- 3 years ago
Safe & Green is a modular solutions company that has created industry-leading processes to design, manufacture and install modular homes, medical facilities and other buildings.
The company and its manufacturing facilities are based in the U.S. and designed to be as sustainable as possible. Safe & Green says that it can cut construction times by 50% and costs by 10% to 20%.
The company and its manufacturing facilities are based in the U.S. and designed to be as sustainable as possible. Safe & Green says that it can cut construction times by 50% and costs by 10% to 20%.
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NewsTranscript
00:00 (upbeat music)
00:02 - Paul Galvin, Chairman and CEO of Safe and Green Holdings.
00:07 Thank you so much for joining us this morning.
00:10 - Hey, thanks for having me Zanod, nice to meet you.
00:12 - That's pleasure of mine here as well.
00:14 Now we've got a lot to talk about.
00:16 I know you had some news that came out earlier this month
00:19 that I wanna get to, but for the folks at home
00:21 that might not be familiar with your company,
00:23 if you could explain it to me like I'm five,
00:25 what is it that your company does?
00:27 - Sure, so we take modular construction
00:32 and use those solutions to solve the biggest problems
00:35 that exist in our country and the world,
00:38 namely sustainable employment, affordable housing,
00:43 and point of care medicine.
00:45 And we originally did that repurposing shipping containers,
00:49 and now we use other forms of modules,
00:51 including wood, light gauge steel and what have you.
00:54 But what I'd like your audience to recognize
00:56 is that from our perspective,
00:59 the module itself or the shipping container
01:01 is a technology delivery device.
01:04 And that could be your home, it could be a Clio lab,
01:07 it could be a primary care or imaging office,
01:10 and it could be an ADU in your backyard.
01:12 So we have gone from designing
01:16 and using the factories of others,
01:19 and now we have up to 1.1 million square feet available
01:23 for us and made in the USA space.
01:25 And we're building in Durant, Oklahoma
01:27 and St. Mary's, Georgia, and we're a good employer.
01:31 Not every company should be an employer,
01:32 we're a good employer.
01:34 - Well, look, I'm in Georgia,
01:35 so I might have to check this out sometime.
01:37 But has that impacted your margins in any way,
01:39 in a positive way or negative way?
01:42 - It's helped us with the margins,
01:44 and it's given us more control
01:45 over the means of productions.
01:48 We can count on our own estimates and bids as being accurate.
01:51 And we have a development company
01:55 that we're going to talk about shortly.
01:57 And one of the reasons we developed our Devco
02:00 and our factory ecosystem at the same time
02:03 is because they're related.
02:06 The factories are gonna build the 4,000 houses
02:10 or apartments that the development company has under control.
02:13 And for the factories,
02:15 that's approximately $800 million in seven years.
02:19 - Well, let's talk about Devco here.
02:20 I know on July 12th, you talked about,
02:23 you got the SEC approval with the Form 10
02:26 that's needed to go ahead and spin off.
02:28 So let me go, give me a little bit of insight
02:29 on why you did that
02:31 and how this can help investors in the longterm.
02:34 - Sure, we have great shareholders at the parent level, SGBX.
02:38 Our market cap is about $20 million.
02:41 It seems unnaturally low, we'll leave it at that.
02:45 Considering we have one subsidiary that's 100% owned
02:49 with 75 million in assets,
02:51 which is our development.
02:53 Our plan spinning out the development company
02:56 is we're giving only our existing loyal
03:00 and dedicated shareholders,
03:03 30% of the development company, 70% stays with the parent.
03:07 So approximately 25 million in equity
03:10 to people that believe in the platform
03:12 and have stuck with us.
03:14 And we're giving them another horse in the race.
03:16 It's connected back to the manufacturing,
03:18 which is in the parent.
03:20 And we believe it's gonna take some stock trading pressure
03:22 off the parents.
03:23 But more than anything else,
03:25 we have $75 million of assets in our development company.
03:30 And I think it's about 5 million in debt.
03:32 So to try to understand the parent valuation,
03:34 if you figure it out, let me know.
03:36 - Yeah, I mean, hey, listen,
03:37 this is why I asked the question
03:39 and hope that you can go ahead and answer them for me.
03:41 The next one I wanna talk about
03:43 is your non COVID related revenue,
03:45 which has grown tremendously.
03:46 I believe you're up to like, what is it?
03:48 30 million is what the game plan is for the end of 2023.
03:52 What's in the pipeline if you're able to tell us
03:55 on how you plan on getting there.
03:56 But I also wanna get a little bit of insight
03:58 on maybe 2024 in the early quarters.
04:00 - Sure, so pre COVID, I think we had seven employees
04:05 and did about three, three and a half million of revenue.
04:09 And then you can follow the trajectory since then.
04:12 I think we'll have about 150 employee positions now.
04:16 - Yeah.
04:17 - And we're able to use COVID
04:19 to kind of help fortify the company to acquire factories
04:23 and to acquire the real estate to go into factories.
04:26 So SGECO did about 3 million pre pandemic
04:29 and this year plus or minus 30 million in revenue.
04:32 That 30 million is comprised of blue chip clients
04:37 like the US military, military subcontractors,
04:41 Domino's Pizza, and others were under NDA
04:44 for that we repeatedly deliver for,
04:46 but it's kind of a secret for them.
04:48 - Sure.
04:49 - Eventually, I think we see maybe a 70, 30 split
04:54 where 70% of the factories are just gonna be building
04:57 for our development company,
04:59 which like I said, have about 4,000 units
05:01 to deliver over seven years
05:03 and which is gonna provide a lot of upside,
05:05 not just through the development themselves,
05:08 but at the end of these developments,
05:09 the real estate is worth something,
05:11 whether it's rentals or sales or selling assets
05:15 at the end for good cap rates.
05:17 This is a, we have a lot of ways to raise money
05:20 for the company and we have a lot of assets that are in play.
05:24 The markets are unreliable.
05:25 We don't wanna be trapped to have to raise money
05:27 and we've created independence through these verticals.
05:31 - So the financial, I wanted to say this for later on,
05:33 but it's since you kind of brought it up.
05:34 So the financial health of the company is looking solid.
05:37 - Yeah, we, just in one company,
05:41 we have a net 70 million in assets,
05:43 even though our market cap is 20.
05:45 - Right, and then you mentioned the 5 million in debt
05:47 of that, right?
05:49 - Yeah, we have some debt against it, but very low leverage.
05:52 If we wanted to, we could sell any of those assets
05:56 and monetize, we could co-develop, joint develop,
05:59 internally develop.
06:00 - Well, so now the company's name is Safe and Green Holdings
06:05 so I have to go ahead and talk about recycling.
06:07 If my notes here are correct,
06:08 you were one of the first ones, if not the first one,
06:10 to get the ESR certification.
06:13 So you could go ahead and use the recycled materials.
06:15 How does that help you in the margins?
06:17 'Cause something that I've kind of noticed
06:19 is when companies try to go green,
06:21 it may kind of impact their profitability for some of them.
06:25 Is that the case here?
06:26 Or does that kind of help your margins here as well?
06:29 - No, it's a win-win scenario.
06:32 Anything built modular is greener
06:34 than anything built traditionally.
06:37 And the benefit here is your hard cost,
06:40 especially in urban union high price areas,
06:44 is you're just saving in the wage,
06:46 you're building in a controlled environment,
06:48 you're doing skilled work but repetitively,
06:52 and so that you get into a groove.
06:54 And then your site work is finished on a Friday.
06:58 And if your building is 5,000 to 7,000 square feet,
07:02 it'll be erected on Monday.
07:04 - Yeah.
07:06 - So you're saving half the time of your project.
07:11 You're saving about a third of your soft costs,
07:13 which are time-driven, construction loan interest,
07:16 insurances, general conditions, heater, cooler.
07:19 A third of all construction supplies
07:21 delivered to a traditional site
07:23 are lost or stolen or broken.
07:26 - Can you give us an update?
07:27 I know you had published it,
07:28 but I'd like to hear from you as well
07:29 on the manufacturing facility in Oklahoma.
07:33 Can you give us an update on that?
07:34 - Yeah, so Waldron has got a CFO,
07:36 it's ready for business.
07:37 We've been creating a workforce inside our first factory
07:42 that can go over and help lead the second factory,
07:45 which is best practices.
07:46 And so we'll be facing work in there
07:47 over the next 30 to 60 days.
07:50 And that will also help to alleviate
07:53 the $800 million backlog for Demco.
07:56 - And I know you had talked about dominoes
07:58 and you've got someone that you're not able to talk about,
07:59 which we absolutely respect.
08:01 Can we expect more partners coming up here
08:04 to end 2023 or 2024?
08:06 - We're gonna be very judicious
08:09 who we allow in our factories.
08:11 We have enough business.
08:12 - All right, I appreciate it.
08:13 Now, look, we've talked about a lot
08:14 in terms of what you've done,
08:15 the revenue and in the pipeline as well.
08:17 But before we go, Paul,
08:19 I wanted to kind of give the floor to you
08:20 to talk about anything.
08:21 I didn't get a chance to bring up,
08:23 viewers are all yours.
08:24 - Sure.
08:25 SGBlocks provided point of care medicine.
08:29 We provided all of the COVID testing at LAX airport
08:33 during the pandemic in five shipping container lab
08:36 with a great partner, Clarity.
08:38 And we took that money
08:40 and we built a real estate company
08:42 that's gonna be public in three weeks or less
08:45 and a factory system that has $800 million
08:48 to build internally.
08:49 What we haven't talked about
08:52 is we're re-emerging in the medical space
08:55 and we're taking that point of care model,
08:57 which is the future of medicine.
08:59 Our first target, we signed and announced an agreement
09:02 with the people's trust with the Teamsters.
09:04 We're providing a full array of healthcare services
09:06 to their members at the port of Long Beach,
09:09 primary care, phlebotomy, clear lab, imaging and pharmacy.
09:13 So that working class people,
09:16 the backbone of this country
09:19 who oftentimes don't get any medicine
09:21 are gonna get world-class medicine
09:22 and the best cancer and genetic markers available.
09:25 And their union is supporting them,
09:27 allowing them getting it during the workday.
09:30 So that this is a model that's gonna work for any union.
09:34 It's gonna work in Trident territories.
09:36 It's gonna work in the developing world.
09:38 It's gonna work in urban public housing markets,
09:41 bring the care to people that need it.
09:43 We have a great team.
09:45 Last thing I wanna say is one of the ways I gauge
09:48 the success and the movement of the company
09:50 is the quality of the people that we're onboarding.
09:52 And we've never been able to attract better people,
09:56 both as executives and as officers and as board members.
09:59 We're very grateful for that.
10:01 And I know what we're down to now is simply execution
10:04 and we have the people to do it.
10:06 - Investing in the people, that's the way to go.
10:07 Thank you so much.
10:08 I appreciate you hanging out with us.
10:09 That is Paul Galvin, who is a chairman and CEO
10:12 of Safe and Green Holdings.
10:14 Ticker on NASDAQ is SGBX.
10:17 Paul, thank you so much.
10:18 - Thank you much.
10:19 (upbeat music)
10:22 (upbeat music)