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Safe and Green Development Corporation Releases Preliminary Financial Results

On March 21, 2025, Safe and Green Development Corporation (NASDAQ: SGD) announced preliminary, unaudited financial details for Resource Group US Holdings LLC (RSG), which the company plans to acquire completely as part of a larger strategic initiative in the real estate development sector. This announcement marks a crucial step in SGD's efforts to bolster its portfolio and enhance its capabilities in innovative and sustainable development practices.

Overview of the Acquisition

The definitive agreement to purchase 100% equity interests in Resource Group US Holdings signifies SGD’s commitment to expanding its operations beyond traditional real estate. Resource Group US Holdings oversees two major entities: Resource Group US LLC (RGUS), specializing in advanced engineered soils and compost production, and Zimmer Equipment (ZEI), which focuses on logistics and transportation services in the region. The acquisition aligns with SGD's vision of merging real estate initiatives with environmentally responsible practices, particularly in the realm of waste-to-value solutions.

Financial Breakdown

The preliminary financial information provided to SGD from RSG suggests that significant growth potential exists within these entities, although the initial figures indicate challenges. For the fiscal year ending December 31, 2024, RGUS reported a revenue of $5.2 million, matching its gross profit. However, it also reflected a net loss of $1.8 million. In contrast, ZEI performed notably better, generating $13.4 million in revenue, which translated into a gross profit of $4.8 million and a net income of $907,000. Collectively, when both entities are consolidated, RSG reported total revenues of $18.75 million, a gross profit of $9.4 million, and a consolidated net loss of $936,000.

For 2023, RGUS's revenue was estimated at $4.6 million, resulting in an equal gross profit but a larger net loss of $4.5 million. ZEI’s figures were slightly lower, with $13.5 million in revenue and a net loss of $1.7 million. Overall, RSG consolidated for 2023 showcased revenues of $17.5 million, a gross profit of $7.8 million, and a worrisome net loss of $6.2 million.

Adjusted EBITDA Metrics

Management also presented an adjusted EBITDA approach for evaluating RSG's performance, removing non-recurring expenses and accounting for interest and depreciation. This perspective revealed that for the fiscal year ending December 31, 2024, RGUS and ZEI contributed adjusted EBITDA figures of ($1.16 million) and $1.985 million respectively, culminating in a positive adjusted EBITDA of $821,000 for RSG consolidated.

Conversely, for 2023, RGUS had an adjusted EBITDA of ($1.49 million), while ZEI’s performance realized $1.01 million, leading to a consolidated adjusted EBITDA of ($481,000). These contrasting figures highlight the operational variances and the need for ongoing adjustments within the companies post-acquisition.

Looking Ahead

RSG intends to finalize its audited financial statements for the years 2023 and 2024 shortly. The completion of these audits is critical for SGD as they help paint a clearer picture of RSG's operational health and market potential. Furthermore, SGD plans to seek stockholder approval for the issuance of shares as part of the acquisition process, which includes providing members of RSG with shares equivalent to 49% of SGD's outstanding common stock.

Conclusion

This acquisition reflects Safe and Green Development Corporation's strategic decision to integrate sustainable practices into its operations while leveraging the robust capabilities of Resource Group US Holdings. As the audit results emerge, they will provide further clarity on the financial positions of RGUS and ZEI, paving the way for future endeavors in innovative real estate development.