urban-gro Q4 Revenue Increases 4% Sequentially To $19M

urban-gro, Inc. UGRO, a fully integrated architectural, engineering, and cultivation systems company focused on the indoor Controlled Environment Agriculture (CEA) market, reported record fourth-quarter and full-year financial results and provided full-year 2022 guidance.

“I am thrilled about our strong fourth-quarter results, which capped off a record full-year performance for urban-gro,” commented Bradley Nattrass, chairman, and CEO of urban-gro. “In 2021, we more than doubled the company from a revenue perspective, achieved positive Adjusted EBITDA, built our backlog to record levels, and expanded our integrated service model with the strategic acquisition of the architect firm, 2WR. We are in an ideal position to accelerate our momentum in the global CEA industry while simultaneously enhancing shareholder value."

Dick Akright, the firm’s CFO added. “We generated our sixth consecutive quarter of positive Adjusted EBITDA in fourth quarter 2021, reflecting our ongoing commitment to growing in a profitable and cash generative manner. We enter 2022 with a strong balance sheet containing approximately $35 million of cash and no debt, giving us immense flexibility to execute on inorganic growth opportunities. We remain laser-focused on building shareholder value and returned approximately $5 million of cash to shareholders through our stock buyback program in 2021, which we also further increased earlier in 2022.” Fourth Quarter 2021 Financial Results

• Revenue was $19.0 million in the fourth quarter of 2021, as compared to $9.2 million in the prior-year period, representing an increase of $9.7 million, or 106% driven by a significant increase in cultivation equipment sales and incremental services revenue from acquisitions.
• Gross profit was $4.9 million, or 26% of revenue, in the fourth quarter of 2021, as compared to $1.7 million, or 18% of revenue, in the prior-year period, representing an increase of $3.2 million, or approximately 8%, driven by higher-margin services revenues tied to an increased focus on building turnkey services.
• Operating expenses were $5.6 million in the fourth quarter of 2021 compared to $2.0 million in the prior-year period, representing an increase of $3.6 million. Meanwhile, in the fourth quarter of 2021, the firm’s net loss was ($0.6) million, or ($0.06) per share, as compared to a net loss of ($1.1) million, or a net loss per share of ($0.24), in the prior-year period, representing an increase of $0.5 million, or $0.18 per share.
• Adjusted EBITDA was $0.5 million in the fourth quarter of 2021, compared to $0.2 million in the prior-year period. The increase was driven by growth in revenues and gross profit and partially offset by increased operating expenses which include the Company’s ongoing investment to support its European expansion.

Full-Year 2022 Guidance

• 2022 full-year revenue guidance of greater than $110 million, including urban-gro’s base revenue as well as revenue for partial year contribution from our pending Emerald acquisition.
• 2022 full-year Adjusted EBITDA guidance of greater than $5 million, which includes partial year contribution from the expected Emerald acquisition.

Emerald Construction Management Acquisition

On March 14, 2022, the firm inked a definitive agreement to acquire Emerald Construction Management Inc., a 37-year old Colorado-based construction management firm providing comprehensive construction and supervisory services, for $7 million.

The acquisition extends urban-gro’s services into early-stage conceptual design and planning, and it creates the industry’s first fully-integrated architecture-led design-build offering targeting the cannabis and food-focused CEA sectors.

UGRO May Be Underappreciated 

According to Alan Brochstein, from New Cannabis Ventures, urban-gro is an ancillary cannabis company with high levels of cash and low debt whose stocks are not receiving enough credit from investors.

As of the end of September, urban-gro's cash balance surpassed $40 million, ahead of making a $2.5 million strategic investment. In addition, the company has a share repurchase program.

During the first three quarters of this fiscal year, urban-gro generated a slightly positive operating cash flow with a current market cap of roughly $137 million.

Image By Ilona Szentivanyi.