MIAMI–(BUSINESS WIRE<\/a>)–Safe & Green Holdings Corp. (NASDAQ: SGBX) (\u201cSafe & Green Holdings\u201d or the \u201cCompany\u201d)<\/b>, a leading developer, designer, and fabricator of modular structures for residential, commercial, and point-of-care medicine, reported results for the three months ended March 31, 2023.<\/p>\n Recent Highlights:<\/b><\/p>\n \n\u201cDuring the first quarter of 2023, the Company achieved a 230% year-over-year increase in construction services revenue, building on the momentum that we experienced in the fourth quarter of 2022,\u201d commented Paul Galvin, Chairman and CEO of Safe & Green. \u201cDespite significant investments in the business to support our planned growth, which had a temporary impact on margins, we are clearly executing on our business model as a vertically integrated developer and manufacturer of modular structures. We are now focusing on four distinct verticals, each offering multiple opportunities for revenue growth, business expansion, and shareholder value enhancement. Moreover, we remain confident that SG Echo, our manufacturing operations, will turn cash-flow positive in Q3, 2023, signifying a key milestone towards our goal of achieving long-term, company-wide profitability. Due to the Waldron production facility gearing up for operations, SG Echo was not yet cash flow positive; however, once it has ramped up, likely in Q3 2023, we expect SG Echo to turn cash flow positive. In the face of the pandemic, while numerous businesses experienced stagnation or contraction, Safe & Green has achieved remarkable growth, with total assets increasing from $6.6 million in 2019 to $28.4 million at March 31, 2023, reflecting an increase of over 300%. For accounting reasons, these reported assets do not reflect the third-party appraised value of $74 million for Safe & Green Development Corporation (\u201cSG DevCo\u201d) alone. Simultaneously, our workforce has grown from 7 to 92 over the same period, without including the 50 plus additional employees who will be working at our new Waldron facility.\u201d<\/p>\n \n\u201cTo support the organic growth of SG Echo, we continue to invest in new capacity. Recently, SG Echo received a certificate of occupancy for its new Waldron facility in Durant, Oklahoma. As a result, we are now ready to commence production at this facility, which we believe will support approximately 55-65 additional U.S. jobs when running at full capacity. The extra 58,000 square feet of manufacturing space this facility provides has the potential to reach up to $25 million in additional annualized revenue for SG Echo within the next 12 months. In addition, we are making progress on our third facility in Durant, which is planned for later in 2023.\u201d<\/p>\n \n\u201cWe recently announced that SG Echo designed, delivered, and installed two Quick Serve Restaurant (QSR) units in Arkansas for a franchisee of the largest pizza company in the United States, Domino’s. These two units serve as a proof of concept for future stores within the national chain, with plans to roll out additional modular storefronts across the country. SG Echo also entered into a recent contract to deliver additional units for a long-time private customer, valued at approximately $6 million. The delivery of the current set of units is projected to be completed in the third quarter of 2023. We believe these orders are strong validation of the quality of our units, as well as the significant value proposition we provide our clients.\u201d<\/p>\n \n\u201cWithin Safe & Green Medical, the medical segment, our objective is to establish a national presence with various clinics and labs that cater to the specific needs of local communities. Our collaboration with The Peoples Health Care and Teamsters Local 848 continues to progress, and we are on track to deliver four modules before year-end. We also announced an important partnership with HALO Precision Diagnostics, which provides us the ability to deliver more cost-effective, accurate, and less invasive integrated healthcare to patients than traditional clinical diagnostic laboratory and imaging models. We are confident that our point-of-care delivery approach is advanced and scalable, functioning more akin to medical technology distribution systems rather than a traditional clinic or laboratory. We are excited about the prospect of establishing analogous partnerships with other Teamster Locals and various unions, while also broadening our scope to encompass other communities throughout the U.S., including smaller rural areas, and eventually expanding overseas, to offer integrated healthcare solutions in the future. We firmly believe that enhancing the healthiest years of life by offering medical care tailored to the needs of working-class people is the proper course of action for Safe & Green Medical. Importantly, we expect to generate $5.0 million in annual gross revenue per distinct medical site.\u201d<\/p>\n \n\u201cConsidering the growth and success of SG DevCo, we are progressing with plans to spin-off this subsidiary as a standalone, publicly traded company, which should unlock considerable value for existing shareholders. In addition, the proposed sale of the Lago Vista site continues to advance and is likely to close in the second quarter of 2023. The site, initially acquired for about $3.5 million, is expected to be sold for a substantially higher sum than the purchase price, providing additional capital and strengthening our balance sheet. Notably, we have over 4,000 units progressing through the planning and approval stages and are poised to enter our manufacturing facilities. These projects have a gross potential value of $800 million with anticipated margins of approximately 15%.\u201d<\/p>\n \n\u201cAt the same time, we are advancing operations within our environmental segment, in which we plan to utilize the Sanitec Microwave Healthcare Waste Disinfection System\u2122 for onsite elimination of biomedical waste using our mobile and modular units. We believe we can supply this lower-cost, compliant, and distributed solution to major healthcare systems as an alternative to how they currently dispose of medical waste.\u201d<\/p>\n \nIn conclusion, Mr. Galvin stated, \u201cOur enthusiasm and outlook for the business has never been greater. We continue to grow revenue, while carefully managing expenses and increasing our asset base. We are on track to achieve positive cash flow within our construction services segment in Q3 and for the full year. As a result, we are confident that we have created a highly scalable and profitable business model and look forward to providing further updates as developments unfold.\u201d<\/p>\n Financial Results for the Three Months Ended March 31, 2023<\/b><\/p>\n \nRevenue for the first quarter of 2023 was $5.5 million, compared to $8.6 million for the first quarter of 2022, reflecting the discontinuation of COVID-19 testing facilities, partially offset by increased construction services revenue. The construction services segment generated $5.5 million in revenue, a 230% increase, compared to the same period last year.<\/p>\n \nTotal gross profit for the first quarter of 2023 was a loss of $69 thousand compared to $2.5 million of gross profit in the first quarter of 2022, reflecting the decline in medical revenue, offset by increased revenue within the construction services segment.<\/p>\n \nOperating expenses for the first quarter of 2023 were $2.8 million, compared to $2.1 million for the first quarter of 2022. This increase was primarily attributable to increased general and administrative expenses, that the Company incurred to support its anticipated growth, partially offset by a reduction in payroll and related expenses. Operating expenses for the first quarter of 2023 included approximately $404 thousand of non-cash expenses, including $138 thousand of depreciation and amortization, as well as $266 thousand of stock-based compensation expense. This compares to approximately $806 thousand of non-cash expenses, including $157 thousand of depreciation and amortization, as well as $649 thousand of stock-based compensation expense for the same period last year. The first quarter of 2023 also included significant expenses allocated to the buildout of SG DevCo and the medical segment that were not incurred for the same period last year. The Company expects its operating expense as a percentage of revenue will significantly decline in future quarters.<\/p>\n \nThe net loss attributable to common shareholders was approximately $3.2 million, or $(0.22) per share in the first quarter of 2023, compared to a net loss of $717 thousand, or $(0.06) per share, in the first quarter of 2022.<\/p>\n \nThe Company\u2019s Adjusted EBITDA loss for the first quarter ended March 31, 2023, was approximately $2.0 million as compared to Adjusted EBITDA of approximately $239 thousand for the first quarter ended March 31, 2022. Both EBITDA and Adjusted EBITDA are not measures of performance calculated in accordance with Accounting Principles Generally Accepted in the United States of America (\u201cGAAP\u201d), and should not be considered in isolation of, or as a substitute for, earnings as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. The Company believes the presentation of EBITDA and Adjusted EBITDA is relevant and useful by enhancing the readers\u2019 ability to understand the Company\u2019s operating performance. The Company\u2019s management utilizes EBITDA and Adjusted EBITDA as a means to measure performance. The Company\u2019s measurements of EBITDA and Adjusted EBITDA may not be comparable to similar titled measures reported by other companies. The table below reconciles EBITDA and Adjusted EBITDA, both non-GAAP measures, to GAAP numbers for net loss attributable to common stockholders of Safe & Green Holdings Corp.<\/p>\n\n