Safe and Green Development Corporation reveals Resource Group US Holdings’ preliminary financials ahead of acquisition

Safe and Green Development Corporation has released preliminary financial data for Resource Group US Holdings, shedding light on the performance of its engineered soils and composting division, Resource Group US LLC, and its logistics subsidiary, Zimmer Equipment. The unaudited figures, disclosed ahead of an impending acquisition, provide investors with insights into revenue trends, profitability, and operational challenges as the companies prepare for a significant transition.

With Safe and Green Development Corporation seeking to expand its footprint beyond real estate development, the acquisition of Resource Group US Holdings signals a strategic push into the sustainable infrastructure and logistics industries. However, as financial statements remain unaudited, questions linger about the final valuation and the potential impact on the company’s financial outlook.

What Do the Preliminary Financials Reveal About Resource Group US Holdings?

The preliminary 2024 results show that Resource Group US Holdings generated $18.75 million in total revenue, an increase from $17.5 million in 2023. Gross profit climbed from $7.8 million to $9.4 million, reflecting improved cost management and operational efficiency. Despite these gains, the company recorded a consolidated net loss of $936,000, though this was a significant improvement from its $6.2 million net loss in 2023.

Examining individual business units, Resource Group US LLC, which focuses on engineered soils and composting, saw revenue rise from $4.6 million in 2023 to $5.2 million in 2024. The division posted a gross profit of $5.2 million, yet continued to operate at a loss, reporting a net loss of $1.8 million, an improvement from its $4.5 million loss the previous year.

Meanwhile, Zimmer Equipment, the logistics and transportation segment, remained relatively stable, generating $13.4 million in revenue in 2024 compared to $13.5 million in 2023. The unit reported $907,000 in net income, a sharp turnaround from the $1.7 million net loss it posted in 2023. The reversal suggests that Zimmer Equipment has effectively streamlined operations and controlled costs, making it the more financially stable subsidiary within Resource Group US Holdings.

How Does Adjusted EBITDA Reflect the Company’s Financial Health?

Safe and Green Development Corporation also reported Adjusted EBITDA, a non-GAAP financial measure that removes one-time expenses, interest, and depreciation to provide a clearer view of ongoing operations.

For 2024, Resource Group US Holdings posted an Adjusted EBITDA of $821,000, recovering from a negative Adjusted EBITDA of $481,000 in 2023. Zimmer Equipment emerged as the strongest performer, generating $1.985 million in Adjusted EBITDA, up from $1.01 million in 2023. In contrast, Resource Group US LLC struggled, reporting negative Adjusted EBITDA of $1.16 million, though this was an improvement over its $1.49 million negative Adjusted EBITDA from the previous year.

Safe and Green Development Corporation emphasized that Adjusted EBITDA is a useful tool for assessing business performance by excluding extraordinary costs such as legal fees and debt issuance expenses. However, the company warned investors that non-GAAP metrics should not replace standard financial reporting, as adjustments can sometimes obscure underlying financial challenges.

What Does the Acquisition Mean for Safe and Green Development Corporation’s Growth Strategy?

The planned acquisition of Resource Group US Holdings represents a shift in Safe and Green Development Corporation’s business model, expanding beyond real estate into sustainable infrastructure, waste-to-value composting, and logistics. The company aims to integrate Resource Group US LLC’s composting technology and leverage Zimmer Equipment’s established transportation network to enhance profitability.

As part of the transaction, Safe and Green Development Corporation intends to issue restricted common stock to stakeholders in Resource Group US Holdings. The deal will result in the issuance of shares totaling 49% of Safe and Green Development Corporation’s outstanding stock. To proceed, the transaction requires shareholder approval, and the company has confirmed plans to file a proxy statement with the Securities and Exchange Commission (SEC).

Shareholders and analysts will be closely watching the audited financial results, expected in the coming weeks, to assess whether the acquisition aligns with Safe and Green Development Corporation’s long-term profitability goals.

How Is the Market Reacting to Safe and Green Development Corporation’s Expansion?

Investor sentiment surrounding Safe and Green Development Corporation’s stock (NASDAQ: SGD) remains mixed as market participants evaluate the implications of the acquisition. While the move into engineered soils and logistics could provide diversified revenue streams, concerns persist regarding the company’s ability to integrate and scale its new assets.

In the short term, share dilution resulting from the issuance of restricted common stock may weigh on the stock price. However, if Resource Group US Holdings continues its trajectory of improving financial performance, the acquisition could ultimately strengthen Safe and Green Development Corporation’s earnings potential.

Industry observers have pointed out that waste-to-value composting is an emerging sector with long-term growth potential, particularly as sustainable waste management practices gain traction. If Safe and Green Development Corporation successfully monetizes this technology, it could position itself as a leader in environmentally conscious infrastructure solutions.

What Are the Risks and Next Steps in the Acquisition Process?

While the acquisition of Resource Group US Holdings aligns with Safe and Green Development Corporation’s broader strategy, several risks remain. The most immediate concern is the completion of audited financial statements, which could impact the final valuation and terms of the deal.

Additionally, the company’s ability to secure sufficient capital to support integration efforts will be a crucial factor in the acquisition’s success. If Safe and Green Development Corporation encounters cash flow constraints, it may need to explore additional financing options, which could further dilute existing shareholders.

The company has advised investors to monitor upcoming SEC filings, including the proxy statement, for additional details on the transaction. In the meantime, the market will be watching whether Safe and Green Development Corporation can deliver on its sustainability-focused business expansion while maintaining financial stability.

As the deal moves forward, stakeholders will assess whether this strategic acquisition can deliver on its promise of expanding Safe and Green Development Corporation’s market presence and revenue streams while mitigating the financial risks associated with the transition.