Investing in Boxabl: A tale of two cities.
In the spirit of Charles Dickens's historical novel, published in 1859, this article compares the stark contrast between Boxabl's poor financial results reported in the latest 10-K and the positive streak of operational improvements experienced during our last site visit.
Introduction
Boxabl operates within the innovative construction and housing industry, producing modular, foldable homes designed for rapid assembly and versatility. These prefabricated units seek to address critical issues in the housing market, including affordability, scalability, and sustainability. Boxabl is one of the few startups that file its financials with the SEC.
The significance of the 10-K filing for Boxabl lies in its role as a comprehensive and audited report of the company's annual financial performance, providing stakeholders with crucial insights into its operational health, financial stability, and strategic direction.
This analysis will delve into the detailed narratives and financial data presented in Boxabl’s latest 10-K filing, juxtaposing the company’s reported challenges with its operational advancements. Through this exploration, the article aims to present a nuanced view of Boxabl's current position in the market, examining both the hurdles it faces and the strides it is making towards innovation and growth.
2. Analysis of 10-K Filing - The Challenges
Starting with the worst, Boxabl did not book any meaningful revenue in 2023. This is partially due to complications with the delivery of one order, but the responsibility for such a dismal revenue number sits squarely with the management.
Current assets were down, even though inventory doubled. Given the long waiting list that the company has consistently communicated to the market, we should see the inventory moving fast. Casitas (residential building code) are now selling in Arizona, Hawaii, Kansas, Nevada, New Mexico, Oklahoma, Utah, Vermont, West Virginia, Wyoming, and internationally. Casitas on a Trailer (Park Model RV- ANSI A119.5) can be shipped Nationwide in RV parks, mobile home parks, backyards, and other places. (Excludes AL, CA, KY, NE, OR, WA).
“The Company collects customer deposits to reserve for the purchase of a Casita. The Company has received $3,987K and $4,257K in customer deposits for approximately 8,500 and 7,700 BOXABL units as of December 31, 2023 and 2022, respectively. The Company held deposits ranging between $100 - $5,000 from approximately 8,500 prospective customers as of December 31, 2023, which are recorded as liabilities on the balance sheet. If the prospective purchaser decides to not purchase a Box once they become available, they will forfeit their deposit.”
Liabilities are up 58% YoY, and operating loss is up 26%.
2. Risk Factors
The significant risks we see in Boxabl are connected with the ability of management to execute the strategy and can expanded as follows:
The company has a limited operating history. Neither Paolo nor Galiano Tiramani has a history of previous scale-ups to the size required by Boxabl to be successful.
The demand for Casitas could shift towards other products launched in the market. Boxabl must innovate in design and production to improve product demand and reduce production costs.
Compliance with regulations is still required for Casitas to be approved in crucial states.
3. Management's Discussion and Analysis (MD&A)
The lack of revenue in the 2023 results is a real concern. We expect the company to start generating revenue in Q1 2024 and will be checking their upcoming 10-Q for evidence of a change of course.
4. Strategic Developments
The appointment of a new CFO is a promising advancement for 2023.
Martin Noe Costas brings over 25 years of corporate and operational global experience as the Chief Financial Officer (CFO) at Boxabl. His career began in public accounting at PwC, where he was involved in over 100 audits, consulting, and advising engagements, including capital markets engagements. Costas's deep CFO experience spans leading the finance function in globally recognized companies such as Honeywell, Schlumberger, and Sysco. He has successfully led complex initial public offerings (IPOs) and mergers and acquisitions (M&As), indicating a solid strategic and operational leadership capability.
Costas's appointment at Boxabl is viewed as a strategic move, potentially gearing the company towards an IPO or other significant corporate developments. His successful track record in IPOs and M&As is expected to be pivotal in guiding Boxabl through its next phase of growth and innovation. The company has previously hinted at an IPO, aiming for it once it completes its flagship "Boxzilla" factory and achieves a run rate of $100 million in revenue. With Costas's expertise, Boxabl's ambitious growth and expansion strategies are more poised for success, enhancing investor confidence and financial management within the company.
5. Production & other Enhancements
Factory Building 1 is building houses, Factory Building 2 is operational and producing parts, and Factory Building 3 is becoming a warehouse.
200+ houses were built for inventory during 2023.
The company established a Board of Directors.
They completed a $30m acquisition of Build IP LLC and 60+ patent portfolio from the CEO Paolo Tiramani, meaning that the company will not pay him a 1% of revenue as a royalty on the design and patents.
Material and direct labor costs to manufacture Casitas were reduced by over 25% yearly.
The production site received $15m in equipment upgrades: the panels are not processed vertically instead of horizontally, meaning that the production process takes less space and is more automated and streamlined.
Presented the next-gen Casita (aka Goldibox) product with two bedrooms.
6. Expansion of Market Reach
Getting licensed to sell in more states across the United States has been relatively slow at Boxabl. We saw an acceleration at last year's tail end and hope the momentum will be kept solid during 2024.
The company seems to have finalized what a production site should look like and could be able to replicate a new site on the northeast coast to serve clients in the area.
This goes hand in hand with getting licensed to sell in densely populated states, which still has to be done. Boxabl is only approved in Vermont and West Virginia, both sparsely populated states in the east.
Also, investors may want to see revenue from the current factory setup before a new factory is put online.
7. challenges and advancements facing Boxabl
Boxabl's trajectory towards reshaping the construction and housing market is highlighted by several key developments and prospects. The company's innovative Structural Insulated Panels (SIPs) have received approval from the International Code Council, marking a significant step forward in the construction sector. These SIPs are distinguished by their sustainability, reduced construction waste, durability, and energy efficiency, collectively offering an expedited construction timeline and cost-effective solutions. The versatility of Boxabl SIPs extends to various applications, including residential and commercial construction and disaster relief, showcasing the adaptability of Boxabl's building solutions (TinyHouse).
In a recent update, Boxabl announced a notable interest from investors, with $5.8 million in non-binding indications from just over 2000 potential investors for the upcoming crowdfund on Startengine.com. This reflects investor confidence and enthusiasm for Boxabl's mission to revolutionize housing with technology and innovation. Operational enhancements and inventory expansion, including Modular and Park Model RV Casitas ready for shipment to specific regions, underscore Boxabl's commitment to operational excellence. Introducing the GOLDIBOX prototype represents a leap towards customizable and efficient housing, highlighting Boxabl's forefront position in innovation (Yahoo Finance).
Adding to its innovative streak, Boxabl unveiled a new two-story model home featuring modern amenities and design efficiencies to make housing more affordable. This development is part of Boxabl's ongoing mission, supported by endorsements from high-profile individuals and strategic partnerships, including a notable collaboration with homebuilder D.R. Horton, indicative of Boxabl's growing influence and potential in the housing market (Boxabl).
These developments collectively paint a promising picture of Boxabl's commitment to innovation, sustainability, and affordability in the housing market, setting the stage for significant growth and impact in the years to come.
As we wrote last February, we believe Boxabl can help solve the housing and homelessness crisis in the United States.
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Disclaimer
Private companies carry inherent risks and may not be suitable for all investors. The information provided in this article is for informational purposes only and should not be construed as investment advice. Always conduct thorough research and seek professional financial guidance before making investment decisions.
