenarios to deliver a fights
All of that manufacturing is potentially built out.
we could potentially build them out for suppliers to feed our ecosystem.
And lastly, the largest client inside our pipeline electricity is suddenly breaking into Germany. actually.
It's SG depot itself. And so there'll be a high level of cooperation in trying to find out the most efficient way to deliver our safe and green structures. There's a total of like.
Okay, perfect. And then just my last question, and I'll turn it back to Mark. Did you speak to the stock price movement over the last few years? And just, you know, any thoughts you have on the way that it's gone?
Okay, perfect. And then just my last question, then I'll turn it back to Mark. Did you speak to the stock price movement over the last few years? And you know any thoughts you have on the way that it's gone? Alright.
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and find your folder and help it approach the investor.
in our approach of fighting for shareholder.
and in our approach to making the good cap table. And for the stock price has fluctuated in that range.
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and the current price which is why we deploy capital to acquire x in the capital, colours LED, solar, illustrated vs the value of x, that need to be shown and used for mal cars
Thank you, sir.
Thank you for the question Wolf, really appreciate it. Next up, we're gonna bring Ticker history.
Thanks Mark. More general question for the group. Galvin, you talked about the construction protocol and the pivot to medical. What are the other protocols that SG blocks can eventually expand to and operate at?
I move back and I will wait to some informal slides. Thank you.
which includes medical, sanitary...
We think that that is a use and potentially something in people's resources that would probably be really useful to they are both
that doesn't offer best practices. We have a license with the technology called Sanitech.
that nitrogen Oxygen próximo to Raperole airflow off of the current. We have a number of other questions underneath. I just got eight comments on electricity below. I was just going to look at about 1.5 trillion in without showing off. Thank you.
or is the current practices with
By now it's in a rate up in the water table. So we're looking for potential verticals. We think there's going to be an awful lot of infrastructure on my side by the government.
State federal law.
and we want to have access to some of that and we have to do that. Otherwise, the development companies have residential components, hospitality components, hotel components, food, etc.
It's by each project diversity of opportunity and hedge on that
For the first time, we have a broad base of revenue. Each one of them could potentially pop at any time. We're going to do some more communication about the relationship with the team. We're just trying to get right to what that opportunity is.
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Great, thanks so much for the question, Dicker History. Next up, we're going to bring Charlie to the floor once he is able to connect.
And so...
Looks like Charlie dropped off was unable to connect. I believe we have another question from wolf wolf. You're up
Okay, sure, yeah, I can pop back in here. I was looking at some of the peer metrics. I was looking at like, Greenburg, ITT, and some of the others, but it feels like you're operating in so many different areas, right, with the medical side and other things. Do you consider these to be traditional peers, or are there other people that you would say are better kind of benchmarks for people to look at when examining a company?
That's a great question and observation.
We don't think that they are a perfect fit for peers.
One of the things that's going on now is the company is undergoing research report that needs to be done to avoid m advert possessions that may be 550,000,000 dollars just experiencing an almost 500,000 dollar thinking change.
Yeah, we'll help you fire up the barn.
Oh.
and consolidate what our peers should be versus what we did necessarily. So, I think we see that all as a part of the process.
Okay. Got it. Appreciate that. It looks like I think that's Charlie up here now. Someone else came up. Yeah, we were going to bring Charlie up in a second, but first let's bring Coffee Meets Capital up. Thanks for taking my question. I was just curious on the recently signed LOI if there was additional.
progress.
for the like of Vista property
akes five minutes? I guess you can sidebar. Uh on the
We are thankful.
Hopefully wrapping up the...
process of having a purchasing sale.
in the near term and simultaneously...
We can still do it again, best practices, once we get the title approved and the land use changed, we talked about partial rentals, full rentals, and we still love the idea of the world we live in which are important because there is no other building we can import,
and we look forward to seeing you in the next session.
Excellent.
Got it. And then as a follow-up, could you talk a little bit more about your Devco?
How much control do you typically have and what are the funding requirements after you get the project set up? Do you need to, I mean, will banks typically go fund your bill with debt or how does that work?
And what are the funding requirements after you get the project set up? Do you need to, I mean, will banks typically go fund your bill with debt or how does that work?
Sure. The construction is the best growth sector of the construction.
So there's a target industry that's merged with animal services. So, typical.
part of our plan which is by science entitled
Get the program ready and then build structures in a controlled environment.
At a controlled price at the top that's a formula that produce projects that will be at or above 25% IRR on the project basis.
The priority of the project is we have operation to roll over the Cumberland Inlet process the
and we have a 10% non-ocultural interest in that and are contracted to build tribal units and provide forms and asset plans.
All right, OK, thank you.
Great, thanks so much for the question. Now we'll bring Charlie up to the floor.
Hey, we can hear you.
So in the last few quarters, COVID has fallen off. The medical revenue has fallen. And as you bring in the other,
diseases like diabetes that you've mentioned and increased its cause, how long do you think it will take for those to ramp up, to overtake?
the revenue peaks of
We see it more transition to
We have operated out of LA, it's contracted and set to 1231.
LA is contracted and also you want to hear our
in LOI to have certain modules at work in January of 2023, and that we see that as much more permanent and predictable revenue, a much more realistic approach to wellness than what we're doing now. And we think the potential for that is virtually endless. Best in class medical care includes some tests...
in a cancers and Alzheimer's Years of life We're going to combine whatever medical testing has to be done at the moment It'll be brick and no pun intended sitting in a container somewhere and the other is is going to be mobile and on chassis going where people are episodically And we're going to talk about it's a real change in medicine and what we think is going to pay off
Okay, so one more question about the pipeline. So you said the $750 million you currently have in the pipeline, do you think that will speed up growing or do you think you could hit a peak and do you have any projections that actual revenue will hit in the next quarter and coming quarter? Sure. So that $750 million is related to the projects that are inside the developing company.
We're either the owner manager or a partner that has the contractual rights to build every one of those. And those are going to be built at a 15% open book billing process.
As we bring business into the development company and as previously stated on today's call we want to get 10,000 units.
That will only increase the 750 million
It will take you to…
of that fleet of homes and then replace the pipeline. And it'll fully activate our factory network. And in a way where we're not only going to get the revenue from the factory, but we're going to be perfectly integrated. We're the client, we're going to open up the pipeline.
asset management fees, project fees, developers fees, appreciation, income from rent, income from sale, refunding.
every one of those ways.
is a way to raise capital for companies without issuing a single share.
And that's what the report full has done. That's what the eventual monetization of Lago Vista has done
in contract at $15 million dollars in L.O.I. designed for $15 million dollars.
and our acquisition price and our all-day
approximately four four and a half million dollars.
that profit will…
help the company grow and give us…
not needed operating monies, it'll give us the duty needs to unfold and undo the power of our projects and our factories.
monies, it'll give us the juiciest needs to unfold and unseat the power of our projects and our factories in a more rapid manner.
So.
That's the story.
Okay, one last question.
I know the company right now is in a rapid growth phase, but have you all started to think about net income and profitability?
And have you all started to think about net income and profitability?
The.
With.
The day we sell up this there will be positive cash flow
that year?
Otherwise,
will issue
Some guide has to revenue.
as we get closer to our own projects being in factories.
Since then we quote we hold the project the projects
and the operations at the manufacturing level.
And so we'll be able to get
A little bit
On.
as art projects into the factory so we can be less dependent.
on the other entrepreneurs or potential clients.
Okay, thank you very much, Charlie.
Thanks Paul and Charlie. Now for our last question, it's going to be ticker history, ticker history, you're up.
Thanks Mark. I just had a question about revenue and market cap. You said you did, I think it was 38.5 million in 2021. The stock trade that 26 million dollar market cap by today's close. Why is revenue higher than market cap and why do you see that?
Well, it's not a condition new to us or new to anyone in this marketplace.
It's a very complex question.
There are
different answers by different people you would ask from different perspectives and why that's the case. it's very therefore important and Could Card refactoring into the general MAR dynamics of the field of action. i think there should be focus now.
what we're putting in on
keeping our heads down.
Transitioning to this point of error, getting Lago Vista to the point of sale and to continue to build our factories.
Air Crop getting logo Vista to the point of sale and to continue to build our factories the market capital take care of itself. We only have 12 million here.
We have enough operate.
and have multiple ways to raise money growth, that doesn't require us to issue it.
At some point the way all that good and all the support and our
who are going to help us fight for...
and get this story further.
and the right tools for the right job here, we think.
corn have some comments.
a fresh set of eyes.
and getting more people participating in the life of the stock and the stock's ecosystem will take care of the price of the stock itself in the market cap.
the market. Fantastic Paul very much appreciate the time and appreciate everyone listening want to give a special shout out to doctor Pareek Patel. Here thank you wolf ticker history historic bid. Starly capital. Coffee meets capital and everyone else who asked questions and joined us in that. We plan to be able to do this more often to be looking at the more
a lot of the opportunity that's here. That being said, I want to encourage everyone to follow SG Block's corporate account, Paul Galvin's personal account, as well as the Equity Animal account, and many of the other speakers here like Wolf. We appreciate your time, and we'll be concluding this call now.
Thank you. This concludes the presentation. Thank you for dialing in and you may now disconnect your lines.