SG Blocks Reports 2Q22 Financial Results

Rhea-AI Summary

SG Blocks (SGBX) reported strong Q2 2022 financial results, achieving $7.6 million in revenue, a decline from $11.9 million in Q2 2021. A highlight was the 104% year-over-year growth in the Construction segment, contributing 56% of total revenue. Medical revenue accounted for 44%, showcasing a shift from COVID reliance. Gross profit fell to $0.8 million from $2.0 million the previous year. The company holds a $4.2 million construction backlog. SG Blocks also secured major contracts, including an $18 million deal with Moliving, enhancing its growth outlook.

Positive

• 104% year-over-year revenue growth in Construction segment.
• $18 million contract with Moliving, enhancing revenue streams.
• 56% of revenue now from Construction, indicating diversification.

Negative

• Total revenue decreased from $11.9 million in Q2 2021 to $7.6 million in Q2 2022.
• Gross profit declined to $0.8 million from $2.0 million in the previous year.

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

• The Twitter Spaces will be hosted on the SG Blocks corporate account by CEO Paul Galvin and Mark Moran of Equity Animal; and accessible at this link: https://twitter.com/i/spaces/1ynJOZlLNvqGR
• To ask questions during the Q&A, participants must join the Twitter Space using a mobile device

Dial-in Information:

• Toll-free dial-in number: 1-844-825-9787
• International dial-in number: 1-412-317-5172
• Live webcast, slides, and replay: https://viavid.webcasts.com/starthere.jsp?ei=1564240&tp_key=22fcf9918a

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			$	—

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220815005666/en/

Investor Relations:

Equity Animal

Mark Moran

(703) 888-8693

mm@equityanimal.com

Source: SG Blocks, Inc.

FAQ

What were SG Blocks' Q2 2022 earnings results?

SG Blocks reported $7.6 million in revenue for Q2 2022, down from $11.9 million in Q2 2021.

How did the Construction segment perform in Q2 2022?

The Construction segment generated $4.2 million in revenue, a 104% increase year-over-year.

What major contracts did SG Blocks announce in Q2 2022?

SG Blocks announced an $18 million contract with Moliving and a $0.8 million contract for a Military SCIF.

How much construction backlog does SG Blocks have as of June 30, 2022?

SG Blocks has a construction backlog valued at approximately $4.2 million.

What is the revenue breakdown for SG Blocks Q2 2022?

In Q2 2022, 56% of revenue came from Construction and 44% from Medical.