SMG Reports Record Revenues of $71 Million for Fiscal Year ended December 31, 2022, an Increase of 36% From 2021 Revenues, and a 2022 Positive Adjusted EBITDA of $4.8 Million
HOUSTON, TX, April 18, 2023 (GLOBE NEWSWIRE) -- via NewMediaWire – SMG Industries, Inc. (“SMG” or the "Company") (OTCQB:SMGI), a growth-oriented transportation services company focused on the domestic infrastructure logistics market, today announced that its audited results of consolidated revenues from operations for the year ended December 31, 2022 was a record $71,021,862, representing an increase of 36% from $52,113,827 reported for the year ended December 31, 2021. For the year ended December 31, 2022, Adjusted EBITDA, a non-GAAP measure, was a positive $4.8 million compared to a loss in the year ago period showing the significant progress the Company has made compared to recent years. Additional information regarding Adjusted EBITDA, as well as a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure of net income (loss), is provided in the “Adjusted EBITDA Non-GAAP Net Income (Loss) Reconciliation Table” section below.
The increase in revenue year-over-year in 2022 compared to 2021 resulted from increased volumes and improved pricing in the Company’s Industrial Division, which experienced increased demand for super heavy haul projects, infrastructure and additional production hauling work. The Company also saw its brokerage business (known as 5J Logistics Services) launch in 2022 and contribute solid operating revenues as it expanded its footprint and customer base, which was not present during the 2021 comparable period. Overall, positive Adjusted EBITDA performance was attributed to higher sales volumes, improved fixed asset utilization, better pricing mix from the increased activity of the Company’s Industrial Division and lower SG&A as a percentage of sales compared to the prior year period.
Mr. Matt Flemming, Chairman of SMG, stated, "The Company benefited from higher activity levels from its customers, new end market diversification and increased pricing relative to the prior year period. Additionally, the heavy haul transport of infrastructure including bridge beams, compressors and refinery components contributed to the increase in revenues during 2022. The Company’s asset-light brokerage business, 5J Logistics Services, finished its first full fiscal year and made strong inroads into retail and some industrial customers. The performance of the Company during and after the COVID pandemic is a testament to management’s ability to adjust through one of the more trying times in US history and still post record revenue performance. As discussed in the Company’s Annual Report on Form 10-K, the Company’s growth strategy includes seeking acquisitions that are accretive to its business to support its growth and diversification. SMG is hopeful to achieve further growth via acquisitions this year. The Company looks forward to updating shareholders further on its progress, diversification and growth. Lastly, the Company has started conversations for a listing of its common stock on a national stock exchange and the associated satisfaction of the related listing requirements.”
Please see the Company’s full financial results along with management’s discussion and analysis and risk factors within its Annual Report on Form 10-K for 2022 filed April 17, 2023.
Forward-Looking Statements
This press release contains certain "forward-looking statements" with respect to our financial condition, business strategies, growth opportunities, acquisitions, listing plans and objectives of management, and other matters. Statements in this press release that are not historical facts are "forward-looking statements" for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, and involve a number of risks and uncertainties.
Forward-looking statements, including, without limitation, those relating to our future business prospects, listing plans, financial condition and acquisitions, whenever they occur in this press release are necessarily estimates reflecting the best judgment of the Company's senior management at the time such statements were made. There are a number of factors, many of which are beyond the Company's control, which could cause actual results and events to differ materially from those described in the forward-looking statements. These factors include, among others, the risks and uncertainties discussed more fully under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, and in the Company's subsequent filings with the Securities and Exchange Commission. Readers of this press release are cautioned not to place undue reliance on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. The Company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.
About SMG Industries, Inc.: SMG Industries is a growth-oriented transportation services company focused on the domestic infrastructure logistics market. Through several of the Company’s wholly-owned subsidiaries branded as the “5J Transportation Group,” it offers specialized heavy haul, super heavy haul, flatbed, brokerage, and drilling rig mobilization services. 5J’s engineered permitted jobs can support up to 500-thousand-pound loads including infrastructure cargo associated with wind energy, power generation components, bridge beams, compressors, and refinery and construction equipment. SMG Industries is headquartered in Houston, Texas and has facilities in Floresville, Hempstead, Henderson, Houston, Odessa, Palestine, Victoria, Texas and Fort Mill, South Carolina. Read more at www.5J-Group.com and www.SMGIndustries.com
Source: SMG Industries, Inc. +1-713-955-3497.
Contact:
Stan Abiassi – Market Street Capital, Inc.
stan@marketstreetcp.com
713-338-9415
| SMG Industries, Inc. | ||||
| 2022 10K Adjusted EBITDA | ||||
| Non-GAAP Reconciliation | ||||
| December 31, 2022 | ||||
| Net Income (Loss) | $ | (11,610,240 | ) | |
| Depreciation | $ | 5,328,366 | ||
| Interest expense/non-cash debt discount amort | $ | 9,431,681 | ||
| Taxes (Franchise adjustment) | $ | (130,040 | ) | |
| Non-Cash Stock Compensation | $ | 61,043 | ||
| Non-cash Shares expense Issued for Debt Extension | $ | 643,467 | ||
| One-Time Consulting Invoices | $ | 200,161 | ||
| Non-Op Target Transaction Expenses | $ | 36,641 | ||
| CTO Costs | $ | 249,997 | ||
| Duplicative CFO Costs | $ | 109,521 | ||
| Discontinued Operations - Legal | $ | 22,074 | ||
| ERTC Receivable (payroll tax expense offset) | $ | 465,230 | ||
| Adjusted EBITDA | $ | 4,807,901 | ||
In addition to reporting financial results in accordance with U.S. GAAP, the Company has provided the non-GAAP performance measure of Adjusted EBITDA to illustrate and improve comparability of its results from period to period. Adjusted EBITDA is defined as net income (loss) before interest expense, net, including amortization of debt discounts, benefit/provision for income taxes, depreciation expense, one-time and non-operating expenses unrelated to the ongoing business operations and other amortization expenses during the twelve month period ended December 31, 2022. The Company considers this non-GAAP measure in evaluating and managing the Company's operations and believes that discussion of results adjusted for these items is meaningful to investors because it provides a useful analysis of ongoing underlying operating trends. The measure is not in accordance with, nor is it a substitute for, GAAP measures, and it may not be comparable to similarly titled measures used by other companies.
| SMG INDUSTRIES, INC. | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (Audited) | ||||||||||
| December 31, | December 31, | |||||||||
| 2022 | 2021 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 127,225 | $ | 257,768 | ||||||
| Restricted cash | 1,105,818 | 858,408 | ||||||||
| Accounts receivable, net of allowance for doubtful accounts of $855,832 and $1,041,387 | ||||||||||
| as of December 31, 2022 and 2021, respectively | 12,185,792 | 11,703,347 | ||||||||
| Prepaid expenses and other current assets | 2,308,067 | 2,162,238 | ||||||||
| Current assets of discontinued operations | - | 17,446 | ||||||||
| Total current assets | 15,726,902 | 14,999,207 | ||||||||
| Property and equipment, net of accumulated depreciation of $15,329,817 and $11,262,193 | ||||||||||
| as of December 31, 2022 and 2021, respectively | 5,414,830 | 10,463,352 | ||||||||
| Right of use assets - operating lease | 734,504 | 3,312,710 | ||||||||
| Other assets | 305,451 | 448,887 | ||||||||
| Other assets of discontinued operations, net | - | 1,500 | ||||||||
| Total assets | $ | 22,181,687 | $ | 29,225,656 | ||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 3,014,598 | $ | 3,958,515 | ||||||
| Accounts payable - related party | 565,603 | 94,602 | ||||||||
| Accrued expenses and other liabilities | 2,850,547 | 4,055,113 | ||||||||
| Right of use liabilities - operating leases short term | 650,945 | 816,671 | ||||||||
| Deferred revenue | 128,000 | - | ||||||||
| Secured line of credit | 10,623,887 | 9,468,759 | ||||||||
| Current portion of unsecured notes payable | 2,465,445 | 1,168,420 | ||||||||
| Current portion of secured notes payable, net | 6,990,486 | 3,527,960 | ||||||||
| Current portion of convertible note, net | 7,327,288 | 1,616,672 | ||||||||
| Current liabilities of discontinued operations | 200,994 | 588,283 | ||||||||
| Total current liabilities | 34,817,793 | 25,294,995 | ||||||||
| Long term liabilities: | ||||||||||
| Convertible note payable, net | - | 2,620,145 | ||||||||
| Notes payable - secured, net of current portion | 13,307,309 | 14,535,751 | ||||||||
| Right of use liabilities - operating leases, net of current portion | 278,137 | 2,545,950 | ||||||||
| Long term liabilities of discontinued operations | 300,586 | 381,746 | ||||||||
| Total liabilities | 48,703,825 | 45,378,587 | ||||||||
| Commitments and contingencies | ||||||||||
| Stockholders' deficit | ||||||||||
| Preferred stock 1,000,000 shares authorized: | ||||||||||
| Series A preferred stock - $0.001 par value; 2,000 shares authorized; 0 shares issued | - | - | ||||||||
| and outstanding at December 31, 2022 and 2021, respectively | ||||||||||
| Series B convertible preferred stock - $0.001 par value; 6,000 shares authorized; 0 shares issued | ||||||||||
| and outstanding at December 31, 2022 and 2021, respectively | - | - | ||||||||
| Common stock - $0.001 par value; 250,000,000 shares authorized; 39,180,297 and 33,731,162 shares | ||||||||||
| issued and outstanding at December 31, 2022 and 2021, respectively | 39,181 | 33,732 | ||||||||
| Additional paid in capital | 18,081,457 | 16,845,873 | ||||||||
| Accumulated deficit | (44,642,776 | ) | (33,032,536 | ) | ||||||
| Total stockholders' deficit | (26,522,138 | ) | (16,152,931 | ) | ||||||
| Total liabilities and stockholders' deficit | $ | 22,181,687 | $ | 29,225,656 | ||||||
| SMG INDUSTRIES INC. | |||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||
| For the years ended December 31, 2022 and 2021 | |||||||||||
| (Audited) | |||||||||||
| December 31, 2022 | December 31, 2021 | ||||||||||
| REVENUES | $ | 71,021,862 | $ | 52,113,827 | |||||||
| COST OF REVENUES | 65,285,261 | 52,714,418 | |||||||||
| GROSS PROFIT (LOSS) | 5,736,601 | (600,591 | ) | ||||||||
| OPERATING EXPENSES: | |||||||||||
| Selling, general and administrative | 9,079,344 | 8,377,682 | |||||||||
| Gain on disposal of assets | (330,499 | ) | (43,624 | ) | |||||||
| Total operating expenses | 8,748,845 | 8,334,058 | |||||||||
| LOSS FROM OPERATIONS | (3,012,244 | ) | (8,934,649 | ) | |||||||
| OTHER INCOME (EXPENSE) | |||||||||||
| Interest expense, net | (9,431,681 | ) | (7,618,889 | ) | |||||||
| Gain on PPP Loan Forgiveness | - | 5,023,089 | |||||||||
| Gain on extinguishment of debt | 564,814 | - | |||||||||
| Other income | 228,689 | 46,620 | |||||||||
| Other expense | (100,365 | ) | - | ||||||||
| Loss on settlement of note payable | - | (807 | ) | ||||||||
| Total other income (expense) | (8,738,543 | ) | (2,549,987 | ) | |||||||
| NET LOSS FROM CONTINUING OPERATIONS | (11,750,787 | ) | (11,484,636 | ) | |||||||
| Income from discontinued operations | 140,547 | 342,656 | |||||||||
| NET LOSS | (11,610,240 | ) | (11,141,980 | ) | |||||||
| Preferred stock dividends | - | (75,000 | ) | ||||||||
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | (11,610,240 | ) | $ | (11,216,980 | ) | |||||
| Net loss per common share | |||||||||||
| Continuing operations | $ | (0.32 | ) | $ | (0.50 | ) | |||||
| Discontinued operations | $ | (0.00 | ) | $ | 0.01 | ||||||
| Net loss attributable to common shareholders | $ | (0.32 | ) | $ | (0.49 | ) | |||||
| Weighted average common shares outstanding | |||||||||||
| Basic | 36,399,788 | 23,316,751 | |||||||||
| Diluted | 36,399,788 | 23,316,751 | |||||||||
| SMG INDUSTRIES INC. | |||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| For the years ended December 31, 2022 and 2021 | |||||||||||
| (Audited) | |||||||||||
| December 31, 2022 | December 31, 2021 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net loss from continuing operations | $ | (11,750,787 | ) | $ | (11,484,636 | ) | |||||
| Adjustments to reconcile net loss to net | |||||||||||
| cash used in operating activities: | |||||||||||
| Share based compensation | 61,043 | 67,460 | |||||||||
| Depreciation and amortization | 5,328,366 | 5,398,529 | |||||||||
| Amortization of deferred financing costs | 3,790,028 | 2,208,291 | |||||||||
| Amortization of right of use assets - operating leases | 457,325 | 436,787 | |||||||||
| Shares issued for debt extension | 643,467 | - | |||||||||
| Bad debt expense | 208,996 | 454,990 | |||||||||
| Gain on PPP Loan Forgiveness | - | (5,022,102 | ) | ||||||||
| Gain on extinguishment of debt | (564,814 | ) | - | ||||||||
| Gain on disposal of assets | (330,499 | ) | (43,624 | ) | |||||||
| Loss on settlement of liabilities | - | 41,397 | |||||||||
| Changes in: | |||||||||||
| Accounts receivable | (691,441 | ) | (7,237,370 | ) | |||||||
| Prepaid expenses and other current assets | 3,767,578 | 3,118,119 | |||||||||
| Other assets | (165,520 | ) | (241,940 | ) | |||||||
| Accounts payable | (1,005,206 | ) | 2,677,329 | ||||||||
| Accounts payable - related party | 471,001 | (75,842 | ) | ||||||||
| Accrued expenses and other liabilities | (980,656 | ) | 1,525,563 | ||||||||
| Right of use operating lease liabilities | (172,736 | ) | (537,616 | ) | |||||||
| Deferred revenue | 128,000 | (30,000 | ) | ||||||||
| Net cash used in operating activities from continuing operations | (805,855 | ) | (8,744,665 | ) | |||||||
| Net cash provided by operating activities from discontinued operations | 80,450 | 568,519 | |||||||||
| Net cash used in operating activities | (725,405 | ) | (8,176,146 | ) | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Cash paid for disposal of MG Cleaners, LLC | - | (35,000 | ) | ||||||||
| Cash procceds from disposal of purchase of property and equipment | 895,564 | - | |||||||||
| Cash paid for purchase of property and equipment | (301,412 | ) | (97,026 | ) | |||||||
| Net cash provided by (used in) investing activities from continuing operations | 594,152 | (132,026 | ) | ||||||||
| Net cash used in investing activities from discontinued operations | - | - | |||||||||
| Net cash provided by (used in) investing activities | 594,152 | (132,026 | ) | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Payment of deferred financing costs | - | (20,623 | ) | ||||||||
| Proceeds on secured line of credit, net | 1,126,700 | 5,326,060 | |||||||||
| Payments on secured line of credit, net | - | - | |||||||||
| Proceeds from notes payable | 5,229,098 | 15,064,003 | |||||||||
| Payments on notes payable | (6,027,228 | ) | (15,553,327 | ) | |||||||
| Payments on convertible notes payable | - | (50,000 | ) | ||||||||
| Proceeds from convertible notes payable | - | 3,906,079 | |||||||||
| Net cash provided by financing activities from continuing operations | 328,570 | 8,672,192 | |||||||||
| Net cash provided by (used in) financing activities from discontinued operations | (80,450 | ) | (226,932 | ) | |||||||
| Net cash provided by financing activities | 248,120 | 8,445,260 | |||||||||
| NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 116,867 | 137,088 | |||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 1,116,176 | 979,088 | |||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 1,233,043 | $ | 1,116,176 | |||||||
| Supplemental disclosures: | |||||||||||
| Cash paid for income taxes | $ | - | $ | - | |||||||
| Cash paid for interest | 5,076,266 | $ | 5,534,279 | ||||||||
| Noncash investing and financing activities | |||||||||||
| Prepaid expenses financed with note payable | $ | 3,638,407 | $ | 3,253,678 | |||||||
| Preferred stock dividend | $ | - | $ | 75,000 | |||||||
| Shares issued for deferred financing costs | $ | 397,773 | $ | 337,500 | |||||||
| Note receivable for property and equipment | $ | 275,000 | $ | 616,683 | |||||||
| Beneficial conversion feature on convertible notes payable | $ | - | $ | 5,138,070 | |||||||
| Non-cash increase in secured notes payable for settlement of accounts payable | $ | - | $ | 203,010 | |||||||
| Equipment financed with note payable | $ | 919,946 | $ | - | |||||||
| Right of use assets and operating lease obligation recognized | $ | - | $ | 2,478,508 | |||||||
| Convertible notes payable issued to settle accounts payable | $ | - | $ | 1,381,740 | |||||||
| Share issued for settlement of debt and accrued interest | $ | 138,750 | $ | 73,818 | |||||||
| Share issued for settlement of accounts payable | $ | - | $ | 41,000 | |||||||
| Series A Convertible Preferred Stock converted into common shares | $ | - | $ | 182,657 | |||||||
