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SAFE & GREEN HOLDINGS CORP. (SGBX)·Q4 2022 Earnings Summary

Executive Summary

  • Q4 2022 revenue was $4.1M (down 51.8% YoY on COVID testing wind-down) while construction services revenue surged to $4.2M (+476% YoY), reflecting the pivot back to core modular manufacturing .
  • Net loss improved slightly to $(3.3)M, or $(0.24) per share (vs $(0.32) in Q4 2021); gross profit rose to $0.3M despite the revenue reset, supported by construction mix shift .
  • Management tightened 2023 operating focus: expects SG Echo to be cash-flow positive in 2023, targets gross margins >15% in manufacturing, and highlights completed vertical integration with capacity to support >$150M annualized revenue across facilities .
  • Strategic catalysts: planned Q2 2023 spin-out/listing of SG DevCo (~$74.3M third-party fairness opinion) and expected Q2 sale of Lago Vista property for materially above the ~$3.5M purchase price .

What Went Well and What Went Wrong

  • What Went Well

    • Construction services revenue inflected to $4.2M in Q4 (+476% YoY), demonstrating traction in modular manufacturing and internal development pipeline .
    • Vertical integration across Durant HQ, planned Waldron facility (opening targeted Q2 2023), and planned St. Marys facility expands capacity; management asserts capacity can support >$150M annualized revenue .
    • Clear strategic roadmap: positive SG Echo cash flow in 2023; Magnolia Gardens fabrication (~800 units) expected to add $130M manufacturing revenue; growing PO book ($11.5M since April 2022) .
    • Quote: “We believe the vertical integration of our business…provides us with a distinct competitive advantage…expected to drive significant margin expansion.” — Paul Galvin, CEO .

  • What Went Wrong

    • Total revenue fell YoY to $4.1M (vs $8.5M) on the discontinuation of COVID-19 testing; medical segment reset drove the headline decline despite construction strength .
    • Operating expenses rose to $4.0M (vs $2.4M), including ~$1.1M non-cash (D&A $145K, SBC $924K) and ~$2.4M allocated to SG DevCo; near-term profitability burdened by growth investments .
    • Liquidity tightened: cash and short-term investments were $0.583M at year-end (vs $13.0M prior year), raising emphasis on asset sales (Lago Vista) and borrowings to fund operations .

Financial Results

MetricQ2 2022Q3 2022Q4 2022
Revenue ($USD Millions)$7.55 $4.13 $4.10
Construction Services Revenue ($USD Millions)$4.21 $2.66 $4.20
Gross Profit ($USD Millions)$0.77 $(0.17) $0.30
Gross Margin (%)10.2% (GP $0.77; Rev $7.55) (4.0%) (GP $(0.165); Rev $4.13) 7.3% (GP $0.30; Rev $4.10)
Net Loss ($USD Millions)$(1.42) $(2.45) ~$(3.30)
Diluted EPS ($USD)$(0.11) $(0.18) $(0.24)
Operating Expenses ($USD Millions)N/AN/A$4.0
Adjusted EBITDA ($USD Millions)N/A$(1.09) $(2.32)
Cash & Short-term Investments ($USD Millions, period-end)$2.43 N/A$0.58

Notes: Gross margin figures are calculated from cited revenue and gross profit values.

Segment breakdown (Q4 2022):

SegmentRevenue ($USD Millions)
Construction Services$4.20
Other (Medical/Engineering)Not disclosed for Q4; total consolidated revenue $4.10

Key KPIs and balance items:

KPIValue
Purchase Orders since Apr 2022~$11.5M
Manufacturing capacity plan>$150M annualized revenue
SG DevCo fairness opinion~$74.3M
Stockholders’ equity (12/31/22)$14.9M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
SG Echo cash flowFY 2023“On track to achieve positive cash flow in 2023” (Q4 call) “Projecting positive cash flow within SG Echo in 2023” (press release) Maintained
Manufacturing gross margin targetOngoing“Gross margins exceeding 15%” (Q4 call) “Achieve gross margins in excess of 15%” (press release) Maintained
Manufacturing capacityOngoing“Expect capacity >$150M annualized” (Q4 call) “Current and planned facilities expected to support up to $150M annualized” (press release) Maintained
SG DevCo spin-out/listingQ2 2023“Anticipate spin-out soon; naming leadership” (Q4 call) “Anticipates Q2 spin-out and NASDAQ listing; 30% to existing shareholders” (press release) Formalized timing
Lago Vista property saleQ2 2023LOI at ~$15M disclosed earlier (Q2 press release) “Commenced auction; anticipate Q2 2023 close for significantly above $3.5M cost” (press release) Updated process & timing

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2022)Previous Mentions (Q3 2022)Current Period (Q4 2022)Trend
Vertical integration & capacityDescribed factory network; pipeline ~$750M; adding St. Marys; no major supply chain issues Waldron to open; capacity >$150M; backlog ~$2.6M Facilities plan supports >$150M annualized capacity; margin expansion expectation Strengthening execution
Manufacturing margins & cash flowEmphasis on improving profitability as internal projects enter factories “Gross margins exceeding 15%”; positive cash flow for SG Echo in 2023 Reiterates >15% margins; SG Echo cash-flow positive projected in 2023 Consistent, nearer-term
Medical point-of-care strategyEntry via Teamsters LOI; Port of Long Beach plan Four mobile modules for Teamsters Local 848; $5M/site revenue potential Agreement announced; national footprint ambition; diagnostics market to $51B by 2029 Scaling beyond COVID
SG DevCo spin-outDevelopment pipeline; multiple sites; financing approach Named CEO/CFO; 30% distribution to current holders; ~$74M appraisal Anticipates Q2 spin-out; listing on NASDAQ Firm timeline
Environmental/medical waste (Sanitec)10-year exclusive NY distribution; footprint buildout National sales/service buildout; on-site biomedical waste disinfection Reiterates market opportunity and integration with medical sites Early-stage buildout

Management Commentary

  • “2022 was a transformative year…nearly five-fold increase in construction services revenue for the fourth quarter compared to the same period last year.” — Paul Galvin, CEO .
  • “We expect to have capacity to support over $150 million in annualized revenue…expect our manufacturing segment to generate positive cash flow in 2023.” .
  • “We are making progress with the planned spin-out and independent listing of SG DevCo…existing shareholders are expected to receive 30% of the spin-out.” .
  • “Our growing sales pipeline is now in excess of $800 million.” .

Q&A Highlights

  • The Q4 2022 transcript provided prepared remarks and financial review; Q&A content was not available in the retrieved document excerpts due to a database inconsistency while reading the remainder .
  • From prior quarter (Q3 2022) Q&A: investors probed revenue growth pace vs $800M pipeline, margin trajectory at SG Echo (management cited typical 18–20% on external work and 15% open-book on internal projects), and timing of backlog conversion .
  • Clarifications included multi-year realization of development pipeline revenues (3–5 years) and focus on internal projects to stabilize factory utilization .

Estimates Context

  • Wall Street consensus EPS and revenue estimates for Q4 2022 via S&P Global were unavailable during this session due to data access limits, so we cannot assess beats/misses against consensus at this time. Any future estimate comparisons should default to S&P Global/Capital IQ [GetEstimates error].

Key Takeaways for Investors

  • Construction-led reset is underway: Q4 construction revenue strength (+476% YoY) signals traction in core modular manufacturing as medical COVID revenues taper .
  • 2023 inflection path: SG Echo targeted for positive cash flow; manufacturing margin goal (>15%) supported by internal SG DevCo work and PO visibility (~$11.5M since Apr 2022) .
  • Capacity expansion de-risks scaling: Fully integrated footprint (Durant, Waldron, St. Marys) with >$150M annualized capacity ambition positions SGBX for larger programs .
  • Strategic unlocking: SG DevCo spin-out (Q2 2023) with ~$74.3M appraisal and 30% distribution to holders could surface value and simplify the manufacturing story .
  • Liquidity watch: Year-end cash $0.583M emphasizes timely execution on Lago Vista sale (Q2 2023 target) and discipline on OpEx amid growth investments .
  • Narrative catalysts: Multi-site medical modules rollout (Teamsters Local 848), environmental waste solutions (Sanitec), and Magnolia Gardens fabrication pipeline (~800 units, ~$130M revenue) can drive utilization and margin visibility .