SG Blocks Reports Fourth Quarter 2020 Financial Results
04/15/2021 - 04:05 PM
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:
In November, the Company and OSANG Healthcare announced a Managed Covid Test Supply Agreement and Purchase Order for 2 million Covid PCR tests being stored in Southern California.
In November, the Company and Grimshaw announced its D-Tec product was selected by CBS’s coveted “New York by Design ” competition commencing in November 2020.
In November, the Company’s subsidiary, Clarity Mobile Venture, announced it had been selected as a Trusted Testing Partner approved by the State of Hawaii for their comprehensive Travel Testing program to and from California.
In November, the Company announced that the Company has been selected by Memorial Healthcare, in Wayne County, Michigan, to provide Covid-19 testing services, supporting the County's goal to reopen businesses and other institutions safely.
In November, the Company executed an agreement to build and operate COVID testing centers at Los Angeles Airport, for passengers and employees, which were completed and functional in November.
In November, the Company was selected as one of the approved providers of testing and diagnostic services at the Daniel K. Inouye International Airport in Honolulu, Hawaii.
And subsequent to year end:
In January, the Company announced an agreement with National Pain Centers to provide COVID testing near O'Hare airport, supporting the needs of passengers, airport employees and the public at large. This facility opened for testing in February and was subsequently re-leased to a consortium of government entities at a profit for the company.
The Company reached an agreement with KLM Royal Dutch Airlines to provide testing services within the Tom Bradley International Terminal at O'Hare airport.
Within the Commercial and Residential verticals, the Company:
Reached an agreement with BLINK for the design and delivery of unique electric vehicle charging solutions.
Executed a purchase order from an existing privately held client completing a governmental project in Tyndall, Florida. The project consists of 20,560 square feet and is expected to be completed in the second quarter of 2021.
Fourth Quarter and Full Year 2020 Financial Results:
Revenue for the fourth quarter 2020 of approximately $7.4 million dollars, compared to approximately $337,000 dollars for the fourth quarter of 2019. The increase in revenue was driven by an approximately $2.7 million dollar increase in construction revenue and an approximately $4.2 million dollar increase in medical revenue. For the full year 2020, revenue was approximately $8.8 million dollars, compared to approximately $3.0 million dollars for 2019. This increase was driven primarily by an approximately $4.2 million dollar increase in medical revenue, and an approximately $1.3 million dollar increase in construction revenue.
Gross profit for the fourth quarter 2020 was approximately $1.6 million dollars, compared to a gross profit of approximately $48,000 dollars in the fourth quarter 2019. The gross profit margin in the fourth quarter 2020 was approximately 21.8% . For the full year 2020, gross profit was approximately $2.2 million dollars, compared to a gross profit of approximately $677,000 dollars for 2019. The gross profit margin for 2020 was approximately 25.4% .
Operating expenses for the fourth quarter 2020 were approximately $3.1 million dollars, compared to approximately $4.0 million dollars in the fourth quarter 2019. The decrease was primarily driven by a goodwill impairment taken in the fourth quarter 2019 of approximately $2.9 million that did not reoccur in 2020, partially offset by an increase in payroll expense of approximately $1.1 million and G&A expense of approximately $700,000. For the full year 2020, operating expenses were approximately $6.8 million dollars, compared to approximately $7.4 million dollars for 2019. The decrease was primarily driven by the goodwill impairment taken in 2019 that did not reoccur in 2020, partially offset by increases in payroll and related expenses, of which approximately $600,000 was due to non-cash
