Safe & Green Q3 2023 Earnings Report

Safe & Green EPS Results

• Actual EPS: -$4.40
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Safe & Green Revenue Results

• Actual Revenue: $3.97 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Safe & Green Announcement Details

• Quarter: Q3 2023
• Date: 11/14/2023
• Time: N/A
• Conference Call Date: Tuesday, November 14, 2023
• Conference Call Time: 4:30PM ET

Safe & Green (NASDAQ:SGBX) is a design and construction services company, which engages in the provision of code engineered cargo shipping containers. It operates through the following segments: Construction, Medical, Development, and Corporate and Support. The Construction Services segment includes the manufacturing of unit SG ECHO and other modules projects. The Medical segment consists of joint venture COVID-19 laboratory operations. The Development segment focuses on real property development. The Corporate and Support segment includes general corporate expenses such as the executive office, corporate finance, accounting, audit, tax, human resources, risk management, information technology, marketing, and legal groups, corporate overhead, and other items not allocated to any of the company's other segments. The company was founded on December 29, 1993 and is headquartered in Miami, FL.

Safe & Green Q3 2023 Earnings Call Transcript

[Operator]

Greetings, and welcome to the Safe and Green Holdings Third Quarter 2023 Business Update Please note this conference is being recorded. I will now turn the conference over to your host, Mr. Ted Ivas, Investor Relations. You may begin.

[Speaker 1]

Good afternoon and thank you for joining Safe and Green's Q3 2023 conference call and business update. On the call with us today is Paul Galvin, Chairperson and Chief Executive Officer of Safe and Green Holdings Inc and Tricia Kalin, Chief Financial Officer of Safe and Green Holdings, Inc. Earlier today, the company announced its operating results for the quarter ended September 30, 2023. The press release is posted on the company's website, www.safeandgreenholdings.com. In addition, the company has filed its quarter report on Form 10 Q with the U.

[Speaker 1]

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. If you have any questions after the call or would like to arrange a 1 on 1 discussion with Mr. Galvez 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 constitute forward looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

[Speaker 1]

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, including risks 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 statement made on this conference call speak only as of today's date, Tuesday, November 14, 2023. 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, Chairperson and CEO of Safe and Green.

[Speaker 1]

Paul?

[Speaker 2]

Thanks, Ted. Good afternoon. Thank you to everyone for joining us today. I would like to begin by extending our sincere thanks to our investors for your continued commitment to and support of our vision. We are focused on creating long term value for our shareholders and are clearly executing on our strategy.

[Speaker 2]

During the Q3 of 2023, we experienced a 70% year over year increase in manufacturing for construction revenue, Building on our recent momentum, we also celebrated a significant milestone event for Safe and Green Holdings as successfully spun off the company's real estate development subsidiary SG DevCo into an independent publicly traded company on NASDAQ under the symbol SGD. This significant achievement marks the successful conclusion of a 2 year journey. Our success was the fruit of continued dedication and tireless efforts of our entire team. Following the spin off, Safe and Green Holdings retained a substantial 70% interest in SG DevCo, with the balance of 30% going to you, our loyal shareholders. This is particularly noteworthy considering SG as the 70% owner of this business.

[Speaker 2]

Furthermore, SG DevCo maintains a shared services agreement with Safe and Green Holdings. Under this agreement, Safing Green Holdings offers base services to SG DevCo for which it receives monthly compensation. We anticipate Ongoing and significant synergies with SG DevCo as it executes on plans to commence development of projects in the pipeline, which are currently valued at more than $800,000,000 and are expected to drive further manufacturing growth for SG ECHO. Additionally, our enthusiasm for the potential growth and future opportunities for both SG Holdings and SG DevCo are numerous. SG Holdings' goal is to develop 10,000 units within the next 7 years.

[Speaker 2]

In reaching the goal, SG Holdings is projected to utilize almost the entirety of our manufacturing capacity. While acknowledging that market conditions may fluctuate, SG Holdings estimates that the returns from all the projects at this time will exceed $200,000,000 over the lifetime of the projects. With the expansion of current client relationships and the acquisition of new projects, including intercompany projects, we anticipate the necessity for multiple factory campuses and additional manufacturing capacity. As a result, we are actively expanding the production capabilities of the company's manufacturing subsidiary, in order to support this growth. Moreover, SG Holdings is integrating state of the art technologies and refining our to boost efficiency throughout all of our manufacturing facilities.

[Speaker 2]

Our strategic focus is on fine tuning production processes, minimizing waste and increasing overall productivity. In 2024, our plan is to shift a portion of our business from lower priced, high volume projects with a higher price point and lower volume. As a result of this pivot and strategy, We expect to see an improvement in cash flow, most notably Q1 2024. The Waldron facility located in Durant, Oklahoma is now up and provides the company with an additional 58,000 square feet of manufacturing space. In fact, we believe that the Walden facility has the potential to generate up to $25,000,000 in additional annualized revenue for SG ECHO over the next 12 months.

[Speaker 2]

In addition, the McLean manufacturing facility, our 3rd production facility has transitioned into the design phase. Once completed, this facility will provide the company with 120,000 square feet of additional manufacturing space. Furthermore, the planning for our manufacturing facility in St. Mary's, Georgia is progressing smoothly. Once completed, This facility will serve the areas of Cumberland Island, Georgia and Florida.

[Speaker 2]

Once all of our manufacturing facilities are operational, It is projected that our collective manufacturing space will encompass a sizable 1,100,000 square feet. This extensive capacity will be instrumental in efficiently servicing the broadening spectrum of projects that the company is undertaking. Additionally, expanding our building capacity demonstrates our commitment to growth as well as our ability to scale up operations to meet the increasing demands of our diverse project portfolio. Moreover, our enhanced capacity better positions the company to deliver on a larger scale as we seek to strengthen and broaden our business footprint in all 50 states. We are also excited to share that SG awarded a multimillion dollar contract to supply an additional modular units to a long standing private infrastructure solutions client, highlighting the quality of our work and ability to generate strong repeat business.

[Speaker 2]

The company was recently selected by the Tunnels to Towers Foundation to Construct a traveling modular home. The home called the Comfort Home Show model is designed to showcase the foundation's homeless veteran program. As a result of the success of the Comfort Home show model, the company will be partnering with Impact Housing to construct 3 additional modular Comfort Homes for the Tunnels to Towers Foundation in Houston, Texas. Additionally, the company announced the launch of the Cornerstone Charitable Foundation, a 501c3 organization focused on providing services around the world. The services will initially include affordable housing, healthcare and Well-being Services and Locations, the provision of clean, portable water and education, we plan to leverage the relationship with Cornerstone by providing cost effective modular solutions manufactured by SG ECHO.

[Speaker 2]

Notably, a first project We are partnering with Cornerstone to construct a vocational schoolhouse in Cape Coast, Ghana as the part of Ghana's Tomorrow project. This relationship demonstrates the power of corporate and charitable partnerships to impact the future of communities worldwide. We are also excited to share the rebranding and rapid expansion of Safe and Green Medical Corporation, which is now known as Well Global Health. Our healthcare services, products and facilities offerings are revolutionizing the way preventative care, chronic condition management and Education are accessed and experienced. Our state of the art pre constructed modular eco friendly wellness suites offer employers, health systems, communities and beyond a comprehensive and personalized solution to the barriers that prevent people from staying healthy.

[Speaker 2]

Leveraging our health experience and modular capabilities, our goal is to rapidly deploy our suites everywhere they are needed. Led by Delfino Rourke, an industry leader and health law expert and the new President and CEO of Well Global Health, We provide an easily accessible, trusted and comprehensive solution for preventative health and ongoing health and wellness. Our model solves the time, distance and space barriers to care that are increasingly acute across the United States, while also providing innovative and engaging care experiences. Safe and Green Holdings still owns the CLIA modular units previously used for the remote COVID-nineteen testing of passengers and employees at LAX Airport and is actively seeking out the ideal opportunity to redeploy these modules. Once the right opportunity is identified, the company will be capable of redeploying these modules within a 2 week timeframe.

[Speaker 2]

This swift turnaround further demonstrates the versatility and adaptability offered by Modular Construction. We are excited about the numerous outstanding projects we are currently involved in. Our manufacturing for construction revenue has seen Significant growth recently rising from $4,100,000 in 2020 to over $12,700,000 in 2022 and is on track to reach record levels in 2023. The direction we are heading is highly promising and the outlook for Safe and Green is brighter than ever. Our business continues to expand and we remain committed to prudently manage our expenses to maximize value for shareholders.

[Speaker 2]

I would now like to turn the call over to Tricia Kalin, Chief Financial Officer of Safe and Green, who will review The financial results for the 3 months ended September 30, 2023. Tricia?

[Speaker 3]

Thanks, Paul. During the Q3, we continued to focus on leveraging our robust asset base to secure non dilutive financing, which we believe highlights the strength of our balance sheet. Furthermore, the company entered into a new non binding letter of intent to sell our Lago Vista site for $11,500,000 The proceeds of which will be invested as equity in a new joint venture with a premier real estate development firm. The joint venture plans to develop the site using SG ECHO's modular units. The Lago Vista property was initially acquired by the company in 2021 for $3,500,000 demonstrating our ability to maximize the value of our assets.

[Speaker 3]

Moreover, we have reduced operating expenses by more than $2,000,000 since the Q1 of 2023, which will be reflected in additional cost savings in 2024. Now turning to our results for the quarter. Revenue for the Q3 of 2023 was $4,000,000 compared to $4,100,000 for the Q3 of 2022. The slight decrease was attributable to the lack of engineering services and medical revenue for the Q3 of 2023, which was partially offset by an increase in manufacturing for construction revenue. The manufacturing for construction segment generated 4.0 $1,000,000 in revenue, a 48% increase for the Q3 of 2023 compared to the same quarter of last year, which is a 70% increase year over year for the 9 months ended September 30.

[Speaker 3]

Total gross profit for the Q3 of 2023 was negative $536,000 compared to negative $165,000 in the Q3 of 2022. Operating expenses for the Q3 of 2023 were $2,400,000 compared to $2,300,000 for the Q3 of 2022. The Q3 of 2023 included significant expenses allocated to the build out of SG DevCo and Safe and Green Medical Corp, now known as Well Global Health that were not incurred for the same period last year. The net loss attributable to common shareholders was approximately $3,600,000 or $0.23 per share loss in the Q3 of 2023 compared to a net loss of $2,500,000 or $0.18 per share loss in the Q3 of 2022. The company's adjusted EBITDA loss for the Q3 ended September 30, 2023 was approximately $1,400,000 as compared to adjusted EBITDA loss of approximately $1,500,000 for the Q3 ended September 30, 2022.

[Speaker 3]

As of September 30, 2023, the company had a cash balance of short term investments of $713,000 compared to $600,000 at December 31, 2022. As of September 30, 23 stockholders' equity was $6,400,000 compared to $14,400,000 as of September 30, 2022. The company believes it has sufficient cash and borrowing capacity to support near term operations. I would now like to turn the call back over to Paul for closing remarks.

[Speaker 2]

Thanks, Tricia. We would like to offer our sincere thanks to all of you for joining us today. We are extremely proud of Safe and Green's accomplishments and are optimistic that we will continue our commitment to excellence and success. We look forward to providing you with updates on our progress in the coming weeks and wish everyone a good day. Thank you.

[Operator]

Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful rest of the day.