urban-gro, Inc. (Nasdaq: UGRO) (“urban-gro” or the “Company”), an
integrated professional services and design-build firm offering
solutions to the Controlled Environment Agriculture (“CEA”) and
commercial sectors, today reported its financial results for the
quarter ended June 30, 2023.
Bradley Nattrass, Chairman and CEO, commented,
"Our second quarter performance marked another sequential
improvement in revenues and Adjusted EBITDA, and as we anticipated,
our cash position improved relative to the first quarter. We remain
intensely focused on returning to positive Adjusted EBITDA, and see
a pathway to this through the costs we've driven out of the
business, our increasing revenues, and a systems-enhanced insight
into project margin. Our performance was consistent with the
expectations that we communicated in May, and is the product of our
team's unrelenting focus on expense optimization and working
capital management."
Mr. Nattrass added, "Our diversification
playbook continues to drive strong growth of non-CEA revenue. While
we continue to see some positive signs within the cannabis
industry, we are not immune to the well known pressures facing the
sector. For this reason, we continue to remain laser focused on
reallocating resources and optimizing our spending where
appropriate to ensure that our infrastructure is aligned with the
size of our business. Through these initiatives, we have reduced
our SG&A expense year-to-date in 2023 by almost $3 million
dollars annualized and we continue to stabilize. We are a leaner
and more efficient organization than we were a year ago, and we
will continue to position our business for long term, profitable
growth."
Second Quarter 2023
Financial Results
Revenue was $18.8 million, as compared to $16.8
million in the first quarter, representing a sequential improvement
of $2.1 million or 12%, and $16.3 million in the prior year period,
representing an increase of $2.6 million or 16%. The sequential
improvement was due to a $1.7 million increase in equipment systems
revenue as well as a $0.8 million increase in construction
design-build revenue, partially offset by a $0.4 million decrease
in professional services revenue. As compared to the prior year
period, revenue increased $2.6 million or 16%, primarily driven by
an $8.1 million increase in revenue associated with the Emerald
acquisition in April 2022, including a substantial organic increase
in construction design-build revenues. This increase was partially
offset by a decrease in equipment systems revenue of
$5.5 million reflecting reduced equipment demand in the U.S.
cannabis market as a result of ongoing state-level regulatory
delays in the license-awarding process, as well as the lack of
movement on passing key legislation impacting the industry.
Gross profit was $2.9 million, or 15% of
revenue, as compared to $2.8 million in the first quarter, or 17%
of revenue, and $3.5 million, or 22% of revenue in the prior year
period. The decrease in gross profit from the prior year period was
primarily driven by the net effects of a decrease in higher margin
equipment revenue offset by an increase in lower margin
construction design-build revenue.
Operating expenses were $6.8 million as compared
to $7.9 million in the first quarter, representing a sequential
decrease of $1.1 million. The decrease sequentially was primarily
due to a reduction in SG&A expenses. As compared to the prior
year period, operating expenses increased $1.3 million primarily
due to increased headcount from both organic growth and
acquisitions, increased professional fees, increased
compensation-related costs, and investment into the Company's
European entity and associated expansion.
Non-operating expenses were $1.6 million, which
includes a $1.5 million legal settlement, as compared to
non-operating income of $0.1 million in the prior year.
Net loss was $5.4 million, or $0.50 loss per
share as compared to a net loss of $1.7 million, or $0.17 loss per
share in the prior year period.
Adjusted EBITDA1 improved by $1.4 million on a
sequential basis to negative $2.0 million. As compared to the prior
year period, Adjusted EBITDA1 decreased by $1.5 million, driven by
lower gross profit due to a change in revenue mix and higher
run-rate operating expenses predominantly associated with increased
professional fees and headcount from both organic growth as well as
acquisitions.
Cash position at the end of the second quarter
of 2023 was $8.6 million with no bank debt.
Summary First Six Months 2023 Financial
Results
Revenue was $35.6 million for the first six months of 2023
compared to $37.3 million in the prior year period, representing a
decrease of $1.7 million, or 5%.
Net loss was $10.6 million, or $0.97 per share, for the first
six months of 2023 compared to a net loss of $2.4 million, or $0.23
per share, in the prior year period.
Adjusted EBITDA was negative $5.5 million for the first six
months of 2023 compared to negative $0.1 million in the prior year
period.
Backlog as of June 30, 2023
Consolidated backlog is unrealized revenue
represented by signed construction design-build, equipment systems,
and service orders. As of June 30, 2023, total backlog was
approximately $79 million in contracts, comprised of $70 million in
construction design-build, $4 million of professional services, and
$5 million of equipment systems.
The following table summarizes the quarter over
quarter change in backlog as of March 31, 2023 to the quarter ended
June 30, 2023:
|
Equipment Systems |
|
Services |
|
Construction Design-Build |
|
Total Backlog |
|
(in millions) |
Beginning backlog as of March 31, 2023 |
$ |
5 |
|
|
$ |
4 |
|
|
$ |
96 |
|
|
$ |
105 |
|
Revenue recognized |
|
(5 |
) |
|
|
(3 |
) |
|
|
(11 |
) |
|
|
(19 |
) |
Net backlog additions/(reductions)(1) |
|
5 |
|
|
|
3 |
|
|
|
(15 |
) |
|
$ |
(7 |
) |
Ending backlog as of
June 30, 2023 |
$ |
5 |
|
|
$ |
4 |
|
|
$ |
70 |
|
|
$ |
79 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) During the second quarter of 2023, a cannabis cultivation
project that was actively in production began to face some
uncertainty with funding. The Company is in close contact with the
client, but felt it prudent to remove this active contract from
reported backlog until the client's funding source is solidified.
The drop in backlog is predominantly tied to this project. |
|
Revenue and Adjusted
EBITDA1 Guidance
- Full Year 2023
For the 2023 full year, the Company is updating
its guidance as follows:
Consolidated revenue: $90 million to $95
million
Adjusted EBITDA1: negative $6 million to
negative $5 million;
Guidance was updated due in part to the pause of
the project that was actively in production, as well as some other
timing shifts where projects have extended out to additional
quarters. Implied in the Company's Adjusted EBITDA guidance is an
assumption for neutral Adjusted EBITDA in the second half of 2023.
In terms of cadence for the balance of the year, the Company
expects continued sequential quarterly increases to both revenue
and Adjusted EBITDA and remains focused on getting back to positive
adjusted EBITDA.
Conference Call Details
urban-gro will host a conference call and live
audio webcast to discuss the operational and financial results
today, August 14, 2023 at 4:30 p.m. Eastern time. Interested
participants and investors may access the conference call by
dialing 877-300-8521 (U.S.), or 412-317-6026 (International). The
live webcast will be accessible on the Events page of the Investors
section of the urban-gro website, ir.urban-gro.com, and will be
archived for 90 days following the event. Availability of the call
replay posted on the Company’s website is at the Company’s
discretion and may be discontinued at any time.
1Adjusted EBITDA is a non-GAAP financial measure. Please see the
information under “Use of Non-GAAP Financial Information” below for
a description of Adjusted EBITDA and the table at the end of this
press release for a reconciliation of this non-GAAP financial
information to GAAP results.
Use of Non-GAAP Financial
Information
We define Adjusted EBITDA as net income (loss)
attributable to urban-gro, determined in accordance with U.S.
generally accepted accounting principles ("GAAP"), excluding the
effects of certain operating and non-operating expenses including,
but not limited to, interest income and expense, income taxes,
depreciation of tangible assets, amortization of intangible assets,
impairment of investments, unrealized exchange losses, debt
forgiveness and extinguishment, stock-based compensation expense,
one-time and non-recurring expenses, and acquisition costs that we
do not believe reflect our core operating performance. We use
Adjusted EBITDA as a measure of our operating performance. Adjusted
EBITDA is a supplemental non-GAAP financial measure, and it is not
a substitute for net income (loss), income (loss) from operations,
cash flows from operating activities or any other measure
prescribed by GAAP.
Our Board of Directors and management team focus
on Adjusted EBITDA as a key performance and compensation measure.
We believe that Adjusted EBITDA assists us in comparing our
performance over various reporting periods because it removes from
our operating results the impact of items that our management
believes do not reflect our core operating performance.
There are limitations to using non-GAAP measures
such as Adjusted EBITDA. Although we believe that Adjusted EBITDA
can make an evaluation of our operating performance more consistent
because it removes items that do not reflect our core operations,
other companies in our industry may define Adjusted EBITDA
differently than we do. As a result, it may be difficult to use
Adjusted EBITDA to compare the performance of those companies to
our performance. Adjusted EBITDA should not be considered as a
measure of the income generated by our business or discretionary
cash available to us to invest in the growth of our business.
About urban-gro, Inc.
urban-gro, Inc.® (Nasdaq: UGRO) is an integrated
professional services and design-build firm. We offer value-added
architectural, engineering, and construction management solutions
to the Controlled Environment Agriculture (“CEA”), industrial,
healthcare, and other commercial sectors. Innovation,
collaboration, and creativity drive our team to provide exceptional
customer experiences. With offices across North American and in
Europe, we deliver Your Vision – Built. Learn more by visiting
www.urban-gro.com.
Safe Harbor Statement
This press release contains forward looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. When used in this release, terms such as
“believes,” “will,” “expects,” “anticipates,” “may,” “projects” and
similar expressions and variations as they relate to the Company or
its management are intended to identify forward-looking statements.
The forward-looking statements in this press release include,
without limitation, financial projections, financial guidance,
future events, business strategy, future performance, future
operations, future demand, backlog, financial position, estimated
revenues, losses, adjusted EBITDA, prospects, plans and objectives
of management, including expense optimization, working capital
management, and the future ability to position the Company for
long-term profitable growth. These and other forward-looking
statements are based on current expectations, forecasts, and
assumptions that involve risks and uncertainties that could cause
actual outcomes and results to differ materially from those
anticipated or expected, including, among others, our ability to
successfully manage and integrate acquisitions, our ability to
accurately forecast revenues and costs, competition for projects in
our markets, our ability to predict and respond to new laws and
governmental regulatory actions, including delays granting licenses
to clients or potential clients and delays in passage of
legislation expected to benefit our clients or potential clients,
our ability to successfully develop new and/or enhancements to our
product offerings and develop a product mix to meet demand, risks
related to adverse weather conditions, supply chain issues, rising
interest rates, economic downturn or other factors that could cause
delays or the cancellation of projects in our backlog or our
ability to secure future projects, our ability to maintain
favorable relationships with suppliers, risks associated with
reliance on key customers and suppliers, our ability to attract and
retain key personnel, results of litigation and other claims and
insurance coverage issues, risks related to our information
technology systems and infrastructure, risks associated with
climate change and ESG matters, our ability to maintain effective
internal controls, our ability to execute on our strategic plans,
our ability to achieve and maintain cost savings, the sufficiency
of our liquidity and capital resources, and our ability to achieve
our key initiatives for 2023, particularly our growth initiatives.
A more detailed description of these and certain other factors that
could affect actual results is included in the Company’s filings
with the Securities and Exchange Commission. Readers are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. The Company undertakes no
obligation to update any forward-looking statements to reflect
events or circumstances after the date hereof, except as may be
required by law.
URBAN-GRO, INC.CONDENSED CONSOLIDATED
BALANCE SHEETS (unaudited) |
|
|
June 30, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
8,559,181 |
|
|
$ |
12,008,003 |
|
Accounts receivable, net |
|
15,475,146 |
|
|
|
15,380,292 |
|
Contract receivables |
|
6,948,417 |
|
|
|
3,004,282 |
|
Prepaid expenses and other assets |
|
3,540,554 |
|
|
|
4,164,960 |
|
Total current assets |
|
34,523,298 |
|
|
|
34,557,537 |
|
Non-current assets: |
|
|
|
Property and equipment, net |
|
1,332,908 |
|
|
|
1,307,146 |
|
Operating lease right of use assets, net |
|
2,396,668 |
|
|
|
2,618,825 |
|
Investments |
|
2,584,964 |
|
|
|
2,559,307 |
|
Goodwill |
|
15,572,050 |
|
|
|
15,572,050 |
|
Intangible assets, net |
|
4,876,503 |
|
|
|
5,450,687 |
|
Total non-current assets |
|
26,763,093 |
|
|
|
27,508,015 |
|
Total
assets |
$ |
61,286,391 |
|
|
$ |
62,065,552 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
18,552,579 |
|
|
$ |
9,960,364 |
|
Accrued expenses |
|
5,183,451 |
|
|
|
3,196,961 |
|
Contract liabilities |
|
3,344,832 |
|
|
|
1,294,452 |
|
Customer deposits |
|
1,940,394 |
|
|
|
2,571,161 |
|
Contingent consideration |
|
238,621 |
|
|
|
2,799,287 |
|
Promissory note |
|
1,941,188 |
|
|
|
3,832,682 |
|
Operating lease liabilities |
|
617,815 |
|
|
|
600,816 |
|
Total current liabilities |
|
31,818,880 |
|
|
|
24,255,723 |
|
Non-current liabilities: |
|
|
|
Operating lease liabilities |
|
1,822,754 |
|
|
|
2,044,782 |
|
Deferred tax liability |
|
914,185 |
|
|
|
1,033,283 |
|
Total non-current liabilities |
|
2,736,939 |
|
|
|
3,078,065 |
|
|
|
|
|
Stockholders’ equity |
|
|
|
Preferred stock, $0.10 par value; 10,000,000 shares authorized; 0
shares issued and outstanding |
|
— |
|
|
|
— |
|
Common stock, $0.001 par value; 30,000,000 shares authorized;
13,056,409 issued and 11,606,576 outstanding as of June 30, 2023,
and 100,000,000 shares authorized; 12,220,593 issued and 10,770,760
outstanding as of December 31, 2022 |
|
13,056 |
|
|
|
12,221 |
|
Additional paid-in capital |
|
87,468,937 |
|
|
|
84,882,982 |
|
Treasury shares, cost basis: 1,449,833 shares as of June 30, 2023
and as of December 31, 2022 |
|
(12,045,542 |
) |
|
|
(12,045,542 |
) |
Accumulated deficit |
|
(48,705,879 |
) |
|
|
(38,117,897 |
) |
Total stockholders’ equity |
|
26,730,572 |
|
|
|
34,731,764 |
|
Total liabilities and
stockholders’ equity |
$ |
61,286,391 |
|
|
$ |
62,065,552 |
|
URBAN-GRO, INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS (unaudited) |
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues: |
|
|
|
|
|
|
|
Equipment systems |
$ |
4,619,887 |
|
|
$ |
10,077,572 |
|
|
$ |
7,531,711 |
|
|
$ |
27,144,916 |
|
Services |
|
3,034,574 |
|
|
|
3,027,556 |
|
|
|
6,505,227 |
|
|
|
6,666,062 |
|
Construction design-build |
|
11,048,997 |
|
|
|
2,917,321 |
|
|
|
21,254,949 |
|
|
|
2,917,321 |
|
Other |
|
134,086 |
|
|
|
259,054 |
|
|
|
311,043 |
|
|
|
606,072 |
|
Total revenues and other income |
|
18,837,544 |
|
|
|
16,281,503 |
|
|
|
35,602,930 |
|
|
|
37,334,371 |
|
Cost of
revenues: |
|
|
|
|
|
|
|
Equipment systems |
|
4,008,911 |
|
|
|
8,617,945 |
|
|
|
6,521,587 |
|
|
|
22,920,542 |
|
Services |
|
1,972,844 |
|
|
|
1,279,492 |
|
|
|
3,947,382 |
|
|
|
2,880,920 |
|
Construction design-build |
|
9,888,907 |
|
|
|
2,692,700 |
|
|
|
19,192,615 |
|
|
|
2,692,700 |
|
Other |
|
92,248 |
|
|
|
189,420 |
|
|
|
224,864 |
|
|
|
436,243 |
|
Total cost of revenues |
|
15,962,910 |
|
|
|
12,779,557 |
|
|
|
29,886,448 |
|
|
|
28,930,405 |
|
Gross
profit |
|
2,874,634 |
|
|
|
3,501,946 |
|
|
|
5,716,482 |
|
|
|
8,403,966 |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
General and administrative |
|
5,874,346 |
|
|
|
4,240,658 |
|
|
|
12,973,204 |
|
|
|
8,965,957 |
|
Stock-based compensation |
|
622,547 |
|
|
|
882,000 |
|
|
|
1,102,188 |
|
|
|
1,764,000 |
|
Intangible asset amortization |
|
264,165 |
|
|
|
306,225 |
|
|
|
574,184 |
|
|
|
468,725 |
|
Total operating expenses |
|
6,761,058 |
|
|
|
5,428,883 |
|
|
|
14,649,576 |
|
|
|
11,198,682 |
|
Loss from
operations |
|
(3,886,424 |
) |
|
|
(1,926,937 |
) |
|
|
(8,933,094 |
) |
|
|
(2,794,716 |
) |
|
|
|
|
|
|
|
|
Non-operating income
(expense): |
|
|
|
|
|
|
|
Interest expense |
|
(44,989 |
) |
|
|
(7,658 |
) |
|
|
(118,205 |
) |
|
|
(15,317 |
) |
Interest income |
|
75,061 |
|
|
|
47,275 |
|
|
|
148,191 |
|
|
|
127,126 |
|
Contingent consideration |
|
— |
|
|
|
— |
|
|
|
(160,232 |
) |
|
|
— |
|
Loss on settlement |
|
(1,500,000 |
) |
|
|
— |
|
|
|
(1,500,000 |
) |
|
|
— |
|
Other income (expense) |
|
(140,947 |
) |
|
|
71,563 |
|
|
|
(143,739 |
) |
|
|
62,874 |
|
Total non-operating income (expense) |
|
(1,610,875 |
) |
|
|
111,180 |
|
|
|
(1,773,985 |
) |
|
|
174,683 |
|
Loss before income
taxes |
|
(5,497,299 |
) |
|
|
(1,815,757 |
) |
|
|
(10,707,079 |
) |
|
|
(2,620,033 |
) |
|
|
|
|
|
|
|
|
Income tax benefit |
|
53,966 |
|
|
|
76,453 |
|
|
|
119,097 |
|
|
|
184,512 |
|
Net loss |
$ |
(5,443,333 |
) |
|
$ |
(1,739,304 |
) |
|
$ |
(10,587,982 |
) |
|
$ |
(2,435,521 |
) |
|
|
|
|
|
|
|
|
Comprehensive
loss |
$ |
(5,443,333 |
) |
|
$ |
(1,739,304 |
) |
|
$ |
(10,587,982 |
) |
|
$ |
(2,435,521 |
) |
|
|
|
|
|
|
|
|
Loss per share - basic and
diluted |
$ |
(0.50 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.97 |
) |
|
$ |
(0.23 |
) |
Weighted average shares -
basic and diluted |
|
10,945,978 |
|
|
|
10,508,972 |
|
|
|
10,859,820 |
|
|
|
10,527,975 |
|
URBAN-GRO, INC.NET LOSS (GAAP) RECONCILIATION TO ADJUSTED
EBITDA (NON-GAAP) |
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net loss
(GAAP) |
$ |
(5,443,333 |
) |
|
$ |
(1,739,304 |
) |
|
$ |
(10,587,982 |
) |
|
$ |
(2,435,521 |
) |
Interest expense |
|
44,989 |
|
|
|
7,658 |
|
|
|
118,205 |
|
|
|
15,317 |
|
Interest income |
|
(75,061 |
) |
|
|
(47,275 |
) |
|
|
(148,191 |
) |
|
|
(127,126 |
) |
Federal and state income tax (benefit) expense |
|
56,799 |
|
|
|
(76,453 |
) |
|
|
(8,332 |
) |
|
|
(184,512 |
) |
Depreciation and amortization |
|
424,160 |
|
|
|
371,557 |
|
|
|
828,232 |
|
|
|
589,835 |
|
EBITDA
(non-GAAP) |
|
(4,992,446 |
) |
|
|
(1,483,817 |
) |
|
|
(9,798,068 |
) |
|
|
(2,142,007 |
) |
|
|
|
|
|
|
|
|
Non-recurring legal fees |
|
267,873 |
|
|
|
57,382 |
|
|
|
484,611 |
|
|
|
218,929 |
|
Contingent consideration - change in fair value |
|
— |
|
|
|
— |
|
|
|
160,232 |
|
|
|
— |
|
Contingent consideration - DVO acquisition |
|
80,431 |
|
|
|
— |
|
|
|
126,698 |
|
|
|
— |
|
Reduction in force costs |
|
263,003 |
|
|
|
— |
|
|
|
263,003 |
|
|
|
— |
|
Loss on settlement |
|
1,500,000 |
|
|
|
— |
|
|
|
1,500,000 |
|
|
|
— |
|
Retention incentive |
|
192,000 |
|
|
|
— |
|
|
|
642,000 |
|
|
|
— |
|
Stock-based compensation |
|
622,547 |
|
|
|
882,000 |
|
|
|
1,102,188 |
|
|
|
1,764,000 |
|
Transaction costs |
|
26,859 |
|
|
|
15,535 |
|
|
|
61,938 |
|
|
|
70,760 |
|
Adjusted EBITDA
(non-GAAP) |
$ |
(2,039,733 |
) |
|
$ |
(528,900 |
) |
|
$ |
(5,457,398 |
) |
|
$ |
(88,318 |
) |
Investor Contacts:
Dan Droller – urban-gro, Inc.EVP Corporate
Development & Investor Relations-or-Jeff Sonnek – ICR,
Inc.(720) 730-8160investors@urban-gro.com
Media Contact:Patricia Whyte –
MATTIO Communications (551) 795-7315urbangro@mattio.com
Urban Gro (NASDAQ:UGRO)
過去 株価チャート
から 4 2024 まで 5 2024
Urban Gro (NASDAQ:UGRO)
過去 株価チャート
から 5 2023 まで 5 2024