– Reports Record Revenue for Fourth Quarter and Full Year 2020 –
– Advances Significant Project Activity Across All Verticals –
– Management to Host Conference Call Today at 4:30 p.m. ET –
NEW YORK--(BUSINESS WIRE)-- SG Blocks, Inc. (Nasdaq: SGBX) (“SG Blocks” or the “Company”), a leading designer, innovator and fabricator of container-based structures, today reported its financial results for the fourth quarter ending December 31, 2020.
“We finished 2020 with unprecedented momentum, achieving record revenue for the fourth quarter that exceeded the prior eight quarters combined, with increased activity across all of our verticals, despite the challenges that we have all collectively faced this year,” stated Paul Galvin, SG Blocks’ Chairman and Chief Executive Officer. “These results directly reflect the incredible effort of our team over the past several quarters to build a pipeline of strategic opportunities, aligning with best-in-class partners, and positioning our balance sheet to support the accelerating pace of activity.”
“In the healthcare vertical, we brought to market a viable and cost-effective solution to provide point-of-care testing services to critical travel partners, health care providers, and disadvantaged communities. Importantly, our ambition in the medical vertical does not stop with COVID-19 testing. We are designing and preparing multiple specialty modules we believe will meet urgent demands in community health for a variety of testing needs.”
“Most exciting is our recent launch of SGB Development Corp., that will co-develop and deliver apartments and homes for sale. The units will be manufactured by SG Echo, which we expect will provide a steady stream of manufacturing activity, beginning with our first project, a 225-apartment unit project known in booming Austin, Texas. These projects will provide manufacturing revenue for the Company, as well as a share of expected profits. There are a multitude of exciting projects in the works with SGB Development, and we look forward to communicating additional activity shortly.”
Mr. Galvin concluded, “2020 was a year truly unlike any other, with social, economic and healthcare challenges on a global basis. However, SG Blocks thrived, booking a record year, with momentum continuing into 2021. We are excited with all the new opportunities we are working on. We appreciate our shareholders and investors, and express our appreciation by working tirelessly each and every day to maximize what we believe is a golden opportunity for SG Blocks. I look forward to sharing additional information as we move forward.”
Fourth Quarter 2020 and Subsequent Operational Highlights:
At December 31, 2020, the Company had 21 projects under contract, compared to 17 projects under contract at September 30, 2020. At December 31, 2020, the construction backlog was approximately $25.1 million, as compared to $24.9 million as of September 30, 2020.
Vertical integration:
In September 2020, SG Blocks acquired the assets of modular factory Echo DCL. Subsequent to year end, in January, the Company announced a new 10,300 square foot building extension, and in February, the Company exercised its option to acquire the 19-acre site and all of its structures. Closing on the acquisition is expected to occur in the second quarter 2021, with plans to add additional manufacturing capacity to support the Company’s current and expected project activity.
In the healthcare vertical:
And subsequent to year end:
Within the Commercial and Residential verticals, the Company:
Fourth Quarter and Full Year 2020 Financial Results:
Further details about the Company’s results 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 will host a conference call on Thursday, April 15, 2021 at 4:30 p.m. Eastern Time to share its results for the fourth quarter and 12 months ended December 31, 2020.
To access the call, please use the following information:
Date: Thursday, April 15, 2021 Time: 4:30 p.m. ET, 1:30 p.m. PT Toll-free dial-in number: 1-877-407-9716 International dial-in number: 1-201-493-6779 Conference ID: 13718700
To access the replay, please use the following information:
Toll-free replay number: 1-844-512-2921 International replay number: 1-412-317-6671 Replay ID: 13718700
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.
EBITDA and Adjusted EBITDA have certain limitations. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income (loss), or any other measures of financial performance derived in accordance with GAAP. These measures also should not be construed as an inference that the Company’s future results will be unaffected by unusual or non-recurring items for which these non-GAAP measures make adjustments. Additionally, EBITDA and Adjusted EBITDA are not intended to be liquidity measures because of certain limitations, including, but not limited to: i) they do not reflect the Company’s cash outlays for capital expenditures; They do not reflect changes in, or cash requirements for, working capital; and Although depreciation and amortization are non-cash charges, the assets are being depreciated and amortized and may have to be replaced in the future, and these non-GAAP measures do not reflect cash requirements for such replacements.
The non-GAAP information should be read in conjunction with the Company’s consolidated financial statements and related notes.
The following is a reconciliation of EBITDA and Adjusted EBITDA to the nearest GAAP measure, net loss:
In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we will incur expenses that are the same or similar to some of the adjustments made in our calculations, and our presentation of EBITDA and Adjusted EBITDA should not be construed to mean that our future results will be unaffected by such adjustment. Management compensates for these limitations by using EBITDA and Adjusted EBITDA as supplemental financial metrics and in conjunction with our results prepared in accordance with GAAP. The non-GAAP information should be read in conjunction with our consolidated financial statements and related notes.
The following is a reconciliation of EBITDA and Adjusted EBITDA to the nearest GAAP measure, net loss:
|
| For the Year Ended December 31, 2020 |
|
| For the Year Ended December 31, 2019 |
| ||
Net loss attributable to common stockholders of SG Blocks, Inc. |
| $ | (4,692,729 | ) |
| $ | (6,920,540 | ) |
Addback interest expense |
|
| 9,275 |
|
|
| 178,995 |
|
Addback interest income |
|
| (61,675 | ) |
|
| — |
|
Addback depreciation and amortization |
|
| 239,982 |
|
|
| 164,941 |
|
EBITDA (non-GAAP) |
|
| (4,505,147 | ) |
|
| (6,576,604 | ) |
|
|
|
|
|
|
|
|
|
Addback goodwill impairment |
|
| — |
|
|
| 2,938,653 |
|
Addback loss on asset disposal |
|
| 1,012 |
|
|
| 52,039 |
|
Addback litigation expense |
|
| 461,613 |
|
|
| — |
|
Addback stock-based compensation expense |
|
| 1,261,215 |
|
|
| 729,404 |
|
Adjusted EBITDA (non-GAAP) |
| $ | (2,781,307 | ) |
| $ | (2,856,508 | ) |
About SG Blocks:
SG Blocks, Inc. is a premier innovator in advancing and promoting the use of code-engineered cargo shipping containers for safe and sustainable construction. The firm 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 GreenSteelTM, the structural core and shell of an SG Blocks building, and then is customized to client specifications. 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 designing and preparing multiple specialty modules to meet urgent demands in community health for a variety of testing needs, SGB Development Corp. providing a steady stream of manufacturing activity to SG Echo, communicating regarding additional activity shortly and completing the Tyndall, Florida project in the second quarter of 2021. 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 design and deliver multiple specialty modules which meet urgent demands in community health for a variety of testing needs, SGB Development Corp.’s ability to provide a steady stream of manufacturing activity to SG Echo, the Company’s ability to communicate regarding additional activity as planned, the Company’s ability to complete the Tyndall, Florida project in the second quarter of 2021, 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, 2020 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 | |||||||
December 31, |
| 2020 |
|
| 2019 | ||
|
|
|
|
|
| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 13,010,356 |
|
| $ | 1,625,671 |
Accounts receivable, net |
|
| 2,635,608 |
|
|
| 1,101,185 |
Contract assets |
|
| 1,303,136 |
|
|
| 106,015 |
Inventories |
|
| 778,144 |
|
|
| — |
Prepaid expenses and other current assets |
|
| 570,775 |
|
|
| 73,938 |
Total current assets |
|
| 18,298,019 |
|
|
| 2,906,809 |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
| 2,683,014 |
|
|
| 11,747 |
Goodwill |
|
| 1,309,330 |
|
|
| 1,223,520 |
Right-of-use asset |
|
| 1,537,545 |
|
|
| — |
Long-term notes receivable |
|
| 682,637 |
|
|
| — |
Intangible assets, net |
|
| 2,218,609 |
|
|
| 2,298,805 |
Deferred contract costs, net |
|
| 152,944 |
|
|
| 193,730 |
Total Assets |
| $ | 26,882,098 |
|
| $ | 6,634,611 |
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
| $ | 3,961,961 |
|
| $ | 2,105,505 |
Contract liabilities |
|
| 1,774,740 |
|
|
| 168,957 |
Lease liability, current maturities |
|
| 326,654 |
|
|
| — |
Due to affiliates |
|
| 965,561 |
|
|
| — |
Assumed liability |
|
| 200,765 |
|
|
| — |
Other current liabilities |
|
| 5,000 |
|
|
| — |
Total current liabilities |
|
| 7,234,681 |
|
|
| 2,274,462 |
|
|
|
|
|
|
|
|
Lease liability, net of current maturities |
|
| 1,209,594 |
|
|
| — |
Total liabilities |
|
| 8,444,275 |
|
|
| 2,274,462 |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
Preferred stock, $0.00 par value, 5,405,010 shares authorized; none issued or outstanding. |
|
| — |
|
|
| — |
Common stock, $0.01 par value, 25,000,000 shares authorized; 8,596,189 issued and outstanding as of December 31, 2020 and 1,157,890 issued and outstanding as of December 31, 2019. |
|
| 85,962 |
|
|
| 11,579 |
Additional paid-in capital |
|
| 40,443,840 |
|
|
| 21,932,387 |
Accumulated deficit |
|
| (22,276,546 | ) |
|
| (17,583,817) |
Total SG Blocks, Inc. stockholders’ equity |
|
| 18,253,256 |
|
|
| 4,360,149 |
Non-controlling interests |
|
| 184,567 |
|
|
| — |
Total Stockholders' equity |
|
| 18,437,823 |
|
|
| 4,360,149 |
Total Liabilities and Stockholders’ Equity |
| $ | 26,882,098 |
|
| $ | 6,634,611 |
SG BLOCKS, INC. AND SUBSIDIARIES | ||||||||
Condensed Consolidated Statements of Operations | ||||||||
|
| For the Years Ended December 31, |
| |||||
|
| 2020 |
|
| 2019 |
| ||
Revenue: |
|
|
|
|
|
| ||
Construction services |
| $ | 4,104,917 |
|
| $ | 2,808,981 |
|
Engineering services |
|
| 409,206 |
|
|
| 175,854 |
|
Medical revenue |
|
| 4,241,500 |
|
|
| — |
|
Total |
|
| 8,755,623 |
|
|
| 2,984,835 |
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
Construction services |
|
| 3,224,457 |
|
|
| 2,238,535 |
|
Engineering services |
|
| 322,853 |
|
|
| 68,953 |
|
Medical revenue |
|
| 2,988,134 |
|
|
| — |
|
Total |
|
| 6,535,444 |
|
|
| 2,307,488 |
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
| 2,220,179 |
|
|
| 677,347 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Payroll and related expenses |
|
| 2,992,207 |
|
|
| 2,392,587 |
|
General and administrative expenses |
|
| 3,449,849 |
|
|
| 1,788,276 |
|
Marketing and business development expense |
|
| 230,248 |
|
|
| 240,557 |
|
Pre-project expenses |
|
| 130,707 |
|
|
| 21,286 |
|
Goodwill impairment |
|
| — |
|
|
| 2,938,653 |
|
Total |
|
| 6,803,011 |
|
|
| 7,381,359 |
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
| (4,582,832 | ) |
|
| (6,704,012 | ) |
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
| (9,275 | ) |
|
| (178,995 | ) |
Interest income |
|
| 61,675 |
|
|
| — |
|
Other income |
|
| 23,282 |
|
|
| 14,506 |
|
Loss on asset disposal |
|
| (1,012 | ) |
|
| (52,039 | ) |
Total |
|
| 74,670 |
|
|
| (216,528 | ) |
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
| (4,508,162 | ) |
|
| (6,920,540) |
|
Income tax expense |
|
| — |
|
|
| — |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| (4,508,162 | ) |
|
| (6,920,540 | ) |
|
|
|
|
|
|
|
|
|
Add: net profit attributable to noncontrolling interests |
|
| 184,567 |
|
|
| — |
|
Net loss attributable to common stockholders of SG Blocks, Inc. |
| $ | (4,692,729 | ) |
| $ | (6,920,540 | ) |
|
|
|
|
|
|
|
|
|
Net loss per share attributable to SG Blocks, Inc. - basic and diluted: |
|
|
|
|
|
|
|
|
Basic and diluted |
| $ | (0.79 | ) |
| $ | (22.85 | ) |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
| 5,959,403 |
|
|
| 302,844 |
|
SG BLOCKS, INC. AND SUBSIDIARIES |
Condensed Consolidated Statements of Changes in Stockholders’ Equity |
For the Year Ended December 31, 2020 and 2019 |
|
| $0.01 Par Value Common Stock |
|
| Preferred |
|
| Additional Paid-in |
|
| Accumulated |
|
| SG Blocks Stockholders’ |
|
| Noncontrolling |
|
| Total Stockholders' |
| |||||||||
|
| Shares |
|
| Amount |
|
| Stock |
|
| Capital |
|
| Deficit |
|
| Equity |
|
| Interests |
|
| Equity |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance at January 1, 2019 |
|
| 213,002 |
|
| $ | 2,130 |
|
| $ | — |
|
| $ | 17,741,214 |
|
| $ | (10,663,277 | ) |
| $ | 7,080,067 |
|
| — |
| $ | 7,080,067 |
|
Stock-based compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 946,660 |
|
|
| — |
|
|
| 946,660 |
|
| — |
|
| 946,660 |
|
Issuance of common stock, net of issuance costs |
|
| 944,888 |
|
|
| 9,449 |
|
|
| — |
|
|
| 3,244,513 |
|
|
| — |
|
|
| 3,253,962 |
|
| — |
|
| 3,253,962 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (6,920,540 | ) |
|
| (6,920,540 | ) |
| — |
|
| (6,920,540 | ) |
Balance at December 31, 2019 |
|
| 1,157,890 |
|
| $ | 11,579 |
|
| $ | — |
|
| $ | 21,932,387 |
|
| $ | (17,583,817 | ) |
| $ | 4,360,149 |
| $ | — |
| $ | 4,360,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019 |
|
| 1,157,890 |
|
| $ | 11,579 |
|
| $ | — |
|
| $ | 21,932,387 |
|
| $ | (17,583,817 | ) |
| $ | 4,360,149 |
|
| — |
| $ | 4,360,149 |
|
Stock-based compensation |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,261,215 |
|
|
| — |
|
|
| 1,261,215 |
|
| — |
|
| 1,261,215 |
|
Conversion of restricted stock units to common stock |
|
| 24,672 |
|
|
| 246 |
|
|
| — |
|
|
| (246 | ) |
|
| — |
|
|
| — |
|
| — |
|
| — |
|
Reverse stock split settlement |
|
| (38 | ) |
|
| — |
|
|
| — |
|
|
| (122 | ) |
|
| — |
|
|
| (122 | ) |
| — |
|
| (122 | ) |
Conversion of debt exchange to common stock |
|
| 73,665 |
|
|
| 737 |
|
|
| — |
|
|
| 205,526 |
|
|
| — |
|
|
| 206,263 |
|
| — |
|
| 206,263 |
|
Issuance of common stock, net of issuance costs |
|
| 7,340,000 |
|
|
| 73,400 |
|
|
| — |
|
|
| 17,045,080 |
|
|
| — |
|
|
| 17,118,480 |
|
| — |
|
| 17,118,480 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4,692,729 | ) |
|
| (4,692,729 | ) |
| 184,567 |
|
| (4,508,162 | ) |
Balance at December 31, 2020 |
|
| 8,596,189 |
|
| $ | 85,962 |
|
| $ | — |
|
| $ | 40,443,840 |
|
| $ | (22,276,546 | ) |
| $ | 18,253,256 |
| $ | 184,567 |
| $ | 18,437,823 |
|
SG BLOCKS, INC. AND SUBSIDIARIES | ||||||
Condensed Consolidated Statements of Cash Flows | ||||||
|
| For the Year Ended December 31, 2020 |
| For the Year Ended December 31, 2019 | ||
|
|
|
|
| ||
Cash flows from operating activities: |
|
|
|
| ||
Net loss |
| $ | (4,508,162) |
| $ | (6,920,540) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Impairment of goodwill |
|
| — |
|
| 2,938,653 |
Depreciation expense |
|
| 50,655 |
|
| 9,621 |
Amortization of intangible assets |
|
| 148,541 |
|
| 145,124 |
Amortization of deferred license costs |
|
| 40,786 |
|
| 10,196 |
Accretion of debt discount |
|
| — |
|
| 105,770 |
Amortization of debt issuance costs |
|
| — |
|
| 73,225 |
Bad debt expense and recoveries |
|
| 10,018 |
| (54,000) | |
Interest income on notes receivable |
|
| (32,637 | ) |
| — |
Stock-based compensation |
|
| 1,261,215 |
|
| 729,404 |
Loss on asset disposal |
|
| 1,012 |
|
| 52,039 |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
| (890,531 | ) |
| 699,141 |
Contract assets |
|
| (1,166,692 | ) |
| 154,310 |
Inventories |
|
| (647,345 | ) |
| — |
Prepaid expenses and other current assets |
|
| (489,437 | ) |
| 912,749 |
Right of use asset |
|
| 81,256 |
|
| — |
Accounts payable and accrued expenses |
|
| 1,129,189 |
| (301,457) | |
Contract liabilities |
|
| 1,236,174 |
| (1,165,930) | |
Due to affiliates |
|
| 965,561 |
|
| — |
Other current liability |
|
| 5,000 |
|
| — |
Long term lease liability |
|
| (82,553 | ) |
| — |
Deferred long-term asset charge |
|
| — |
| (203,926) | |
Net cash used in operating activities |
|
| (2,887,950 | ) |
| (2,815,621) |
|
|
|
|
|
|
|
Cash flows used in investing activities: |
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
| (1,568,115 | ) |
| (2,070) |
Purchase of Echo DCL, LLC, net of cash acquired |
|
| (743,168 | ) |
| — |
Advances in notes receivable |
|
| (650,000 | ) |
| — |
Payment on assumed liability of acquired assets |
|
| (84,440 | ) |
| — |
Net cash used in investing activities |
|
| (3,045,723 | ) |
| (2,070) |
|
|
|
|
|
|
|
Cash flows provided by financing activities: |
|
|
|
|
|
|
Proceeds from public stock offering and other private placements, net of issuance costs |
|
| 17,118,480 |
|
| 3,253,962 |
Proceeds from short-term note payable |
|
| — |
|
| 375,000 |
Proceeds from long term debt |
|
| 200,000 |
|
| — |
Settlement of common stock from reverse stock split |
|
| (122 | ) |
| — |
Payments on short-term note debt |
|
| — |
| (480,770) | |
Payments on debt issuance costs |
|
| — |
| (73,225) | |
Net cash provided by financing activities |
|
| 17,318,358 |
|
| 3,074,967 |
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
| 11,384,685 |
| 257,276 | |
|
|
|
|
|
|
|
Cash and cash equivalents - beginning of period |
|
| 1,625,671 |
|
| 1,368,395 |
|
|
|
|
|
|
|
Cash and cash equivalents - end of period |
| $ | 13,010,356 |
| $ | 1,625,671 |
|
|
|
|
|
| |
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
Cash paid during the period for Interest |
| $ | 2,614 |
| $ | 105,770 |
|
|
|
|
|
|
|
Supplemental disclosure of non-cash operating activities: |
|
|
|
|
|
|
Non-cash conversion of long term debt |
| $ | 200,000 |
| $ | — |
Non-cash conversion of interest expense of long term debt |
| $ | 6,263 |
| $ | — |
Non-cash conversion of accrued salary to restricted stock units |
| $ | — |
| $ | 217,256 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20210415005993/en/
Media: Rubenstein Public Relations Christina Levin Account Director 212-805-3129 clevin@rubensteinpr.com
Investors: Stephen Swett (203) 682-8377 investors@sgblocks.com
Source: SG Blocks, Inc.