SG Blocks, Inc. (SGBX) provides fabricated modular structures. The company advances and promotes the usage of code-engineered cargo shipping containers for safe and sustainable construction. Recently, the company was selected as the exclusive manufacturer in the U.S. for Street Food USA’s national modular rollout of food halls.
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Let’s look at SGBX’s recent second-quarter fiscal 2021 financials and understand what has changed in its key risk factors that investors should know.
Despite several projects getting delayed due to the COVID-19 pandemic, SGBX’s second-quarter revenue increased to $11.9 million from $630,000 a year ago. This increase was attributable to higher construction services revenue, along with a $9.8 million contribution from the Medical vertical.
The Chairman and CEO of SGBX, Paul Galvin, said, “We made substantial progress in our housing vertical, launching several new development opportunities where we anticipate earning revenue from both our interest in the projects and by fabricating the units at SG Blocks’ own manufacturing facilities.
Our goals over the coming quarters will be to execute at a high level on our existing projects, seek new investment opportunities and partners, and continuously expand our manufacturing capacity to support our accelerating pace of activity.”
As of June 30, SGBX had 14 projects under contract and a construction backlog of approximately $21 million.
During the second quarter, owing to one-time start-up costs related to multiple closings and manpower addition to support backlog and pipeline, the company’s operating expenses increased to $2.8 million from $1.2 million a year ago. Net loss per share increased to $0.17 versus a net loss per share of $0.16 a year ago. (See SG Blocks stock chart on TipRanks)
Furthermore, SGBX expects to be cash-flow positive in the fourth quarter of 2021. Shares of the company are up 146.7% over the past 12 months.
Now, let’s look at what’s changed in the company’s key risk factors.
According to the new Tipranks’ Risk Factors tool, SGBX’s main risk category is Finance & Corporate, which accounts for 47% of the total 51 risks identified. Since June, the company has added two key risk factors.
Under the Finance & Corporate risk category, SGBX notes that its projections of the number of units it anticipates building for each project and the associated timelines are based on reasonable assumptions but may not be realized. These projections and the actual results may vary, and the variations could be substantial and may increase over time.
The second risk factor is under the Production risk category. Amid the COVID-19 pandemic, SGBX has witnessed delays in deliveries and increased costs for materials, especially lumber. The company acknowledges that the inability to procure materials and products from suppliers on time or at competitive prices may negatively impact its business.
The Finance & Corporate risk factor’s sector average is at 39%, compared to SGBX’s 47%.
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