urban-gro(US:UGRO)2021-05-12 05:35Financial Data and Key Metrics Changes - Total revenue reached a record $12 million in Q1 2021, up 182% from $4.3 million in Q1 2020, and compared to $9.2 million and $8.4 million in Q4 and Q3 2020 respectively [14] - Positive income from operations of $153,000 was reported for the first time, compared to a loss of $1.4 million in Q1 2020 [15] - Adjusted EBITDA was $0.5 million, an improvement of $1.4 million from a loss of $0.9 million in the same period last year [16] - Backlog at the end of Q1 was a record $15.2 million, up from $14.6 million at the end of 2020 [17] - Net loss for Q1 2021 was $1.6 million, slightly improved from a net loss of $1.7 million in Q1 2020 [18] - Cash as of March 31, 2021, stood at $50 million with only $1 million of low-interest debt remaining [19] Business Line Data and Key Metrics Changes - The company is expanding its services offerings, particularly through its managed services platform branded as gro-care, which is expected to drive strong demand [10] - The development of a turnkey facility offering is in progress, aiming to deliver operation-ready high-performance facilities [11] Market Data and Key Metrics Changes - The company is successfully expanding its reach within the food-focused vertical farming market while continuing to capture market share in the global cannabis market [9] - Two commercial agent representation agreements were signed in Q1 for expansion into Europe, indicating growth opportunities in that region [11] Company Strategy and Development Direction - The company is focused on three growth initiatives: expanding service offerings, launching turnkey facilities, and expanding global reach [10] - The strategy includes targeting accretive, synergistic acquisitions to enhance service offerings and market access [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum and ability to capitalize on opportunities in both cannabis and food markets [48] - The elimination of non-recurring non-operating expenses is expected to positively impact future net income results [18] Other Important Information - The company has achieved three consecutive quarters of positive operating cash flow [21] - The focus remains on increasing higher-margin components of revenue and reducing operating expenses as a percentage of revenue [20] Q&A Session Summary Question: Understanding the backlog increase - Management clarified that the backlog of $15.2 million consists of signed contracts yet to be recognized as revenue, with expectations to work through the majority within six months [24][26] Question: Acquisition strategy and market pricing - The company is looking for synergistic, cash flow positive acquisitions to enhance service offerings and market access, with favorable pricing conditions currently observed [31] Question: Gross margin volatility and future expectations - Management indicated that while gross margins may fluctuate based on equipment sales, they expect to stabilize and improve with increased service revenue [35] Question: Correlation between services revenue and equipment sales - Management noted that as equipment sales increase, there is a corresponding opportunity for services revenue, emphasizing the importance of maintaining client relationships [38] Question: Strategies to reduce net loss and grow revenues - The focus is on increasing revenue and associated gross margins while maintaining or reducing operating expenses to eliminate net loss [46]