Management to Host Conference Call Today at 4:30 p.m. ET
BROOKLYN, N.Y.–(BUSINESS WIRE)–SG
Blocks, Inc. (Nasdaq: SGBX)
(“SG Blocks” or the “Company”), a leading designer, innovator and
fabricator of container-based structures, reported its financial results
for the first quarter ended March 31, 2019.
Key First Quarter 2019 Financial Highlights:
-
Revenue increased 12.4% to $1.7 million in Q1 2019, as compared to
$1.5 million in Q1 2018. -
Gross profit for Q1 2019 totaled approximately $0.5 million, as
compared to $0.2 million in Q1 2018. Gross profit margin as a
percentage of revenue increased to 31.4% in Q1 2019, as compared to
10.6% in Q1 2018. -
Net loss totaled $0.5 million, or $(0.12) per basic and diluted share,
in Q1 2019, as compared to net loss of $0.8 million, or $(0.18) per
basic and diluted share, in Q1 2018. -
Adjusted EBITDA loss in Q1 2019 totaled $0.3 million, as compared to
$0.5 million in Q1 2018. (See below for further discussion about the
presentation of Adjusted EBITDA, a non-GAAP financial measurement).
Key First Quarter 2019 and Subsequent Operational Highlights:
-
Construction backlog decreased to $95.8 million as of March 31, 2019,
as compared to $97.7 million at December 31, 2018. The decrease in
backlog at March 31, 2019 from the prior year end is primarily
attributable to work in progress or completed contracts during the
first quarter for approximately $1.7 million. - Performed activity on 11 total projects in backlog during Q1 2019.
-
Raised approximately $0.7 million in net proceeds from a follow-on
equity offering of the Company’s common stock, to be used for working
capital and general corporate purposes. -
Executed a $4.0 million agreement with Arizona Investissements to
build approximately 50 state-of-the-art mobile hospitality units to
initially be delivered to an eco-resort in upstate New York. -
Announced a joint collaboration with Capital Plus Financial, a
certified Community Development Financial Institution, and EDS
Development to complete 55 affordable houses to families displaced by
Hurricane Maria in Guayama, Puerto Rico. -
Announced exclusive partnership with Blockchain Holdings Capital
Ventures to build next generation modular data centers utilizing SG
Blocks’ container-based construction, the first prototypes of which
are expected to be delivered in the fourth quarter of 2019.
Management Commentary
“The first quarter of 2019 was highlighted by continued operational
execution, as defined by our continued revenue growth and gross margin
expansion,” said Paul Galvin, CEO of SG Blocks. “We continued to service
innovative new clients, ranging from mobile hospitality units in New
York to affordable housing for those displaced by Hurricane Maria in
Puerto Rico, while making what we believe is substantial progress
towards realizing our long-term operational goals.
“On the financial front, the first quarter of 2019 was highlighted with
increased top line revenue performance and gross margin expansion,
driving our gross margin profile to 31.4% in the first quarter. We are
comfortable with the timeline to realize our $95.8 million backlog, and
based upon conversations with our customers, and assuming no
site-related delays, the Company currently anticipates generating
revenue of approximately $18 million to $20 million in 2019 as compared
to $8.2 million in 2018.
“We believe that our business model allows us to handle incremental
revenue with a relatively modest increase in general and administrative
expenses. We leverage both inventory and labor on our suppliers’ balance
sheets and in most cases, pay for products and services only after we
have been paid by our customers. Our model creates significant leverage
and reduces working capital constraints to growth. These attributes,
paired with the recent capital infusion from a follow-on equity
offering, fortifies our balance sheet to support manufacturing and
commercial activity for near-term transformative projects that we expect
to deliver significant revenue in the quarters to come,” added Mr.
Galvin.
“As we move towards the end of the second quarter of 2019, I remain
confident in our ability to execute upon our backlog in 2019, while
continuously growing our order book with new partners that are
forward-thinking and creating solutions for tomorrow. We continue to
seek out innovative ways to vertically expand our operating platform in
order to provide end-to-end modular solutions on a global basis that add
value to both us and our clients. I believe we are on the cusp of a
major operational inflection point in our business and look forward to
our anticipated creation of long-term value for our shareholders,
clients and communities,” concluded Galvin.
First Quarter 2019 Financial Results
Revenue in Q1 2019 totaled $1.7 million, an increase of 12.4% compared
to $1.5 million in Q1 2018. This increase in revenue was mainly driven
by growth in the Company’s retail and office contracts that were in
progress or completed for the three months ended March 31, 2019 as
compared to March 31, 2018.
Construction backlog decreased to $95.8 million as of March 31, 2019, as
compared to $97.7 million at December 31, 2018. The decrease in backlog
at March 31, 2019 from the prior year end is primarily attributable to
work in progress or completed contracts during the first quarter for
approximately $1.7 million.
Gross profit totaled $0.5 million in Q1 2019 as compared to $0.2 million
in Q1 2018. Gross profit margin as a percentage of revenue increased to
31.4% in Q1 2019, as compared to 10.6% in Q1 2018.
Operating expenses increased to $1.0 million in Q1 2019 from $0.9
million in Q1 2018. The increase in operating expenses was primarily due
to an increase in payroll and related expenses offset by a decrease in
general and administrative costs.
Net loss totaled $0.5 million, or $(0.12) per basic and diluted share,
in Q1 2019, compared to net loss of $0.8 million, or $(0.18) per basic
and diluted share, in Q1 2018.
Adjusted EBITDA loss decreased to $0.3 million in Q1 2019 from $0.5
million in Q1 2018. See below under the heading “Use of Non-GAAP
Financial Information” for a discussion of Adjusted EBITDA and a
reconciliation of such measure to the most comparable measure calculated
under U.S. generally accepted accounting principles (“GAAP”).
Cash and cash equivalents at March 31, 2019 totaled $0.3 million, as
compared to $1.4 million at December 31, 2018. Subsequent to the end of
the first quarter of 2019, the Company completed a $0.9 million equity
financing, resulting in an estimated $0.7 million of net proceeds.
Further details about the Company’s results in the first quarter of 2019
will be available in its Quarterly Report on Form 10-Q, accessible in
the investor relations section of the Company’s website at www.sgblocks.com
and through the U.S. Securities and Exchange Commission’s website.
Conference Call Information
SG Blocks CEO Paul Galvin and President and CFO Mahesh Shetty will host
the conference call, followed by a question and answer period.
To access the call, please use the following information:
| Date: | Monday, May 13, 2019 | |||
| Time: | 4:30 p.m. ET, 1:30 p.m. PT | |||
| Toll-free dial-in number: | 1-800-239-9838 | |||
| International dial-in number: | 1-720-543-0302 | |||
| Conference ID: | 7674984 |
Please call the conference telephone number 5-10 minutes prior to the
start time. An operator will register your name and organization. If you
have any difficulty connecting with the conference call, please contact
MZ Group at 1-949-491-8235.
The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=134458
and via the investor relations section of the Company’s website at www.sgblocks.com.
A replay of the conference call will be available on May 13, 2019, after
7:30 p.m. Eastern time, through May 27, 2019.
| Toll-free replay number: | 1-844-512-2921 | |||
| International replay number: | 1-412-317-6671 | |||
| Replay ID: | 7674984 |
Use of Non-GAAP Financial Information
In addition to its results under GAAP, the Company presents EBITDA and
Adjusted EBITDA for historical periods. EBITDA and Adjusted EBITDA are
non-GAAP financial measures and have been presented as supplemental
measures of financial performance that are not required by, or presented
in accordance with, GAAP. The Company calculates EBITDA as net income
(loss) before interest expense, income tax benefit (expense),
depreciation and amortization. It calculates Adjusted EBITDA as EBITDA
before certain non-recurring adjustments such stock-based compensation
expense. EBITDA and Adjusted EBITDA are presented because they are
important metrics used by management as one of the means by which it
assesses the Company’s financial performance. EBITDA and Adjusted EBITDA
are also frequently used by analysts, investors and other interested
parties to evaluate companies in the Company’s industry. These measures,
when used in conjunction with related GAAP financial measures, provide
investors with an additional financial analytical framework that may be
useful in assessing the Company and its results of operations.
The following is a reconciliation of EBITDA and Adjusted EBITDA to the
nearest GAAP measure, net loss:
|
Three Months Ended March 31, 2019 |
Three Months Ended March 31, 2018 |
|||||||
| Net loss | $ | (490,735 | ) | $ | (754,104 | ) | ||
| Addback depreciation and amortization | 39,446 | 148,247 | ||||||
| EBITDA (non-GAAP) | (451,289 | ) | (605,857 | ) | ||||
| Addback stock-based compensation expense | 162,493 | 79,989 | ||||||
| Adjusted EBITDA (non-GAAP) | $ | (288,796 | ) | $ | (525,868 | ) | ||
About SG Blocks, Inc.
SG Blocks, Inc. is a premier innovator in advancing and promoting the
use of code-engineered cargo shipping containers and purpose-built steel
modules for safe and sustainable construction. The Company offers a
product that exceeds many standard building code requirements, and also
supports developers, architects, builders and owners in achieving
greener construction, faster execution, and stronger buildings of higher
value. Each project starts with GreenSteel™, the structural core and
shell of an SG Blocks building, which is then customized to client
specifications. For more information, visit www.sgblocks.com.
Forward-Looking Statements
Certain statements in this press release constitute “forward-looking
statements” within the meaning of the federal securities laws. Words
such as “may,” “might,” “will,” “should,” “believe,” “expect,”
“anticipate,” “estimate,” “continue,” “predict,” “forecast,” “project,”
“plan,” “intend” or similar expressions, or statements regarding intent,
belief or current expectations, are forward-looking statements. 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 based upon current
estimates and assumptions and are subject to various risks and
uncertainties, including, without limitation, those set forth in SG
Blocks’ filings with the Securities and Exchange Commission. Thus,
actual results could be materially different from those presented
herein. SG Blocks expressly disclaims any obligation to update or alter
statements whether as a result of new information, future events or
otherwise, except as required by law.
| SG BLOCKS, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
|
March 31, 2019 |
December 31, 2018 |
|||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 250,464 | $ | 1,368,395 | ||||
| Accounts receivable, net | 2,956,614 | 1,746,326 | ||||||
|
Costs and estimated earnings in excess of billings on uncompleted contracts |
12,424 | 260,325 | ||||||
| Prepaid expenses and other current assets | 781,046 | 986,687 | ||||||
| Total current assets | 4,000,548 | 4,361,733 | ||||||
| Property, plant and equipment, net | 68,172 | 71,337 | ||||||
| Goodwill | 4,162,173 | 4,162,173 | ||||||
| Intangible assets, net | 2,407,648 | 2,443,929 | ||||||
| Total Assets | $ | 10,638,541 | $ | 11,039,172 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 2,251,920 | $ | 2,624,218 | ||||
|
Billings in excess of costs and estimated earnings on uncompleted contracts |
1,580,481 | 1,334,887 | ||||||
| Total current liabilities | 3,832,401 | 3,959,105 | ||||||
| Commitments and contingencies (Note 12) | ||||||||
| Stockholders’ equity: | ||||||||
|
Preferred stock, $1.00 par value, 5,405,010 shares authorized; none issued or outstanding |
— | — | ||||||
|
Common stock, $0.01 par value, 300,000,000 shares authorized; 4,260,041 issued and outstanding as of March 31, 2019 and December 31, 2018 |
42,601 | 42,601 | ||||||
| Additional paid-in capital | 17,917,551 | 17,700,743 | ||||||
| Accumulated deficit | (11,154,012 | ) | (10,663,277 | ) | ||||
| Total stockholders’ equity | 6,806,140 | 7,080,067 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 10,638,541 | $ | 11,039,172 | ||||
| SG BLOCKS, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
|
For the Three Months Ended March 31, 2019 |
For the Three Months Ended March 31, 2018 |
|||||||
| (Unaudited) | (Unaudited) | |||||||
| Revenue: | ||||||||
| Construction services | $ | 1,658,074 | $ | 1,543,526 | ||||
| Engineering services | 77,050 | — | ||||||
| Total | 1,735,124 | 1,543,526 | ||||||
| Cost of revenue: | ||||||||
| Construction services | 1,159,229 | 1,379,930 | ||||||
| Engineering services | 31,790 | — | ||||||
| Total | 1,191,019 | 1,379,930 | ||||||
| Gross profit | 544,105 | 163,596 | ||||||
| Operating expenses: | ||||||||
| Payroll and related expenses | 638,550 | 405,418 | ||||||
| General and administrative expenses | 333,000 | 426,275 | ||||||
| Marketing and business development expense | 47,359 | 81,047 | ||||||
| Pre-project expenses | 15,931 | 4,964 | ||||||
| Total | 1,034,840 | 917,704 | ||||||
| Operating loss | (490,735 | ) | (754,108 | ) | ||||
| Other income (expense): | ||||||||
| Interest income | — | 4 | ||||||
| Total | — | 4 | ||||||
| Loss before income taxes | (490,735 | ) | (754,104 | ) | ||||
| Income tax expense | — | — | ||||||
| Net loss | $ | (490,735 | ) | $ | (754,104 | ) | ||
| Net loss per share – basic and diluted: | ||||||||
| Basic and diluted | $ | (0.12 | ) | $ | (0.18 | ) | ||
| Weighted average shares outstanding: | ||||||||
| Basic and diluted | 4,260,041 | 4,260,041 | ||||||
| SG BLOCKS, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||
|
For the Three Months Ended March 31, 2019 |
For the Three Months Ended March 31, 2018 |
|||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (490,735 | ) | $ | (754,104 | ) | ||
|
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
| Depreciation expense | 3,165 | 931 | ||||||
| Amortization of intangible assets | 36,281 | 147,316 | ||||||
| Interest income on short-term investment | — | (4 | ) | |||||
| Stock-based compensation | 162,493 | 79,989 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,210,288 | ) | 1,576,243 | |||||
|
Cost and estimated earnings in excess of billings on uncompleted contracts |
247,901 | 59,763 | ||||||
| Prepaid expenses and other current assets | 205,641 | (442,192 | ) | |||||
| Accounts payable and accrued expenses | (317,983 | ) | (542,879 | ) | ||||
|
Billings in excess of costs and estimated earnings on uncompleted contracts |
245,594 | (509,846 | ) | |||||
| Net cash used in operating activities | (1,117,931 | ) | (384,783 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from short-term investment | — | 30,037 | ||||||
| Purchase of property, plant and equipment | — | (3,184 | ) | |||||
| Net cash provided by investing activities | — | 26,853 | ||||||
| Cash flows from financing activities: | ||||||||
| Net cash provided by financing activities | — | — | ||||||
| Net decrease in cash and cash equivalents | (1,117,931 | ) | (357,930 | ) | ||||
| Cash and cash equivalents – beginning of period | 1,368,395 | 4,870,824 | ||||||
| Cash and cash equivalents – end of period | $ | 250,464 | $ | 4,512,894 | ||||
|
Supplemental disclosure of non-cash investing and financing activities: |
||||||||
| Non cash conversion of salary liability to restricted stock units | $ | 54,315 | $ | — | ||||
Contacts
Media
Kati Bergou
Rubenstein Public Relations
Vice
President
212-805-3014
[email protected]
Investor Relations
Chris Tyson
MZ North America
Managing
Director
949-491-8235
[email protected]
