Safe & Green Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2023

There are 4 speakers on the call.

Operator

Greetings. Welcome to the Safe and Green Holdings Second Quarter 2023 Business Update Conference Call. At this time, all participants are in a listen only mode. Please note this conference is being recorded. I will now turn the conference over to your host, Ted Avis, Vice President of Investor Relations.

Operator

You may begin.

Speaker 1

Good afternoon and thank you for joining Safe and Green's 2nd quarter 2023 Conference Call and Business Update. On the call with us today is Paul Galvin, Chairman and Chief Executive Officer of Safe and Green And Tricia Kalin, Chief Financial Officer of Safe and Green. Earlier today, the company announced its operating results for the quarter ended June 30, 2023. The press release is posted on the company's website, www.safeandgreenholdings.com. In addition, the company has filed its Quarterly 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 discussion with Mr. Galvin 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 in the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.

Speaker 1

SafeMoon 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 uncertainties which were described in the company's filings with the SEC. Any forward looking statements made on this conference call speak only as of today's date, Monday, August 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, Chairman and CEO of Safe and Greedy.

Speaker 1

Paul?

Speaker 2

Thanks, Ted. Good afternoon and thank you to everyone for joining us today. I would like to begin by Sending our sincere thanks to our investors for your unwavering belief and support of our vision. We remain committed to creating long term value for our shareholders and are clearly executing on that strategy. In the Q2 of 2023, Safe and Green built on the momentum from previous quarters and achieved a 21% year over year increase in manufacturing revenue.

Speaker 2

While many competitors in our industry face challenges, often downsizing and in some cases filing for bankruptcy, We have set ourselves apart as we continue to execute on our business model as a vertically integrated developer and manufacturer of modular structures. Importantly, we didn't just weather the storm. During and post pandemic, we flourished. This success is evident in the growth of both our asset base and the Safe and Green team. Additionally, We've channeled significant resources into our business and have zeroed in on 4 key verticals.

Speaker 2

Each of these holds promising opportunities for revenue growth, Business Development and the Enhancement of Shareholder Value. I am pleased to report that we have made substantial headway with our plans to spin off SG DevCo as an independent entity listed on NASDAQ and we anticipate setting a record date shortly. We have previously discussed our plans for the distribution of SG DevCo shares following this spin off and listing on NASDAQ. The company plans to allocate 30% of SG DevCo shares to our existing Safe and Green shareholders, With Safe and Green Holdings retaining the remaining 70% of the shares. This strategy is designed to generate significant value For our faithful long time shareholders, given the fact that an independent third party appraisal has valued SG SG DevCo's fair market value at an impressive $74,000,000 a figure many times higher than the Safe and Green Holdings Mark on capitalization.

Speaker 2

SG DevCo currently has a project pipeline valued at more than $800,000,000 which includes more than 4,200 units slated for development. This is just a piece of our overall goal of Developing 10,000 units over the next 7 years. This lofty goal is anticipated to utilize almost our entire in house manufacturing capacity Within SG ECHO, while we recognize that market dynamics can vary over such a period, our projections indicate potential returns surpassing 2 $100,000,000 from these projects over the lifetime of the initial phase of 7 years. In July, Building on the successful design delivery and installation of 2 quick serve restaurant units in Arkansas for a franchise of the largest pizza company in the United States, Domino's SG and A agreed to deliver and install 3 additional units in Oregon on behalf of a second Domino's franchisee, Noble Food Group. We are pleased that another Domino's franchisee has recognized and embraced the substantial value of our modular solutions, Following a thorough evaluation of the SG units that SG Eco supplied earlier this year, Domino's is not merely a global leader in the quick serve restaurant sector.

Speaker 2

They also appreciate the potential in creating a network of sustainable green modular storefronts. This aligns perfectly with our mission to enhance operational efficiency While promoting environmental sustainability for our clients, our partnership with Domino's is a mutual one filled with advantages for both sides and we are optimistic about expanding the relationship to additional Domino's franchisees in the futures, so long as we continue to service the existing ones well now. The company continues to build out its production capacity to support growth among both our existing and new clients. Moreover, We are integrating state of the art technologies and refining our processes to boost efficiency throughout all of our manufacturing facilities. Our strategic focus is aimed at fine tuning production processes, minimizing waste and increasing overall productivity.

Speaker 2

This not only equips us to handle increasing demand, but also underscores our unwavering dedication to innovation, Superior quality and excellence in every aspect of our operations. As the demand for Modulus solution grows, we are happy to report that the McLean manufacturing facility, our Our third production facility has transitioned into its design stage. This vast site spans a Staggering 1,100,000 Square Feet with a dedicated 120,000 square feet carved out for our newest manufacturing facility. The remaining area has been carefully mapped out for diverse functions we anticipate in the near term such as distribution, cold storage and industrial We're actively on boarding talent and exploring potential collaborations for this facility. Located on 114 April property owned by the company, The McLean manufacturing facility enjoys a location adjacent to the Magnolia Residential project.

Speaker 2

This facility will not only Support the development of 800 units at the Magnolia Residential Project, but also caters to the manufacturing needs of SG ECHO in the Dallas, Oklahoma City and surrounding markets. At Safe and Green Medical, we're driven by the vision of creating a widespread footprint with clinics and labs that address the unique needs of individual communities. Our partnership with the Peoples Healthcare and Teamsters Local 848 is Progressing and we are on track to roll out our first four modules by year's end. Moreover, we are working on an exciting project to provide A Native American tribe with a comprehensive, more cost effective, accurate and less invasive integrated healthcare approach compared To traditional clinical diagnostic laboratory and imaging models, spearheaded by Delfino Rourke, The recently appointed President and Chief Executive Officer of Safe and Green Medical, this project is quickly taking shape. Under her astute leadership, we're making swift progress with plans to have the units up and running by the Q4 of 2023.

Speaker 2

Our efforts in this area further emphasize our dedication to transforming healthcare delivery through advanced technology and responsive community engagement. In summary, as we leave the challenges of the pandemic behind, Safe and Green has not only reestablished its core capabilities, but has also grown into a vertically integrated developer and manufacturer of environmentally friendly modular structures. Setting aside our COVID related earnings, the company's financial trajectory over the past several years is nothing short of impressive. From $3,000,000 in 2019, we climbed to more than $12,500,000 in 2022. Looking ahead, We are poised to achieve a milestone of $30,000,000 in revenue in 2023, more than double our revenue from the previous year.

Speaker 2

Our prospects for the business have never been more promising. We are attracting key talent to our senior leadership team as well as our Board of Directors. The interest from such quality professionals stands as a testament to all the positive strides we are making at Safe and Green. Our business continues to expand and we are diligently balancing the growth of our asset base with sensible expense management. We're confident that in the Q3 of 2023, SG ECHO will reach a pivotal turning point and achieve positive cash flow, which would represent a key milestone in our mission of achieving long term profitability for the entire company.

Speaker 2

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

Speaker 3

Thanks, Paul. During the Q2, we sought to utilize our solid asset base to secure non dilutive financing, thereby lessening the company's reliance on the equity markets for further expansion. We have also substantially reduced our cash burn. In fact, we reduced our cash burnings in operations for the 6 months by over $2,000,000 As we continue to grow revenue, we look forward to generating meaningful Now turning to the results for the quarter. Revenue for the Q2 of 2023 Was $5,100,000 compared to $7,600,000 for the Q2 of 2022, reflecting the discontinuation of COVID-nineteen testing Facility, which was partially offset by the increase in Manufacturing for Construction Services revenue.

Speaker 3

The Manufacturing for Construction Services segment generated $5,100,000 in revenue, a 21% increase compared to the same period last year. Total gross profit for the Q2 of 2023 was $34,000 compared to $771,000 of gross profit In the Q2 of 2022, reflecting the decline in the medical revenue, offset by increased revenue within the Manufacturing Construction Services segment. Operating expenses for the Q2 of 2023 were $5,600,000 compared to $2,100,000 For the Q2 of 2022. This increase was primarily attributable to an increase in headcount and salary expense During the 3 months ended June 30, 2023, as well as the vesting of additional restricted stock units during 2023. The Q2 of 2023 also included significant expenses allocated to the build out of SG DevCo And the Medical segment that were not incurred for the same period last year.

Speaker 3

The net loss attributable to common Shareholders was approximately $5,600,000 or $0.37 per share in the Q2 of 2023 compared to a net loss of $1,400,000 or $0.11 per share in the Q2 of 2022. The company's adjusted EBITDA loss for the Q2 ended June 30, 2023 was approximately 2,300,000 as compared to adjusted EBITDA of approximately $512,000 for the Q2 ended June 30, 2022. At June 30, 2023, the company had a cash balance of short term investments of $1,600,000 compared to $600,000 at December 31, 2022. As of June 30, 2023, Stockholders' equity was $9,300,000 compared to $20,400,000 as of June 30, 2022. Through various strategic measures, we expect to raise 1,000,000 in non diluted funds, including the planned sale of our Lago Vista site.

Speaker 3

This should enable the company to accelerate its expansion by bolstering the strength of our balance sheet and highlighting our capability to leverage assets To maximize the shareholder returns, I would now like to turn the call back over to Paul for closing remarks.

Speaker 2

Thanks, Tricia. I would like to offer our sincere thanks to all of you for joining us today. We are very proud of the progress that Safe and Green has made and we're confident that the best is yet to come. We look forward to providing you with updates on our progress in the coming weeks. Thank you.

Operator

Thank you. This concludes today's event and you may disconnect your lines at this time. Thank you for your participation.

Remove Ads
Powered by Quartr
Earnings Conference Call
Safe & Green Q2 2023
00:00 / 00:00
Remove Ads