SG Blocks Reports 2Q22 Financial Results

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JACKSONVILLE, Fla.--(BUSINESS WIRE)-- SG Blocks, Inc. (NASDAQ: SGBX) (“SG Blocks” or the “Company”), a leading developer, designer, and fabricator of modular structures, reported financial results for the second quarter ended June 30, 2022.

Q2 Was One of the Strongest revenue generating Quarters Ever with $7.6 Million of revenue –

– Construction Segment Revenues Grew 104% YoY –

Paul Galvin, Chairman and Chief Executive Officer of SG Blocks, commented, “SG Blocks had one of our strongest quarters to-date with revenue of $7.6 million and notably within our construction segment, a 104% YoY increase in revenues.

What excites us the most is that we have transitioned to become much more diverse from a revenue perspective with 56% of this quarter’s revenue coming from our Construction segment and 44% coming from Medical.

As COVID has abated, we have become less reliant on COVID testing for revenue, while continuing to grow the construction segment, leading to one of the strongest quarters yet.

SG Blocks’ now emerges as a company that has grown our Construction segment from two years ago and created an extremely healthy point of care solutions opportunity for our Medical segment that we continue to grow without reliance on COVID testing.

We view this quarter’s strong earnings as a return to normalcy and a sign of things to come.

Given our strong earnings and pipeline, we see a clear path for our continued growth.

We’ve grown tremendously as a company from $3.0 million in revenue in 2019, to $8.8 million in 2020, to $38.5 million in 2021, with $16.2 million in 1H22.”

Second Quarter 2022 Financial Highlights

  • Revenue for the second quarter of 2022 was $7.6 million compared to $11.9 million for the second quarter of 2021.
  • Construction segment revenues for the second quarter of 2022 were $4.2 million compared to $2.0 million in the second quarter of 2021.
  • Second quarter revenue from the Construction segment accounted for 56% of total revenues with 44% of revenues coming from Medical, compared to 83% of revenues coming from Medical and 17% from Construction in the second quarter of 2021.
  • Gross profit was $0.8 million compared to $2.0 million for the second quarter of 2021.
  • Cash and cash equivalents totaled $2.4 million with an escrow bond at $4.0 million
  • SG Blocks has a construction backlog that is valued at approximately $4.2 million at June 30, 2022. Construction backlog does not include any projects related to SG Development Corp. or ongoing medical testing.

Second Quarter 2022 Operational Highlights

  • Announced point of care testing and lab services contract at the Port of Long Beach for 10,000 members of Teamsters 848.
  • Signed letter of intent for sale of Lago Vista development site located outside of Austin, Texas at the asking price of $15 million.
  • Joint partnership, Clarity Mobile Ventures, entered into a contract extension with Los Angeles International Airport (LAX) for COVID-19 testing.
  • Entered into agreement with private developer for container park in Lake City, Florida.
  • Announced the largest contract in the Company’s history with Moliving, Inc. the world’s first luxury nomadic hospitality solution for a value of $18 million.
  • Entered production phase for United States Military SCIF (Sensitive Compartmented Information Facility). The contract is for $0.8 million and is scheduled for completion in October 2022.
  • Announced the hiring of a new investor relations and public relations firm, Equity Animal

SG Blocks will hold its conference call at 4:30 p.m. ET via both Twitter Spaces and traditional dial-in mediums.

Twitter Spaces

Dial-in Information:

A webcast of the conference call will be broadcast live and available for replay at the Investors section of the Company’s website at www.sgblocks.com.

A replay of the earnings call will be available immediately after on the Company’s Twitter account for 30 days.

About SG Blocks, Inc.

SG Blocks, Inc. is a leading developer, designer, and fabricator of modular structures, meeting the growing demand for safe and green construction. The firm offers a product that exceeds many standard building code requirements, and also supports developers, architects, builders and owners in achieving faster execution, greener construction, and buildings of higher value. The Company creates purpose built, pre-fabricated modules from wood, steel, and shipping containers into supreme structures. For more information, visit www.sgblocks.com. 

Safe Harbor Statement

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by terminology such as "may," "should," "potential," "continue," "expects," "anticipates," "intends," "plans," "believes," "estimates," and similar expressions. These forward-looking statements are based on management's expectations and assumptions as of the date of this press release and include statements regarding the Company’s path for continued growth, selling the Lago Vista development site for $15 million and completing the United States Military SCIF in October 2022. While SG Blocks believes these forward-looking statements are reasonable, undue reliance should not be placed on any such forward-looking statements, which are based on information available to us on the date of this release. These forward-looking statements are subject to a number of risks and uncertainties, many of which are difficult to predict that could cause actual results to differ materially from current expectations and assumptions from those set forth or implied by any forward-looking statements. Important factors that could cause actual results to differ materially from current expectations include, among others, the Company’s ability to continue its growth, the Company’s ability to close on the sale of the Lago Vista development site as planned, the Company’s ability to complete the United States Military SCIF in October 2022, the Company’s ability to expand within various verticals as planned, the Company’s ability to position itself for future profitability, the Company’s ability to maintain compliance with the NASDAQ listing requirements, and the other factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and the Company’s subsequent filings with the SEC, including subsequent periodic reports on Forms 10-Q and 8-K. The information in this release is provided only as of the date of this release, and we undertake no obligation to update any forward-looking statements contained in this release on account of new information, future events, or otherwise, except as required by law.

 

SG BLOCKS, INC AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
 
 

June 30,

 

 

December 31,

2022

2021
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $

2,428,211

 $

13,024,381
Escrow - bond

4,000,000

—
Accounts receivable, net

2,510,192

2,917,646
Contract assets

—

41,916
Held for sale assets

4,392,541

—
Inventories

928,120

1,273,825
Prepaid expenses and other current assets

933,036

656,279
Total current assets

15,192,100

17,914,047
 
Property, plant and equipment, net

4,806,650

6,839,943
Project development costs and other non-current assets

808,761

923,172
Goodwill

1,309,330

1,309,330
Right-of-use asset

2,779,191

1,210,053
Long-term note receivable

838,733

720,137
Intangible assets, net

2,013,028

2,095,232
Deferred contract costs, net

91,767

112,159
Investment in non-marketable securities

700,000

200,000
Investment in and advances to equity affiliates

3,599,943

3,599,945
Total Assets $

32,139,503

 $

34,924,018
 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses $

4,462,673

 $

7,568,851
Contract liabilities

1,769,604

1,437,579
Lease liability, current maturities

479,488

337,469
Due to affiliates

—

264,451
Assumed liability

5,795

5,795
Short term note payable, net

1,997,843

1,971,960
Total current liabilities

8,715,403

11,586,105
 
Long-term note payable

750,000

750,000
Lease liability, net of current maturities

2,310,017

872,124
Total liabilities

11,775,420

13,208,229
 
Stockholders’ equity:
Preferred stock, $1.00 par value, 5,405,010 shares authorized; none issued or outstanding

—

—
Common stock, $0.01 par value, 25,000,000 shares authorized; 12,050,206 issued and outstanding as of June 30, 2022 and 11,986,873 issued and outstanding as of December 31, 2021

120,502

119,869
Additional paid-in capital

54,660,934

53,341,405
Accumulated deficit

(35,241,757

)

(33,109,220
Total SG Blocks, Inc. stockholders’ equity

19,539,679

20,352,054
Non-controlling interest

824,404

1,363,735
Total stockholders’ equity

20,364,083

21,715,789
Total Liabilities and Stockholders’ Equity $

32,139,503

 $

34,924,018
 

SG BLOCKS, INC AND SUBSIDIARIES
Condensed Consolidated Statement of Operations
 
For the For the For the For the
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
June 30, June 30, June 30, June 30,

2022

 

2021

 

2022

 

2021
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue:
Construction services $

4,213,264

 $

2,064,438

 $

5,881,648

 $

5,202,153
Engineering services

24,320

4,059

74,706

98,008
Medical revenue

3,317,387

9,785,490

10,203,215

15,741,453
Total

7,554,971

11,853,987

16,159,569

21,041,614
 
Cost of revenue:
Construction services

4,265,021

3,164,695

5,942,581

7,258,235
Engineering services

10,739

32,197

53,892

41,967
Medical revenue

2,507,251

6,645,714

6,904,701

11,323,405
Total

6,783,011

9,842,606

12,901,174

18,623,607
 
Gross profit

771,960

2,011,381

3,258,395

2,418,007
 
Operating expenses:
Payroll and related expenses

1,211,509

801,664

2,355,696

1,629,186
General and administrative expenses

796,812

1,060,499

1,576,833

1,720,300
Marketing and business development expense

91,495

72,438

234,830

143,065
Pre-project expenses

—

847

-

10,980
Total

2,099,816

1,935,448

4,167,359

3,503,531
 
Operating income (loss)

(1,327,856

)

75,933

(908,964

)

(1,085,524
 
Other income (expense):
Interest expense

(73,126

)

(329

)

(121,975

)

(692
Interest income

10,979

13,797

23,762

31,267
Other income

372,407

61,024

491,309

61,024
Total

310,260

74,492

393,096

91,599
 
Income (loss) before income taxes

(1,017,596

)

150,425

(515,868

)

(993,925
Income tax expense

—

—

-

—
 
Net income (loss)

(1,017,596

)

150,425

-515,868

(993,925
 
Add: net income attributable to noncontrolling interests

397,764

1,691,684

1,616,669

2,581,211
Net loss attributable to common stockholders of SG Blocks, Inc. $

(1,415,360

)

 $

(1,541,259

)

 $

(2,132,537

)

 $

(3,575,136
 
Net loss per share attributable to SG Blocks, Inc.
Basic and diluted $

(0.11

)

 $

(0.17

)

 $

(0.16

)

 $

(0.41
 
Weighted average shares outstanding:
Basic and diluted

13,226,451

8,822,278

13,110,821

8,783,806
 
 

SG BLOCKS, INC AND SUBSIDIARIES
Condensed Consolidated Statement of Operations
 
 
For the For the
Six Months Ended Six Months Ended
June 30, 2022 30-Jun-21
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net loss $

(515,868

)

 $

(993,925
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense

210,977

198,398
Amortization of intangible assets

82,204

82,230
Amortization of deferred license costs

20,392

20,392
Amortization of debt issuance costs

21,569

—
Bad debt expense

7,024

161,202
Interest income on long-term note receivable

(18,596

)

(18,596
Stock-based compensation

1,280,162

532,422
Loss on asset disposal

241

—
Changes in operating assets and liabilities:
Accounts receivable

400,430

(245,307
Escrow - bond

(4,000,000

)

—
Contract assets

41,916

(819,095
Inventories

345,705

(631,771
Prepaid expenses and other current assets

(276,757

)

16,800
Right of use asset

232,401

204,840
Accounts payable and accrued expenses

(3,040,292

)

1,958,175
Contract liabilities

332,025

(985,672
Due to affiliates

(264,451

)

(583,791
Lease liability

(221,627

)

(204,246
Net cash used in operating activities

(5,362,545

)

(1,307,944
 
Cash flows from investing activities:
Purchase of property, plant and equipment

(1,751,999

)

(4,693,008
Purchase of intangible asset

—

(42,500
Proceeds from sale of equipment

760

—
Repayment of promissory note

(100,000

)

—
Payment on assumed liability of acquired assets

—

(157,469
Project development costs and other non-current assets

(726,386

)

—
Investment in and advances to equity affiliates

—

(3,350,239
Investment in non-marketable securities

(500,000

)

—
Net cash used in investing activities

(3,077,625

)

(8,243,216
 
Cash flows from financing activities:
Proceeds from conversion of warrants to common stock

—

707,187
Distribution paid to non-controlling interest

(2,156,000

)

(1,842,784
Net cash used in financing activities

(2,156,000

)

(1,135,597
 
Net decrease in cash and cash equivalents

(10,596,170

)

(10,686,757
 
Cash and cash equivalents - beginning of period

13,024,381

13,010,356
 
Cash and cash equivalents - end of period $

2,428,211

 $

2,323,599
 
Supplemental disclosure of non-cash investing and financing activities:
Initial value of lease liability $

1,801,584

 $

—

 

Investor Relations:
Equity Animal
Mark Moran
(703) 888-8693
mm@equityanimal.com

Source: SG Blocks, Inc.

Released August 15, 2022