urban-gro(US:UGRO)2021-11-14 07:25Financial Data and Key Metrics Changes - The company achieved quarterly revenue of $18.3 million, representing a growth of 119% compared to the prior year period [11][25] - Positive adjusted EBITDA of approximately $1 million was generated, marking an increase from $300,000 in the prior year period [11][27] - Net income improved to $100,000 from a net loss of $700,000 in the prior year period [27] - The total backlog as of September 30, 2021, was $22.5 million, with equipment backlog at $18.6 million and services backlog at $3.9 million [29] Business Line Data and Key Metrics Changes - Equipment systems revenue increased by $9.1 million, while services revenue rose by $1 million, primarily due to the acquisition of the 2WR entities [25][26] - Gross profit was $4.3 million, or 23% of revenue, compared to $1.7 million, or 20% of revenue, in the prior year period [26] Market Data and Key Metrics Changes - The company is expanding its presence in both the cannabis and food-focused vertical farming markets, with significant progress in the EMEA region [14][19] - Multiple contracts have been entered into in the Netherlands, Portugal, and Macedonia, indicating a strong pipeline for future growth [19] Company Strategy and Development Direction - The company aims to be the leading provider of turnkey indoor high-performance cultivation facilities in the global controlled environment agriculture market [23] - A focus on building out managed services offerings, branded as gro-care, is emphasized as a recurring revenue model [13] - The recent acquisition of 2WR is expected to enhance service offerings and create cross-selling opportunities [12][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the European market for cannabis, likening it to the U.S. market five years ago, with strong demand for expertise and systems [39] - The company is raising its full-year 2021 revenue guidance to greater than $60 million and EBITDA guidance to exceed $2.5 million due to strong year-to-date performance [22] Other Important Information - The company has a cash position of over $40 million with no debt, providing flexibility for growth strategies and potential M&A targets [31] - A legal action has been initiated against a bank to recover $5.1 million related to a fraud incident [31][32] Q&A Session Summary Question: Can you help to contextualize the European opportunity? - Management views the European cannabis market as a significant opportunity, similar to the U.S. market five years ago, with strong demand for expertise and systems [39] Question: How do you think about the leads when new states come online in the U.S.? - The company is seeing strong demand and is engaging with clients earlier in the process, which translates to increased service and equipment solutions [44][46] Question: Can you walk through the expected timing of the Urban Health Farms partnership? - Each facility will have its own statement of work, with completion expected to take between nine to fifteen months depending on size and potential delays [54] Question: How should we think about your capacity to service deals? - The company is aggressively hiring architects and engineers while also considering M&A initiatives to maintain capacity for servicing deals [57][58] Question: Are you seeing any tailwinds from economies opening up post-COVID? - Management noted that while the U.S. market has seen momentum, the European market is still developing, but they are positioned to grow aggressively regardless of COVID's impact [86]