Andrew Arroyo Real Estate, Inc. Reports Full Year 2021

SAN DIEGO, April 29, 2022 (GLOBE NEWSWIRE) — Andrew Arroyo Real Estate Inc. (AARE), a mission-driven real estate and lending brokerage in the United States, announced today that revenue for the full year 2021 was $9.1 million, up 24% year-over-year. Gross profit for the full year was $1.4 million, an increase of 45% year-over-year. AARE’s diversified service model contributed to year-over-year growth for the full year 2021.

Net loss was $48,625 for the full year 2021 compared to a net gain of $20,999 in 2020. The majority of the net losses in 2021 were driven by approximately $205,000 in one-time expenses related to the IPO (initial public offering).

The Company’s cash position remains solid, with $540,000 in cash and an unused $75,000 credit line and $150,000 credit revolver available to invest in the growth of the business.

2021 Milestones & Q1 2022 Operational Updates

As of March 17, 2022, we surpassed the initial minimum raise of our Regulation A offering of $1,000,000. As a result, we accepted subscriptions from 94 investors who became new shareholders as of March 17, 2022.

On April 11, 2022, we appointed AST (American Stock Transfer) as our transfer agent to administrate our common stock. Simultaneously, we filed an application with OTC Markets to quote on the OTCQB. We are currently awaiting approval and a date for the quotation of our common stock to begin.

During the fourth quarter of 2021, we ceased our staging and moving operations. After careful consideration, we decided our time and resources could be better spent growing other divisions of the Company and developing other income streams with less liability and overhead costs. The demand for physical home staging services has slowed due to virtual staging services, and the costs of operating the moving division outweighed the income and potential liability. As a result, we sold our moving truck for $54,000, which is approximately 50% more than our purchase price (approximately $37,000) in 2017 because of the high demand for commercial box trucks and the shortage in inventory.

During the first quarter of 2022, we dissolved our joint venture partnership with Smart Real Estate Tools, LLC. This mutual decision of the partners was based on our agents’ feedback, limited utilization, limited adoption, and the rising ongoing costs without growing profits. After careful consideration, we decided our goal of supporting our agents can be achieved by traditional methods of agent support rather than an emphasis on software tools. Andy Parker, the original developer of Smart Real Estate Tools, LLC, was offered a full-time employee position with us to oversee our Business Support department. Mr. Parker accepted the employment contract and is now directing our staff in that department.

Outlook

“We continue to achieve consistent, measurable revenue growth while improving profitability and reinvesting our net income and free cash flow into growing the business nationwide,” said Andrew Arroyo, founder, chairman, and CEO of AARE. “Despite the many challenges we all faced in 2021, AARE had a record year with increases in revenue and gross profits.”

Arroyo continued, “The economic and political landscape of 2022 is certainly dressing itself up to be much different than in recent years. After 25 years in the industry, I have learned how to prepare the agency ahead of these market cycles. To that end, we have systems in place that helped us through previous rising interest rate environments, recessions, and unusual market conditions. Our salesforce is ready to navigate a change in the market or a potential recession. We will continue to provide short-term guidance, financial outlooks, and long-term targets for our expected revenue, gross and net profits, and free cash flow. We want our shareholders to have clear visibility into our growth plans, strategies, and how we plan to navigate the landscape as economic and political events continue to unfold.”

1Q-2Q 2022 and FY2022 Outlook: 

  • FY2022:
    • FY2022 Revenue of $9.5 million to $12 million
    • FY2022 Gross Profit of $1.5 million to $1.8 million
        
  • 1Q-2Q 2022:
    • 1Q-2Q 2022 Revenue of $4.3 million to $5 million
    • 1Q-2Q 2022 Gross Profit of $650,000 to $750,000

2022-23 Targets:

  • Continued revenue growth between 20-40%  
  • Continued gross profit growth between 30-50%
  • Continued reinvestment of net income and free cash flow to fuel our growth

Additional information can be found in the company’s 1K SEC filing and presentation on the Investor Relations section of the AARE website at https://ir.aare.com

Conference Call Information 
Management will conduct a conference call to discuss the full year results as well as outlook at 11:00 a.m. PST on Monday, May 9, 2022. The conference call will be accessible via webcast and recorded. After the call is complete, you can access the recording on the AARE Investor Relations website at https://ir.aare.com/.  

Safe Harbor Statement
This press release includes forward-looking statements, which are statements other than statements of historical facts, and statements in the future tense. These statements include, but are not limited to, statements regarding our future performance, including expected financial results for the first quarter and full year of 2022, long-term financial targets for full year of 2025, and our continuous ability to achieve positive Adjusted EBITDA. Forward-looking statements are based upon various estimates and assumptions, as well as information known to us as of the date of this press release, and are subject to risks and uncertainties, including but not limited to: general economic conditions (including inflation and interest rates), the health of the U.S. real estate industry, and risks generally incident to the ownership of residential and commercial real estate, including seasonal and cyclical trends; our ability to continuously innovate, improve and expand our platform; our ability to attract new agents and retain current agents or increase agents’ utilization of our platform; our ability to expand our brokerage and adjacent services businesses; our ability to offer additional adjacent services; our ability to achieve expected benefits from our mortgage business, Ensure; our rapid growth and rate of growth; our net losses and ability to achieve or sustain profitability in the future; any future impact of the ongoing COVID-19 pandemic on our business; our ability to compete successful in the markets in which we operate; the effect of monetary policies of the federal government and its agencies; any decreases in our gross commission income or the percentage of commissions that we collect; fluctuation of our quarterly results and other operating metrics; our ability to successfully complete acquisitions and integrate target companies; the effect of the claims, lawsuits, government investigations and other proceedings that we are subject to from time to time; our ability to protect our intellectual property rights; and other general market, political, economic, and business conditions. Additionally, these forward-looking statements, particularly our financial outlook and long-term targets, involve risks, uncertainties and assumptions, including those related to the impacts of COVID-19 and inflationary pressure on our clients’ spending decisions. Significant variation from the assumptions underlying our forward-looking statements could cause our actual results to vary, and the impact could be significant. Accordingly, actual results could differ materially from those predicted or implied or such uncertainties could cause adverse effects on our results.  Reported results should not be considered as an indication of future performance. 

Additional risks and uncertainties that could affect our financial results are included under the caption “Risk Factors” in our Regulation A+ filing on Form 1-A qualified with the SEC on October 12, 2021, which is available on the Investor Relations page of our website at https://ir.aare.com/ and on the SEC website at www.sec.gov. Additional information will also be set forth in our Annual Report on Form 1-K for the year ended December 31, 2021 which was filed on April 26th, 2021 with the SEC. All forward-looking statements contained herein are based on information available to us as of the date hereof, and we do not assume any obligation to update these statements as a result of new information or future events. Undue reliance should not be placed on the forward-looking statements in this press release. 

Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared in accordance with GAAP, from time to time, we may present Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin, which are non-GAAP financial measures, in this press release. Our use of non GAAP financial measures has limitations as an analytical tool, and these measures should not be considered in isolation or as a substitute for analysis of financial results as reported under GAAP.AARE uses Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our board of directors concerning our financial performance. We believe Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin are also helpful to investors, analysts and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical financial periods. Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin have limitations as analytical tools, therefore you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Because of these limitations, you should consider Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin alongside other financial performance measures, including net loss, operating cash flows and our other GAAP results. In evaluating Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments reflected in this press release. Our presentation of Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin should not be construed to imply that our future results will be unaffected by the types of items excluded from the calculation of Adjusted EBITDA, adjusted EBITDA margin and Free Cash Flow margin. Adjusted EBITDA, Adjusted EBITDA margin and Free Cash Flow margin are not presented in accordance with GAAP and the use of these terms varies from others in our industry. Non-GAAP financial measures were not used in this report.

Reconciliations, if any, of these non-GAAP measures have been provided in the financial statement tables included in this press release and investors are encouraged to review these reconciliations.

About AARE
Founded in 2004, AARE is a nationwide real estate brokerage firm licensed and operating in 24 states. The agency provides a variety of real estate services including residential, commercial, property management, syndication, financing, and business opportunities. AARE developed GENEROUS CAPITALISM®, an innovative business model that promotes the importance of corporate social responsibility through generous business practices. This model sets precedent for public corporations by making charitable contributions from top-line gross profits to positively impact local communities and global initiatives.

For more information, please visit www.AARE.com.

Investor Contact
John Windscheffel
john@aare.org

Media Contact
David Malme
david@aare.org

 

ANDREW ARROYO REAL ESTATE, INC.

BALANCE SHEETS
December 31, 2021 and 2020 (audited)
                                                          
    2021       2020  
ASSETS
Current Assets            
Cash and Cash Equivalents   $ 3,655       $ 38,701  
Other Current Assets                
Other Current Assets   $ 314,179       $ 285,151  
Total Current Assets   $ 317,833       $ 323,852  
Property and equipment, net   $ 68,342       $ 69,422  
Other Assets                
Total Other Assets   $ 123,625       $  
TOTAL ASSETS   $ 509,801       $ 393,274  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                 
Current Liabilities                
Accounts Payable   $ 19,050          
Charge Cards   $ 84,793       $ 83,415  
Line of Credit   $ 55,408       $ 55,200  
Current Portion of Long Term Debt   $ 11,737       $ 10,007  
Other Current Liabilities   $ 280,670       $ 252,542  
Total Current Liabilities   $ 451,658       $ 401,164  
Long Term Liabilities                
Notes Payable   $ 172,988       $ 244,290  
Total Liabilities   $ 624,646       $ 645,454  
Equity                
                 
Common Stock, $.001 par value 25,000,000 shares authorized, 3,000,000 issued and outstanding;   $ 1,000       $ 1,000  
Preferred Stock, ($.001 par value; 3,000,000 shares authorized, no shares issued and outstanding as of December 31, 2021 and December 31, 2020).                
Series A Convertible Preferred Stock, ($.001 par value; 2,000,000 shares authorized, and outstanding as of December 31, 2021 and December 31, 2020)                
Additional paid-In capital   $ 583,514       $ 482,590  
Shareholder Contribution/(Distribution)   $ (66,220 )     $ (119,364 )
Retained Earnings/(Deficit)   $ (633,139 )     $ (616,406 )
Total stockholders’ equity   $ (114,845 )     $ (252,180 )
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 509,801       $ 393,274  

  

 

ANDREW ARROYO REAL ESTATE, INC.

STATEMENT OF OPERATIONS
Years Ended December 31, 2021 and 2020 (audited)
    2021       2020  
             
Income from Operations   $ 9,119,970       $ 7,354,474  
                 
Cost of Sales:                
Charitable Contributions   $ 60,847       $ 218,193  
Coaching Fees   $ 8,569       $ 11,238  
Salaries & Wages   $ 60,983       $ 43,800  
Cost of Sales – Agents   $ 6,896,003       $ 5,448,399  
Cost of Sales – TC   $ 208,175       $ 201,369  
Cost of Sales- Material/Supply   $ 54,306       $ 74,310  
Property Management Fees Paid   $ 144,142       $ 100,412  
Recruiting Bonuses   $       $ 1,500  
Referral Fees   $ 281,767       $ 238,425  
Staging & Moving Operations   $ 26,023       $ 66,381  
                 
Total Cost of Sales   $ 7,740,814       $ 6,404,027  
                 
Gross Profit   $ 1,379,155       $ 950,447  
                 
General and administrative expenses   $ 1,394,193       $ 904,133  
                 
Profit from Operations   $ (15,038 )     $ 46,314  
                 
Other Income/(Expense)   $ (31,740 )     $ (24,515 )
                 
Profit /(Loss) before income tax benefit   $ (46,778 )     $ 21,799  
                 
Income Tax Provision   $ 1,847       $ 800  
                 
Net Profit   $ (48,625 )     $ 20,999  

  


ANDREW ARROYO REAL ESTATE, INC.
STATEMENT OF STOCKHOLDERS’ EQUITY
Years Ended December 31, 2021 and 2020 (audited)
    COMMON STOCK     PAID IN CAPITAL
        RETAINED EARNINGS         TOTAL    
                               
Balance – December 31, 2019   $ 1,000       $ 482,590     $ (637,405 )     $ (153,815 )  
                                   
Net Income / (Loss)   $       $     $ 20,999       $ 20,999    
                                   
Stockholder Contributions / (Distributions)   $       $     $ (119,364 )     $ (119,364 )  
                                   
Balance – December 31, 2020   $ 1,000       $ 482,590     $ (735,770 )     $ (252,180 )  
                                   
Net Income / (Loss)   $       $ 100,924     $ (114,845 )     $ (13,921 )  
                                   
Stockholder Contributions / (Distributions)   $       $ (583,514 )   $ 735,770       $ 151,256    
                                   
Balance – December 31, 2021   $ 0       $ 0     $ (114,845 )     $ (114,845 )  

ANDREW ARROYO REAL ESTATE, INC.
 Statement of Cash Flows
Years Ended December 31, 2021 and 2020 (audited)

  

    2021       2020    
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net Income (Loss)     (48,625 )       20,999    
Adjustments to reconcile net Income to net cash flows                
provided by operating activities:                
Deferred Income Taxes     3,582            
Depreciation  & Amortization     26,052         3,539    
Changes in assets and liabilities                
Changes in Other Receivables                
Changes in prepaid expenses & other     (29,028 )       (175,893 )  
Changes in accounts payable     19,050            
Changes in Other Payables     33,470         98,904    
Income Taxes Payable                
Changes in accrued expenses     (55 )       2,817    
                 
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES     4,446         (49,634 )  
                 
CASH FLOWS PROVIDED BY (USED FOR) INVESTING ACTIVITIES:                
Net Purchases of property and equipment     (25,022 )       (47,014 )  
Net Purchases of goodwill     (127,157 )          
                 
Net cash flows provided by (used in) Investing activities:     (152,179 )       (47,014 )  
                 
CASH FLOWS PROVIDED BY (USED FOR) FINANCING ACTIVITIES:                
Net proceeds (repayments) on borrowings     (73,481 )       238,641    
Changes in Line of Credit     208         (5,340 )  
Dividend Distribution     66,220         (119,364 )  
Loan from Shareholder                
Proceeds (re-purchase) for Equity Investment     119,740            
                 
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:     112,637         113,937    
                 
Net Increase (Decrease) in cash and cash equivalents     (35,046 )       17,289    
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR     38,701         21,412    
CASH AND CASH EQUIVALENTS END OF YEAR   $ 3,655       $ 38,701    

ANDREW ARROYO REAL ESTATE, INC.
SCHEDULE
STATEMENT OF GENEROUS CAPITALISM
Years Ended December 31, 2021 and 2020 (audited)
    2021       2020  
             
Income from Operations   $   9,119,969       $ 7,354,474    
                   
Cost of Sales:                  
Coaching Fees   $   8,569       $ 11,238    
Cost of Sales – Salaries & Wages   $   60,983       $ 43,800    
Cost of Sales – Agents   $   6,896,003       $ 5,448,399    
Cost of Sales – Transaction Coordinators   $   208,175       $ 201,369    
Cost of Sales – Material/Supply   $   54,305       $ 74,310    
Property Management Fees Paid   $   144,142       $ 100,412    
Recruiting Bonuses   $   0       $ 1,500    
Referral Fees   $   281,767       $ 238,425    
Staging & Moving Operations   $   26,023       $ 66,381    
                   
Total Cost of Sales   $   7,679,968       $ 6,185,834    
                   
Gross Profit   $   1,440,002       $ 1,168,640    
                   
Generous Capitalism – Charitable Contributions   $   60,847       $ 218,193    
                   
General and administrative expenses   $   1,394,193       $ 904,133    
                   
Profit from Operations   $   (15,038 )     $ 46,314    
                   
Other Income/(Expense)   $   (31,740 )     $ (24,515 )  
                   
Profit /(Loss) before income tax benefit   $   (46,778 )     $ 21,799    
                   
Income Tax Provision   $   1,847       $ 800    
                   
Net Profit   $   (48,625 )     $ 20,999    

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