SMG Industries, Inc. Announces Fiscal Year 2022 Earnings and Record Revenues for 2022


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, 2022December 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 interest5,076,266 $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