Transportation Services Company Reports $7.6 million in Revenues for First Quarter 2021, an Increase of 74% from Q1 2020
HOUSTON, TX, May 25, 2021 (GLOBE NEWSWIRE) -- via NewMediaWire -- SMG Industries, Inc. (the “Company”) (OTCQB:SMGI), a growth-oriented transportation services company focused on the domestic infrastructure market, today reported financial results for its first quarter 2021 and the release of its 2021 first quarter report on Form 10-Q.
First Quarter 2021 Highlights
· Net of discontinued operations (MG Cleaners and Trinity Services), revenues increased to $7,602,328 for the quarter ending March 31, 2021, an increase of 74% from $4,360,381 for the first quarter in 2020 driven by the acquisition of 5J on February 27, 2020, increased drilling rig relocations and improved customer demand resulting from lessened impacts of the global COVID-19 pandemic and its economic effects in the markets we serve.
· Selling, general and administrative expenses were approximately 19.9% of sales for Q1, 2021.
· Net loss from continuing operations for Q1, 2021 was $3,808,568, which included non-cash expenses of $1,706,170 of which $1,418,401 was depreciation expense.
· Total assets grew to $27,242,213.
· Two owner/operator trucking companies leased onto our platform and generated an immediate revenue impact, growing our geographic footprint.
· SMGI expects to be well positioned for federal domestic infrastructure spending programs presently being legislated.
The Company is a growth-oriented Transportation Services company focused on the domestic logistics market. Our primary business objective is to grow our operations and create value for our shareholders through organic growth and strategic acquisitions. SMGI has implemented a “Buy & Build” growth strategy of acquiring middle market transportation companies and generating organic growth post-acquisition when possible, by removing business constraints and strategic cross-selling of services benefiting us with higher equipment utilization and market share. Management believes our business focus and equipment fleet position us to be a significant participant in the domestic United States infrastructure market.
Our operating subsidiaries provide a range of Transportation Services such as:
·Transporting infrastructure components including bridge beams and power generation transformers
·Transporting wind energy components
·Heavy haul of production equipment, heat exchangers, coolers, construction equipment, refinery components
·Super heavy haul over-dimensional permit-required loads up to 500 thousand pounds for engineered projects
·Transportation of midstream compressors
·Flatbed freight
·Crane services used to set equipment on compressor stations, pipeline infrastructure and load drilling rig components
·Drilling rig relocation for drilling contractors and oil and gas operators
·Freight brokerage
In connection with our focus to expand our Transportation Services business and exit certain up-stream oil and gas industrial-related businesses, the financial results of the following businesses have been classified as discontinued operations on our consolidated financial statements:
·MG Cleaners LLC
·Trinity Services LLC
The discontinued operations of MG Cleaners and Trinity Services removed revenues and expenses from our reported results of continuing operations. See footnote 10 in our Company’s Quarterly Report on Form 10-Q for more information.
Mr. Jeffrey Martini, CEO of SMG, stated, “During the first quarter, we continued to see sequential revenue improvements across substantially all our lines of business. Gross margins improved sequentially but were still negative primarily due to the recognition of $1.4 million in depreciation expenses and insufficient scale to cover various fixed costs within cost of sales. March 2021 revenues of $3.1 million were the highest since March 2020, the beginning of the COVID-19 pandemic. Challenges remained in the first quarter period, caused by the February inclement weather experienced in Texas and general economic activity still recovering from the COVID-19 pandemic. We expect to further expand on our diversification efforts by establishing 5J Brokerage LLC and substantially expanded flatbed capacity through the first and into the second quarters of this year.” Mr. Martini continued, “SMGI saw gains in price and volumes and beneficial sales mix, during the first quarter of 2021 and currently believes this trend will continue through the year. We believe the market is ripe for strategic acquisitions and continue to evaluate potential accretive deals which could expand utilization of our existing assets including more than 100 tractors and semis, about 250 multi-axle trailers, 10 cranes, and 25 forklifts serving hundreds of customers. We continue to position ourselves as a transportation services player in the domestic infrastructure logistics business and believe U.S. government domestic infrastructure investments represent additional opportunities in wind energy, power transformers, compressors and bridge beams that we haul for customers.”
Further information is available, including financial statements, footnotes and management’s discussion and analysis of the financial results, in the Company’s Quarterly Report on Form 10-Q filed May 24, 2021, and December 31, 2020 Annual Report on Form 10-K filed April 19, 2021.
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 heavy haul, super heavy haul, flatbed, brokerage, and drilling rig mobilization services. 5J’s dimensional permitted jobs can support up to 500-thousand-pound loads which include cargo associated with wind energy, power generation components, bridge beams, compressors, and refinery and construction equipment. SMG Industries, Inc. headquartered in Houston, Texas has facilities in Floresville, Hempstead, Henderson, Houston, Odessa, Palestine, and Victoria, Texas. Read more at www.SMGIndustries.com.
| SMG Industries, Inc. Consolidated First Quarter 2021 Financial Statements |
| SMG INDUSTRIES, INC. | |||||
| CONSOLIDATED BALANCE SHEETS | |||||
| (unaudited) | |||||
| March 31, | December 31, | ||||
| 2021 | 2020 | ||||
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | $ 353,418 | $ 263,814 | |||
| Restricted cash | 716,474 | 715,274 | |||
| Accounts receivable, net of allowance for doubtful accounts of $672,210 and $691,098 | |||||
| as of March 31, 2021 and December 31, 2020, respectively | 6,324,912 | 4,920,967 | |||
| Prepaid expenses and other current assets | 1,355,262 | 1,409,996 | |||
| Current assets of discontinued operations | 138,821 | 437,787 | |||
| Total current assets | 8,888,887 | 7,747,838 | |||
| Property and equipment, net of accumulated depreciation of $6,882,957 and $5,991,572 | |||||
| as of March 31, 2021 and December 31, 2020, respectively | 14,912,382 | 16,337,914 | |||
| Right of use assets - operating lease | 1,182,400 | 1,270,989 | |||
| Other assets | 744,075 | 499,707 | |||
| Other assets of discontinued operations, net | 1,514,469 | 1,568,700 | |||
| Total assets | $ 27,242,213 | $ 27,425,148 | |||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | |||||
| Current liabilities: | |||||
| Accounts payable | $ 2,940,421 | $ 3,171,086 | |||
| Accounts payable - related party | 110,526 | 205,444 | |||
| Accrued expenses and other liabilities | 3,836,219 | 2,373,057 | |||
| Right of use liabilities - operating leases short term | 608,097 | 575,517 | |||
| Deferred revenue | 30,000 | 30,000 | |||
| Secured line of credit | 3,718,730 | 4,046,256 | |||
| Current portion of unsecured notes payable | 4,449,569 | 2,187,436 | |||
| Current portion of secured notes payable, net | 5,224,918 | 4,010,627 | |||
| Current portion of convertible note, net | 50,000 | 50,000 | |||
| Current liabilities of discontinued operations | 1,943,319 | 2,243,037 | |||
| Total current liabilities | 22,911,799 | 18,892,460 | |||
| Long term liabilities: | |||||
| Convertible note payable, net | 2,691,321 | 2,417,335 | |||
| Notes payable - unsecured, net of current portion | 1,831,844 | 1,040,223 | |||
| Notes payable - secured, net of current portion | 12,518,185 | 14,038,409 | |||
| Right of use liabilities - operating leases, net of current portion | 793,944 | 846,212 | |||
| Long term liabilities of discontinued operations | 1,009,972 | 1,008,362 | |||
| Total liabilities | 41,757,065 | 38,243,001 | |||
| Commitments and contingencies | |||||
| Stockholders' deficit | |||||
| Preferred stock 1,000,000 shares authorized: | |||||
| Series A preferred stock - $0.001 par value; 2,000 shares authorized; 2,000 shares issued | 2 | 2 | |||
| and outstanding at March 31, 2021 and December 31, 2020 | |||||
| Series B convertible preferred stock - $0.001 par value; 6,000 shares authorized; no shares issued | |||||
| and outstanding at March 31, 2021 and December 31, 2020, respectively | - | - | |||
| Common stock - $0.001 par value; 250,000,000 shares authorized; 19,839,365 and 19,446,258 shares | |||||
| issued and outstanding at March 31, 2021 and December 31, 2020, respectively | 19,840 | 19,447 | |||
| Additional paid in capital | 11,170,885 | 10,978,254 | |||
| Accumulated deficit | (25,705,579) | (21,815,556) | |||
| Total stockholders' deficit | (14,514,852) | (10,817,853) | |||
| Total liabilities and stockholders' deficit | $ 27,242,213 | $ 27,425,148 | |||
| SMG INDUSTRIES INC. | |||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
| For the three months ended March 31, 2021 and 2020 | |||||||||
| (unaudited) | |||||||||
| March 31, 2021 | March 31, 2020 | ||||||||
| REVENUES | $ 7,602,328 | $ 4,360,381 | |||||||
| COST OF REVENUES | 8,700,508 | 4,663,359 | |||||||
| GROSS PROFIT | (1,098,180) | (302,978) | |||||||
| OPERATING EXPENSES: | |||||||||
| Selling, general and administrative | 1,511,900 | 2,098,330 | |||||||
| Impairment expense | - | - | |||||||
| Acquisition costs | 500 | - | |||||||
| Total operating expenses | 1,512,400 | 2,098,330 | |||||||
| LOSS FROM OPERATIONS | (2,610,580) | (2,401,308) | |||||||
| OTHER INCOME (EXPENSE) | |||||||||
| Interest expense, net | (1,248,789) | (344,599) | |||||||
| Other income | 639 | - | |||||||
| Other expense | - | - | |||||||
| Gain (loss) on settlement of notes payable | - | - | |||||||
| Gain on sale of assets | 50,162 | - | |||||||
| Gain on extinguishment of debt | - | - | |||||||
| Total other income (expense) | (1,197,988) | (344,599) | |||||||
| NET LOSS FROM CONTINUING OPERATIONS | (3,808,568) | (2,745,907) | |||||||
| Loss from discontinued operations | (56,455) | (233,324) | |||||||
| NET LOSS | (3,865,023) | (2,979,231) | |||||||
| Preferred stock dividends | (25,000) | (42,123) | |||||||
| NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (3,890,023) | $ (3,021,354) | |||||||
| Net loss per common share | |||||||||
| Continuing operations | $ (0.20) | $ (0.18) | |||||||
| Discontinued operations | $ (0.00) | $ (0.01) | |||||||
| Net loss attributable to common shareholders | $ (0.20) | $ (0.19) | |||||||
| Weighted average common shares outstanding | |||||||||
| Basic | 19,516,258 | 15,686,520 | |||||||
| Diluted | 19,516,258 | 15,686,520 | |||||||
| SMG INDUSTRIES INC. | ||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| For the three months ended March 31, 2021 and 2020 | ||||||
| (unaudited) | ||||||
| March 31, 2021 | March 31, 2020 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net loss from continuing operations | $ (3,808,568) | $ (2,745,907) | ||||
| Adjustments to reconcile net loss to net | ||||||
| cash used in operating activities: | ||||||
| Stock based compensation | 17,973 | 2,895 | ||||
| Depreciation and amortization | 1,418,401 | 542,493 | ||||
| Amortization of deferred financing costs | 245,722 | 80,954 | ||||
| Amortization of right of use assets - operating leases | 88,589 | 33,786 | ||||
| Bad debt recovery | (14,353) | (1,167) | ||||
| (Gain) loss on disposal of assets | (50,162) | 10,229 | ||||
| Gain extinguishment of debt | - | - | ||||
| Changes in: | ||||||
| Accounts receivable | (1,389,592) | (146,198) | ||||
| Prepaid expenses and other current assets | 1,251,779 | 744,766 | ||||
| Other assets | (585,574) | (732,042) | ||||
| Accounts payable | (118,594) | (2,194,972) | ||||
| Accounts payable - related party | (59,918) | - | ||||
| Accrued expenses and other liabilities | 1,438,162 | 2,470,255 | ||||
| Right of use operating lease liabilities | (19,688) | (11,807) | ||||
| Deferred revenue | - | - | ||||
| Net cash used in operating activities from continuing operations | (1,585,823) | (1,946,715) | ||||
| Net cash used in operating activities from discontinued operations | 530,013 | (599,754) | ||||
| Net cash used in operating activities | (1,055,810) | (2,546,469) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Cash paid for acquisition of 5J Entities, net | - | (6,320,168) | ||||
| Cash paid for disposal of MG Cleaners, LLC | (35,000) | - | ||||
| Cash paid for purchase of property and equipment | - | (84,878) | ||||
| Net cash used in investing activities from continuing operations | (35,000) | (6,405,046) | ||||
| Net cash used in investing activities from discontinued operations | - | - | ||||
| Net cash used in investing activities | (35,000) | (6,405,046) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Payment of deferred financing costs | - | (239,558) | ||||
| Proceeds from secured line of credit, net | - | 5,719,410 | ||||
| Payments on secured line of credit, net | (354,214) | - | ||||
| Proceeds from notes payable | 1,874,002 | 1,952,248 | ||||
| Payments on notes payable | (338,001) | (139,842) | ||||
| Proceeds from convertible notes payable | 150,000 | 1,350,000 | ||||
| Net cash provided by financing activities from continuing operations | 1,331,787 | 8,642,258 | ||||
| Net cash provided by financing activities from discontinued operations | (150,173) | 799,754 | ||||
| Net cash provided by financing activities | 1,181,614 | 9,442,012 | ||||
| NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 90,804 | 490,497 | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 979,088 | 29,568 | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ 1,069,892 | $ 520,065 | ||||
| Supplemental disclosures: | ||||||
| Cash paid for income taxes | $ - | $ - | ||||
| Cash paid for interest | $ 528,909 | $ - | ||||
| Noncash investing and financing activities | ||||||
| Non-cash consideration paid for business acquisitions | $ - | $ 4,378,000 | ||||
| Non-cash consideration paid for increase in secured notes payable | $ - | $ 5,840,622 | ||||
| Non-cash consideration paid for prepaids from debt financing | $ - | $ 331,065 | ||||
| Debt discount from issuance of common stock warrants | $ - | $ 59,439 | ||||
| Preferred stock dividend | $ 25,000 | $ 42,123 | ||||
| Expenses paid by related party | $ - | $ 25,279 | ||||
| Prepaid expenses financed with note payable | $ 1,179,752 | $ - | ||||
| Shares issued for deferred financing costs | $ - | $ 419,788 | ||||
| Note receivable for property and equipment | $ 17,293 | $ - | ||||
| Beneficial conversion feature on convertible notes payable | $ 175,051 | $ - | ||||
| Non cash increase in convertible debt for AP payments | $ 112,071 | $ - | ||||
Contact: Matthew Flemming, SMG Industries, Inc. +1-713-821-3153
SOURCE: SMG Industries, Inc.
