urban-gro(UGRO) - 2024 Q1 - Quarterly Results

Management Commentary and Strategic Outlook Management emphasizes successful diversification, significant Q1 bottom-line improvement from cost reductions, and anticipates cannabis reclassification as a major industry catalyst - The company's diversification strategy is leveraging its professional services talent to evolve into a multi-sector focused firm[3] - Q1 performance showed solid bottom-line improvement on both a sequential and year-over-year basis, aided by reductions in operating expenses[3] - The potential reclassification of cannabis from Schedule I to Schedule III is anticipated to be a significant industry catalyst, expected to increase operator working capital for reinvestment in facilities[3] First Quarter 2024 Financial Performance Q1 2024 saw revenue of $15.5 million, improved gross margin to 20%, and significantly reduced net loss and Adjusted EBITDA loss, reflecting strong cost control Q1 2024 Key Financial Metrics | Metric | Q1 2024 | Q4 2023 | Q1 2023 | YoY Change (%) | QoQ Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue (in millions) | $15.5 | $15.0 | $16.7 | -7 | +4 | | Gross Profit (in millions) | $3.1 | $1.7 | $2.8 | +10.7 | +82.4 | | Gross Margin (%) | 20 | 11 | 17 | +300 bps | +900 bps | | Net Loss (in millions) | ($2.1) | ($4.7) | ($5.1) | +58 | +55 | | Adjusted EBITDA (in millions) | ($0.3) | ($3.0) | ($3.4) | +91 | +90 | | GAAP Net Loss per Share | ($0.18) | ($0.40) | ($0.48) | +62.5 | +55 | - General and Administrative (G&A) expenses were significantly reduced to $4.3 million, a decrease of $2.8 million year-over-year and $1.2 million sequentially[6][8] - The improvement in Adjusted EBITDA was primarily driven by the company's previously announced $8 million G&A expense optimization and resource reallocation initiative[10] - Cash stood at $0.7 million at quarter-end, down from $1.1 million in the prior quarter. The balance on the lending facility was reduced by $0.5 million to $2.0 million[10] Backlog as of March 31, 2024 As of March 31, 2024, total project backlog reached approximately $99 million, with 94% attributed to construction design-build projects Backlog by Revenue Category (as of March 31, 2024) | Revenue Category | Amount (in millions) | Percentage of Total (%) | | :--- | :--- | :--- | | Construction design-build | $93 | 94 | | Professional services | $5 | 5 | | Equipment systems | $1 | 1 | | Total backlog | $99 | 100 | Full Year 2024 Guidance The company reaffirms its full-year 2024 guidance, projecting consolidated revenues exceeding $84 million and positive Adjusted EBITDA - The company reaffirms its guidance for fiscal year 2024, projecting consolidated revenues of more than $84 million and the achievement of positive Adjusted EBITDA[12] Financial Statements This section presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and reconciliations of GAAP to non-GAAP measures Condensed Consolidated Balance Sheets As of March 31, 2024, the balance sheet reports total assets of $56.1 million, total liabilities of $37.5 million, and total stockholders' equity of $18.6 million Condensed Consolidated Balance Sheets (unaudited) | (in thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | $33,229 | $40,952 | | Total assets | $56,130 | $64,379 | | Total current liabilities | $35,483 | $42,111 | | Total liabilities | $37,545 | $44,308 | | Total stockholders' equity | $18,586 | $20,071 | Condensed Consolidated Statements of Operations For Q1 2024, the company reported $15.5 million in revenue and a net loss of $2.1 million, or ($0.18) per share, a significant improvement year-over-year Condensed Consolidated Statements of Operations (unaudited, for three months ended March 31) | (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Total revenues | $15,543 | $16,765 | | Gross profit | $3,116 | $2,842 | | Total operating expenses | $5,180 | $7,889 | | Loss from operations | ($2,064) | ($5,047) | | Net loss | ($2,142) | ($5,145) | | Net loss per share | ($0.18) | ($0.48) | Reconciliation of GAAP to Non-GAAP Measures This section reconciles GAAP Net Loss to non-GAAP Adjusted EBITDA and Adjusted Net Loss, showing Q1 2024 Adjusted EBITDA of ($0.3 million) and Adjusted Net Loss of ($1.5 million) Net Loss (GAAP) to Adjusted EBITDA (Non-GAAP) Reconciliation | (in thousands) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net loss (GAAP) | ($2,141.5) | ($5,144.6) | | Depreciation and amortization | $434.6 | $404.1 | | Stock-based compensation | $656.6 | $479.6 | | Reduction in force costs | $443.8 | $0.0 | | Other adjustments | $238.4 | $458.3 | | Adjusted EBITDA (non-GAAP) | ($294.3) | ($3,394.2) | Net Loss (GAAP) to Adjusted Net Loss (Non-GAAP) Reconciliation | (in thousands, except per share data) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net loss (GAAP) | ($2,141.5) | ($5,144.6) | | Non-recurring adjustments, net of taxes | $682.2 | $908.3 | | Adjusted net loss (non-GAAP) | ($1,459.3) | ($4,236.3) | | Adjusted net loss per share (non-GAAP) | ($0.12) | ($0.39) | Use of Non-GAAP Financial Information The company utilizes non-GAAP measures like Adjusted EBITDA and Adjusted Net Loss to provide a clearer view of core operating performance by excluding non-recurring or non-cash expenses - Adjusted EBITDA is defined as GAAP net income (loss) excluding interest, taxes, depreciation, amortization, stock-based compensation, and other one-time or non-recurring expenses[15] - Management and the board of directors use Adjusted EBITDA as a key performance and compensation measure to compare performance across reporting periods by removing items not reflective of core operations[15] - The company acknowledges that non-GAAP measures have limitations and may be defined differently by other companies, potentially making direct comparisons difficult[18]