SEER Reports First Quarter 2018 Financial Results

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| Source: Strategic Environmental & Energy Resources, Inc.

 First Quarter 2018 Highlighted by Significant Reduction in Net Cash Used in Operations and Start-Up of Paragon Southwest Medical Waste in Anahuac, Texas

First Quarter 2018 Conference Call Scheduled for Early June Post Major Pending Operational Milestone Achievements

GOLDEN, Colo., May 15, 2018 (GLOBE NEWSWIRE) -- Strategic Environmental & Energy Resources, Inc. (SEER) (OTCQB:SENR), a provider of environmental, renewable fuels and industrial waste stream management services, reported financial results for its first quarter ended March 31, 2018.

First Quarter 2018 Financial Highlights

  • Total revenue in Q1 2018 was $1.9 million versus $2.6 million in Q1 2017.
     
  • Q1 2018 net revenue was $0.9 million in Industrial Cleaning (REGS), $0.9 million in Environmental Technology Solutions (MV/SEM) and $0.1 million in Solid Waste (Paragon Waste Solutions).
     
  • Gross profit margin in Q1 2018 was 24.3% vs. 27.2% in Q1 2017.
     
  • GAAP net loss attributable to SEER was $0.7 million in Q1 2018 versus a net loss of $0.4 million in Q1 2017.
     
  • Q1 2018 adjusted EBITDA loss was $0.2 million compared to a profit of $0.3 million in Q1 2017.
     
  • Q1 2018 net cash used in operations totaled $0.2 million versus $0.7 million in Q1 2017.

First Quarter 2018 and Subsequent Financial and Operational Highlights by Division

  • Environmental Technology Solutions (MV & SEM)

    Financial

    • Environmental Solutions Q1 2018 revenue was $0.9 million, a decrease of 48% when compared to Q1 2017 revenue of $1.7 million.  Gross profit decreased from $0.5 million in Q1 2017 to $0.3 million in Q1 2018. The lower gross profit in Q1 2018 was primarily due to the year-over-year revenue decrease.

    Operational

    • MV continues to receive high-margin, recurring revenue from media replacement sales to over 30 anaerobic digester systems installed and operational across North America. 

    • Continued targeting replacement media sales to the large, existing base of non-MV systems with its exclusive distributorship of Axens NA media, which is also expected to minimize the impact of periodic lulls in new system orders.

    • Continued to market rental systems and accompanying AxTrap granular iron oxide media in Northern California to landfills that need to comply with California’s increasingly stringent disposal requirements.

    • Kicked off new marketing campaign focused on placement of rental systems and already placed a rental system in a landfill in Northern California. The rental system uses MV’s exclusively licensed Axens NA AxTrap granular iron oxide media.   This media is specifically formulated to comply with California’s more stringent disposal requirements. The rental system will generate approximately $75,000/month of revenue between the equipment and the ongoing sales of AxTrap media. It is estimated the rental system will be in place for 6-12 months. MV is working with the landfill to design, supply and install a permanent system to keep the landfill in long-term compliance and has been contacted by another landfill operator in Central California and expects to install a similar rental system at that location.
  • Paragon Waste Solutions - CoronaLux™

    • Managed successful start-up of Paragon Southwest Medical Waste, LLC (PSMW), a waste destruction facility in Anahuac, Texas.  The operation is utilizing three CoronaLux systems and generated approximately $50,000 in revenue to Paragon during the quarter.  The facility has set a precedence in the industry as it represents the first time an established incinerator operator has idled legacy equipment in favor of the CoronaLux technology.

    • Several significant customer waste agreements have been signed by the Texas facility in the first months of operation, and a number of other agreements are being negotiated.

    • Continued to engage with additional medical waste partners in Southern California, Texas, Florida (Broward & Orange counties) and North Carolina (Guilford County) to initiate or expand operations.
  • REGS

    • Initiated service work on several new projects during the quarter, including continuing work in the Midwest and expects to start over $500,000 in new projects this quarter.

    • Activity continues to ramp surrounding the partnership with Biochar Now (BCN), particularly with the expansion of manufacturing capabilities for kiln production.  BCN manufacturers high-quality and patented biochar.  REGS expects to successfully leverage its relationships in the mining industry to enable initial market penetration.  

    • REGS is also working with leading water experts and service companies to expedite the deployment of its technology within the water treatment market.

    • Debt financing is expected in the short term to enable increased capacity and specialized manufacturing capabilities to fulfill an anticipated $2.4 million in kiln orders from BCN over the next two quarters.

Management Commentary

“The first quarter was highlighted by initiation of our revenue ramp at the Paragon Southwest Medical Waste facility in Anahuac, Texas,” stated John Combs, CEO of SEER.  “We recognized initial revenues and management fees from the joint venture during the first quarter and expect to realize increasing volume and revenue as the year progresses and operations ramp. This represents a demonstrable foothold in the industry for our proprietary CoronaLux™ technology and we look forward to continuing to supply CoronaLux™ systems to the joint venture as operations continue to scale in the licensed region.

“Although a temporary decline in long-term contract revenue dampened revenue growth from the Environmental Solutions segment, we remain encouraged by the growth in our media replacement sales. We expect spikes in large system revenue due to the sales cycle of these products, so in order to offset this impact, the build-out of steadier, high-margin, recurring revenues leveraging our highly competitive media product offerings continues to be a major strategic priority of our management team.

“We experienced modest growth in the Industrial Cleaning segment and expect new projects to materialize starting in the second quarter. We are increasingly disciplined about the service work we bid on and expect this strategy to positively impact our future margins in the segment. Of note, our partnership with Biochar Now continues to progress and we look forward to providing operational updates on that front as soon as appropriate.

“Based on recent industry response, we continue to be optimistic regarding the revenue ramp in our Solid Waste segment as the CoronaLux™ technology sees increasing adoption nationwide.

“While we are not holding a quarterly call in the first quarter due to its proximity to our recent fourth quarter call, we do see several notable operational milestones on the horizon and look forward to holding an update call in early June,” concluded Combs.  

First Quarter 2018 Financial Results

Total revenue in the first quarter of 2018 decreased to $1.9 million compared to $2.6 million in the same year-ago quarter. The decrease is primarily attributable to lower revenues from the Environmental Solutions segment as the result of fewer large system sales.

Industrial Cleaning revenue in the first quarter of 2018 totaled $0.9 million versus $0.8 million in the same year-ago quarter.

Environmental Solutions revenue in the first quarter of 2018 totaled $0.9 million versus $1.7 million in the same year-ago quarter. The decrease is primarily attributable to lower large-system sales revenue.

Solid Waste (PWS) net revenue in the first quarter of 2018 totaled $97,400 versus $69,300 in the same year-ago quarter. The increase in solid waste revenue in the first quarter of 2018 is primarily attributable to the start-up of the facility in Anahuac, Texas.

Gross margin in the first quarter of 2018 decreased to 24.3% from 27.2% in the same year-ago quarter. The decrease in quarterly gross margin was due to lower revenues from the Environmental Solutions segment.

Total operating expenses for the first quarter of 2018 decreased to $2.3 million, compared to $2.9 million in the first quarter of 2017.  The decrease in total operating expenses is primarily attributable to a $0.6 million decrease in product costs.

Net loss attributable to SEER in the first quarter of 2018 totaled $0.7 million or ($0.01) per diluted share, compared to a net loss of $0.4 million or ($0.01) per diluted share in the same year-ago quarter.

Adjusted EBITDA loss in the first quarter of 2018 totaled $0.2 million, compared to a profit of $0.3 million in the same year-ago quarter (see definition and further discussion about the presentation of adjusted EBITDA, a non-GAAP term, below).

Cash at March 31, 2018, totaled $0.2 million compared to $0.3 million at March 31, 2017.

Further details about the company’s results in the first quarter of 2018 are available in its Quarterly Report Form 10-Q, accessible in the investor relations section of the company’s website at www.seer-corp.com.

First Quarter 2018 Financial Summary Tables
The following financial information should be read in conjunction with the unaudited financial statements and accompanying notes filed by the company with the Securities and Exchange Commission on May 15, 2018 in its Annual Report on Form 10-Q for the period ended March 31, 2018, and which can be viewed at www.sec.gov and in the investor relations section of the company’s website at www.seer-corp.com.

Use of Non-GAAP Financial Information
The Company believes that the presentation of results excluding certain items in "Modified EBITDA," such as non-cash equity compensation charges, provides meaningful supplemental information to both management and investors, facilitating the evaluation of performance across reporting periods. The Company uses these non-GAAP measures for internal planning and reporting purposes. These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income or net income per share prepared in accordance with generally accepted accounting principles.

Set forth below is a reconciliation of Adjusted EBITDA to net income (loss):

 Three Months Ended Year Ended
 3/31/20183/31/2017 12/31/201712/31/2016
Net Income (Loss) Continuing Operations(747,300) (774,600) (6,133,400) (5,063,200)
Net Income (Loss) Discontinued Operations0  354,700  3,389,600  423,300 
Noncontrolling Interest16,600  51,200  545,400  753,500 
Net Income (Loss) Applicable to SEER(730,700) (368,700) (2,198,400) (3,886,400)
      
Interest365,800  426,900  1,425,600  324,200 
Depreciation and Amortization160,600  181,500  774,800  740,700 
      
EBITDA, Including Noncontrolling Interest(204,300) 239,700  2,000  (2,821,500)
      
      
Stock Based Compensation (Option Comp, Warrant Comp, Stock Issued for Services and Settlements, Warrant Extensions)35,500  17,000  246,600  91,500 
      
Modified EBITDA, Including Noncontrolling Interest(168,800) 256,700  248,600  (2,730,000)
      
EBITDA, Excluding Noncontrolling Interest(220,900) 188,500  (543,400) (3,575,000)
      
Modified EBITDA, Excluding Noncontrolling Interest(185,400) 205,500  (296,800) (3,483,500)

About Strategic Environmental & Energy Resources, Inc.
Strategic Environmental & Energy Resources, Inc. (SEER) (OTCQB:SENR), identifies, secures, and commercializes patented and proprietary environmental clean technologies in several multibillion dollar sectors (including oil & gas, renewable fuels, and all types of waste management, both solid and gaseous) for the purpose of either destroying/minimizing hazardous waste streams more safely and at lower cost than any competitive alternative, and/or processing the waste for use as a renewable fuel for the benefit of the customers and the environment. SEER has three wholly-owned operating subsidiaries: REGS, LLC; MV Technologies, LLC and SEER Environmental Materials, LLC; and two majority-owned subsidiaries: Paragon Waste Solutions, LLC; and ReaCH4biogas ("Reach"). For more information about the Company visit: www.seer-corp.com.

Forward Looking Statements
This press release contains "forward-looking statements" within the meaning of various provisions of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, commonly identified by such terms as "believes," "looking ahead," "anticipates," "estimates," and other terms with similar meaning.  Although the company believes that the assumptions upon which its forward-looking statements are based are reasonable, it can give no assurance that these assumptions will prove to be correct. Such forward-looking statements should not be construed as fact. Statements in this press release regarding future performance or fiscal projections, the cost effectiveness, impact and ability of the Company's products to handle the future needs of customers are forward-looking statements.  The information contained in such statements is beyond the ability of the Company to control, and in many cases the Company cannot predict what factors would cause results to differ materially from those indicated in such statements. All forward-looking statements in the press release are expressly qualified by these cautionary statements and by reference to the underlying assumptions.

Investor Relations
MZ Group
Chris Tyson
Managing Director – MZ North America
Direct: 949-491-8235
chris.tyson@mzgroup.us  
www.mzgroup.us

 
STRATEGIC ENVIRONMENTAL & ENERGY RESOURCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31, 2018 December 31, 2017
ASSETSUnaudited *
Current assets:   
  Cash$  170,600  $  54,100 
     Accounts receivable, net of allowance for doubtful accounts of $460,100 and $460,100, respectively 695,900   692,400 
     Notes receivable, net 184,600   184,600 
     Prepaid expenses and other current assets 684,000   340,900 
       Total current assets 1,735,100   1,272,000 
Property and equipment, net 1,163,400   1,296,400 
Intangible assets, net 595,500   623,100 
Notes receivable, net of current portion 552,800   542,900 
Other assets 16,500   16,500 
TOTAL ASSETS$  4,063,300  $  3,750,900 
    
LIABILITIES & STOCKHOLDERS’ EQUITY   
Current liabilities:   
     Accounts payable$  1,615,800  $  1,436,900 
     Accrued liabilities 1,207,600   1,307,600 
     Revenue contract liabilities 213,900   227,300 
     Deferred revenue 325,400   304,200 
     Payroll taxes payable 1,011,700   997,700 
     Customer deposits 1,600   21,600 
     Current portion of notes payable and capital lease obligations 2,769,600   2,166,300 
     Notes payable - related parties, including accrued interest 11,800   11,800 
       Total current liabilities 7,157,400   6,473,400 
Deferred revenue, non-current 87,900   113,100 
Notes payable and capital lease obligations, net of current portion 485,900   504,300 
       Total liabilities 7,731,200   7,090,800 
    
Commitments and contingencies   
Stockholders’ Equity:   
     Preferred stock; $.001 par value; 5,000,000 shares authorized; -0- shares issued   
     Common stock; $.001 par value; 70,000,000 shares authorized; 57,348,575 and 56,528,575 shares issued, issuable** and outstanding 2018 and 2017, respectively 57,100   56,500 
     Common stock subscribed 25,000   25,000 
     Additional paid-in capital 21,209,400   20,790,700 
     Stock subscription receivable (25,000)  (25,000)
     Accumulated deficit (22,202,600)  (21,471,900)
       Total stockholders’ equity (936,100)  (624,700)
     Non-controlling interest (2,731,800)  (2,715,200)
       Total equity (3,667,900)  (3,339,900)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$  4,063,300  $  3,750,900 
    

*These numbers were derived from the audited financial statements for the year ended December 31, 2017.    See accompanying notes.
**Includes 760,000 and 190,000 shares issuable at March 31, 2018 and December 31, 2017, respectively, per terms of short-term notes.

 
STRATEGIC ENVIRONMENTAL & ENERGY RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
  
 

 
For the Three Months Ended March 31,
  2018   2017 
Revenue:   
   Products$  875,500  $  1,689,000 
   Services 923,200   834,500 
   Solid waste 97,400   69,300 
     Total revenue 1,896,100   2,592,800 
    
Operating expenses:   
   Products costs 530,200   1,178,400 
   Services costs 775,700   652,900 
   Solid waste costs 17,000   57,300 
   General and administrative expenses 494,500   541,900 
   Salaries and related expenses 492,700   504,800 
     Total operating expenses 2,310,100   2,935,300 
    
Loss from operations (414,000)  (342,500)
    
Other income (expense):   
   Interest expense (365,800)  (426,900)
   Other 32,500   (5,200)
     Total non-operating expense, net (333,300)  (432,100)
    
Net loss from continuing operations   (747,300)    (774,600)
    
Net income from discontinued operations, net of tax -   354,700 
    
Net loss (747,300)  (419,900)
    
Less:  Net loss attributable to non-controlling interest (16,600)  (51,200)
 

Net loss attributable to SEER common stockholders
$  (730,700) $  (368,700)
    
Net loss per share from continuing operations$  (0.01) $  (0.01)
Discontinued operations
 -  *
Net loss per share, basic and diluted$  (0.01) $  (0.01)
    
Weighted average shares outstanding – basic and diluted 56,736,019   54,532,727 

*Less than $0.01 per share

 
STRATEGIC ENVIRONMENTAL & ENERGY RESOURCES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
 (Unaudited)
  
 For the Three Months Ended March 31,
Cash flows from operating activities: 2018   2017 
  Net loss$  (747,300) $  (419,900)
  Income from discontinued operations -   354,700 
Net loss from continuing operations (747,300)  (774,600)
Adjustments to reconcile net loss to net cash provided by operating activities:   
  Depreciation and amortization 160,600   191,900 
  Stock-based compensation expense 35,500   17,000 
  Non-cash expense for interest, common stock issued for debt penalty 263,800   345,000 
  Non-cash expense for interest, warrants – accretion of debt discount -   1,600 
Changes in operating assets and liabilities:   
  Accounts receivable (3,500)  46,700 
  Costs in Excess of billings on uncompleted contracts -   13,600 
  Prepaid expenses and other assets 17,500   (44,000)
  Accounts payable and accrued liabilities 58,900   (286,200)
  Revenue contract liabilities   (13,400)    (134,300)
  Deferred revenue    (4,000)    (47,100)
  Payroll taxes payable   14,000      5,700 
Net cash used by operating activities (217,900)  (664,700)
Cash flows from investing activities:   
  Purchase of property and equipment -   (1,300)
Net cash used in investing activities -   (1,300)
Cash flows from financing activities:   
  Payments of notes and capital lease obligations (135,600)  (183,600)
  Proceeds from short-term notes 350,000   450,000 
  Proceeds from the sale of common stock and warrants, net of expenses 120,000   - 
Net cash provided by financing activities 334,400   266,400 
Net cash flows from discontinued operations -   509,000 
Net increase in cash 116,500   109,400 
   Cash at the beginning of period 54,100   233,200 
  Cash at the end of period$  170,600  $  42,600 
    
Supplemental disclosures of cash flow information:   
  Cash paid for interest$   61,500  $  12,400 
  Cash paid for income taxes$  -  $  - 
  Financing of prepaid insurance premiums$  370,500  $  438,300