Safe & Green Holdings Corp. Q1 2023 Earnings Call
Speaker 1: And.
Speaker 2: Greetings and welcome to Safe and Green Holdings first quarter 2023 business update conference call. At this time, all participants are in a listen only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded.
Speaker 2: I will now turn the conference over to your host, Ted Avis, Vice President of Investor Relations. You may begin.
Speaker 2: Good afternoon and thank you for joining Safe and Greens first quarter 2023 conference call and business update. On the call with us today is Paul Galvin, Chairman and Chief Executive Officer of Safe and Greens and Tricia Kalen, Chief Financial Officer of Safe and Greens. Earlier today the company announced its operating results for the quarter ended March 31st.
Speaker 2: The press release is posted on the company's website, www.safeandgreenholdings.com. In addition, the company plans the file its quarterly report on Form 10Q with the U.S. Securities and Exchange Commission, which will be accessible on the company's website as well as the SEC's website at www.SEC.gov.
Speaker 2: If you have any questions after the call or would like to arrange a one-on-one discussion with Mr. Gallivan following the call, please contact Crescendo Communications at 212-671-1020. Before I turn the call over to Paul, please remember that various remarks about future expectations, plans, and prospects made on today's call
Speaker 2: constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Safe and Green cautions that these forward-looking statements are subject to risks and uncertainties that may cause their actual results to differ materially from those indicated.
Speaker 2: including risk described in the company's filings with the SEC. These forward-looking statements are subject to a number of risks and uncertainties which are described in the company's filings with the SEC. Any forward-looking statements made on this conference call speak only as of today's date, Thursday, May 11, 2023.
Speaker 2: Safe and green does not intend to update any of these forward looking statements to reflect events or circumstances that occur after today. With that being said, I am now pleased to introduce Paul Galvin, chairman and CEO of safe and green. Paul easak.
Speaker 3: Thanks, Ted. Good afternoon, and thank you to everyone for joining us today. I would like to begin by expressing our gratitude to our investors for their incredible support and faith in our vision. We remain dedicated to achieving our goals and generating enduring long-term value.
Speaker 3: Although considerable investments in the business to facilitate our project growth temporarily effective margins, we are clearly implementing our business model as a vertically integrated developer and producer of modular structures.
Speaker 3: Our attention is now concentrated on four distinct verticals.
Speaker 3: All of which present numerous opportunities for revenue growth, business expansion, and increased shareholder value.
Speaker 3: Furthermore, we remain confident that SGEco, our manufacturing operations, will reach positive cash flow in Q3 2023, marking an important milestone in our pursuit of long-term company-wide profitability. Due to the Waldron production facility gearing up for operations during Q1,
Speaker 3: declined, safe and green demonstrated impressive growth. Total assets increased from 6.6 million in 2019 to 28.4 million as of March 31st 2023 representing an increase of over 300 percent.
Speaker 3: of $74 million for our SV DevCoAlone.
Speaker 3: Concurrently, our workforce expanded from seven employees to 92 over the same time frame.
Speaker 3: That is not counting the additional 50-plus employees who will be employed at our new Waldron facility.
Speaker 3: As part of our efforts to bolster the organic growth of SG Echo, we are investing in additional capacity. Recently, SG Echo obtained a certificate of occupancy for our new Waldron facility in Durant, Oklahoma. Consequently, we are now set to begin production at this facility, which we estimate will generate around 55 to 65 additional.
Speaker 3: We are advancing the development of our third facility in Durant, Oklahoma, which is scheduled for completion later in 2023.
Speaker 3: We recently announced that SG Echo has created, delivered, and established two quick serve restaurant units in Arkansas for a franchise of the premier pizza company in the United States dominoes. Our strong working relationship with dominoes, as well as our appreciation for their enormous opportunity to deploy a series of eco friendly and sustainable modular storefronts nationwide.
Speaker 3: make this partnership an excellent fit. The collaboration aligns seamlessly with our goal of promoting environmentally, sustainability, and efficiency within our restaurant industry, benefiting all partners involved. These first two units function as a validation of the concept for future locations within this nationwide chain, and there are plans to implement additional modular storefronts across the United States. The collaboration aligns with our goal of promoting environmentally, sustainability, sustainability, and efficiency within our restaurant industry.
Speaker 3: In addition, SGECO recently signed a contract to supply additional units for a long-term private client with an estimated value of around $6 million. This current set of units is slated for completion in the third quarter of 2023. These units form part of a continuous programmatic ordering arrangement between the two companies with the majority of the units representing a second product line from the client that fits well with each other. In addition, SEGECO has confirmed that the vibrations and moderate factors that contribute
Speaker 3: has demonstrated significant trust in SG Echo and approached us with a range of project requirements that we are pleased to fulfill.
Speaker 3: Within safe and green medical, our goal is to develop a national footprint with multiple clinics and labs that cater to the distinct needs of underserved communities. The point of care diagnostics market is anticipated to expand by more than 40 percent, amounting to over $51 billion by the year 2029. Our collaboration with the People's Healthcare and Teamsters Local 848 continues to progress and we remain on course to deliver four modules by the end of the year. We have also introduced Halo Precision Diagnostics as a diagnostics and proactive analytics partner in this collaboration.
Speaker 3: enabling us to offer primary care, imaging, clinical lab, and pharmacy services. This partnership allows us to provide more cost-effective, accurate, and less invasive integrated healthcare to patients compared to conventional clinical diagnostic laboratory and imaging models.
Speaker 3: We are confident that our point of care delivery approach is innovative and scalable, functioning more akin to medical technology distribution systems rather than traditional clinics or laboratories. The prospect of creating comparable partnerships with additional teamsters, locals, and diverse unions excites us, along with broadening our focus to encompass other US communities.
Speaker 3: including some more rural regions and eventually expanding overseas to offer integrated healthcare solutions in the future.
Speaker 3: Our firm belief is that by delivering medical care tailored to the requirements of working class people, we can enhance the healthiest years of life.
Speaker 3: anticipated to occur within 90 days. We believe that this should unlock considerable value for existing shareholders, as you will receive a 30% interest in the new standalone company, while retaining your full equity ownership in the parent company. Furthermore, the plan sale of Logo Vista site is progressing and is expected to conclude in the second quarter of 2023. Initially purchased for an estimated $3.5 million the site is anticipated to be sold for a substantially higher value, providing the company with additional capital and a stronger balance sheet. Perhaps more importantly,
Speaker 3: Over 4,000 units are moving through the planning and approval process, preparing to enter our manufacturing facilities. The gross potential value of these projects stands at $800 million.
Speaker 3: with an estimated margin of about 15%. Meanwhile, we are advancing efforts in our environmental segment and planning to leverage the Sanitech microwave healthcare waste disinfecting system for on location, elimination of biomedical waste with our mobile and modular units.
Speaker 3: We are excited about this technology and the innovative vertical the company is entering. As it addresses a significantly underserved market, we believe we can provide this cost-effective, compliant, and distributed solution to major healthcare systems as an alternative to their current medical waste disposal methods.
Speaker 3: But the fact that this solution reduces transportation and landfill course in an environmentally friendly and sustainable manner makes it an attractive option for potential customers.
Speaker 3: The construction of a national sales service infrastructure for Sanatech is advancing smoothly, and we view this segment as the perfect fit for all safe and green medical sites.
Speaker 3: In summary, our excitement and prospects for the business have never been stronger. We continue to grow our revenue while prudently controlling expenses and increasing our asset base. Our construction services segment is on course to attain positive cash flow in Q3 and for the full year.
Speaker 3: Accordingly, we are more confident than ever that we have established a highly scalable and profitable business model and eagerly anticipate the company's future. On a final note, I am pleased to introduce Tricia Kaelin, who recently joined Safe and Green as the company's chief financial officer.
Speaker 3: She has served as chief financial officer for public and privately held companies including expertise in mergers and acquisitions and corporate restructuring as well as private and public equity and debt financing. We look forward to her strategic insight as we work to unlock value from our tremendous asset base. With her help and support we are committed to maintaining a lean operating structure with a laser focus on carefully managing expenses which we believe will result in substantial cash flow and long-term profitability. I'll now turn the call over to Tricia to review the financial results.
Speaker 3: for the three months ending March 31st, 2023. Trisha? Thanks Paul. Before I jump into the results, let me say how delighted I am to join Safe and Green at the exciting time in the company's evolution.
Speaker 3: Before joining the company, I conducted my own due diligence, and the more I learned, the more I saw the tremendous potential. This is best illustrated by the rapid growth in the construction services revenue, despite a challenging macro environment.
Speaker 3: When you combine this with the significant operating leverage to be gained from the vertical integration of the company's manufacturing capabilities, I believe Safe and Green is truly poised to drive significant returns for shareholders.
Speaker 3: operating leverage to be gained from the vertical integration of the company's manufacturing capabilities, I believe, Safe and Green is truly poised to drive significant returns for shareholders. That said,
Speaker 3: Let me now turn to our financial results to the corner.
Speaker 3: Revenue for the first quarter of 2023 was $5.5 million compared to $8.6 million for the first quarter of 2022, reflecting the discontinuation of COVID-19 testing facilities, partially offset by increased construction services revenue.
Speaker 3: The construction services segment generated $5.5 million in revenue, a 230% increase compared to the same period last year. Total gross profit for the three months ended March 31, 2023 was a loss of $69,000 compared to $2.5 million.
Speaker 3: of gross profit in the first quarter of 2022, reflecting the decline in medical revenue offset by increased revenue within the construction services segment.
Speaker 3: Operating expenses for the first quarter of 2023 were $2.8 million compared to $2.1 million for the first quarter of 2022.
Speaker 3: Operating expenses for the first quarter of 2023 included approximately $404,000 of non-cash expenses, including 138,000 of depreciation and amortization, as well as 266,000 of stock based compensation expense. This compares to approximately $806,000 of non-cash expenses, including $157,000 of depreciation and amortization, as well as $6449,000 of stock based compensation expense for the same period last year. The first quarter of 2023
Speaker 3: The company expects its operating expense as a percentage of revenue will significantly decline in future quarters. The net loss attributed to common shareholders was approximately 3.2 million or 22 cents per share in the first quarter of 2023 compared to a net loss of 717 thousand or 6 cents per share for the first quarter of 2022. The company is adjusted even a loss for the first quarter and in March 31st 2023 was approximately 2 million dollars as compared to a adjusted EBITDA of approximately 239 thousand for the first quarter ended.
Speaker 3: As of March 31, 2023, stockholders' equity was 12.6 million compared to 21.6 million as of March 31, 2022. We believe Stapengreen has sufficient cash and borrowing capacity to support near-term operations. Furthermore, we are progressing on the sale of our lobbyist to site, which is expected to provide additional liquidity to support our ongoing operational needs. Are we now likely to turn the call back over to Paul for closing remarks?
Speaker 3: Thanks, Tricia. To sum up, I would like to offer my sincere thanks to all of you for joining us today. We are proud of the strides Safe and Green has taken and look forward to what the future will bring. Our steadfast commitment to carrying out our strategy remains strong, and we look forward to updating you on our progress in the months to come.
Speaker 2: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.