Safe & Green Holdings Corp. (NASDAQ:SGBX) is a diversified company operating in the construction, medical, real estate development, and environmental sectors. The company has faced its fair share of challenges, but it is also exploring new avenues for growth and expansion.
Financials
For the fiscal year ended December 31, 2023, Safe & Green Holdings reported annual revenue of $16,523,080, a decrease from the previous year. The company's net loss for the year was $26,282,533, and its operating cash flow was negative $7,141,754, with free cash flow of negative $7,843,128. These financial results reflect the ongoing challenges the company has faced in recent years.In the first quarter of 2024, the company reported revenue of $1,017,931, a significant decrease from the $5,503,935 reported in the same period of the previous year. The decrease was primarily driven by a decline in construction services revenue. Gross profit for the quarter was $372,948, compared to a gross loss of $69,472 in the first quarter of 2023. The company's net loss attributable to common stockholders for the quarter was $4,670,164.
Business Segments
Safe & Green Holdings operates in four main business segments: construction, medical, real estate development, and environmental.Construction Segment
The construction segment designs and constructs modular structures built in the company's factories using raw materials that are Made-in-America. This segment has historically been a significant contributor to the company's revenue, but it has faced challenges in recent years due to the COVID-19 pandemic and other market conditions.Medical Segment
In the medical segment, the company uses its modular technology to provide turnkey solutions for medical testing and treatment, generating revenue from medical testing and point-of-care treatment in its medical suites and leasing medical suites and privacy pods.Real Estate Development Segment
The real estate development segment, operated through the company's majority-owned subsidiary Safe and Green Development Corporation (SG DevCorp), builds innovative and green single or multifamily projects in underserved regions nationally using modules built in one of the company's vertically integrated factories.Environmental Segment
The environmental segment, the newest addition to the company's portfolio, is a sustainable medical and waste management solution that utilizes a patented technology to collect and treat waste for safe disposal.Liquidity
As of March 31, 2024, Safe & Green Holdings had cash and cash equivalents of $739,787 and a backlog of $964,375. The company has incurred losses since its inception, has negative working capital, and has negative operating cash flows, which has raised substantial doubt about its ability to continue as a going concern.The company intends to meet its capital needs from revenue generated from operations, by containing costs, entering into strategic alliances, and exploring other options, including the possibility of raising additional debt or equity capital as necessary. However, there is no assurance the company will be successful in meeting its capital requirements prior to becoming cash flow positive.
Risks and Challenges
Safe & Green Holdings faces several risks and challenges, including:1. Dependence on a few large customers: A significant portion of the company's revenue is derived from a limited number of large customers, and the loss of one or a few of these customers could have a material adverse effect on the business.
2. Backlog uncertainty: The company's backlog is not necessarily indicative of future revenues or earnings, as clients may adjust, cancel, or suspend contracts, and the backlog may not result in the expected gross margins.
3. Dilution from outstanding options and warrants: The issuance of shares upon the exercise of outstanding options, warrants, and restricted stock units may dilute the percentage ownership of existing stockholders and make it more difficult to raise additional equity capital.
4. Potential default of SG DevCorp's loan: If SG DevCorp were to default on its loan from BCV S&G, it could adversely affect the company's investment in SG DevCorp.
5. Macroeconomic and geopolitical factors: Changes in general economic conditions, geopolitical conditions, domestic and foreign trade policies, and monetary policies may adversely impact the company's business and operating results.