Cannabis consulting firm urban-gro, Inc. (NASDAQ: UGRO) reported its financial results for the first quarter ending March 31, 2024, showing revenue down annually despite reaffirming its full-year guidance.
The company posted revenue of $15.5 million, a 4% rise from the previous quarter but a 7% decrease versus the same period last year. The company cited fluctuations in its professional services, equipment systems, and construction design-build segments.
Despite the year-over-year decline, urban-gro expanded its gross profit margin to 20%, up from 11% in the fourth quarter of 2023 and 17% in the first quarter of 2023.
urban-gro said it also took actions to optimize costs and reduce G&A expenses, resulting in a $1.2 million sequential decrease in operating expenses and a $2.7 million reduction versus the prior year. Those efforts helped narrow the company’s net loss to $2.1 million, an improvement from the $5.1 million loss recorded in the previous period.
“Looking at market trends, diversification has most definitely assisted in insulating our business from the previously discussed headwinds that we’ve been facing within the cannabis and vertical farming sectors for the last couple of years,” chairman and CEO Bradley Nattrass told investors on an earnings call Tuesday evening.
Nattras noted that the majority of the company’s revenue, around 72%, came from commercial sectors. The remaining 28% of its revenue was generated from the controlled-environment agriculture sector.
The company reaffirmed its full-year 2024 guidance, projecting consolidated revenues of more than $84 million and positive adjusted EBITDA. urban-gro’s backlog stood at $99 million, mostly consisting of construction design-build projects.
“I’ll further note, that this does not take into consideration today’s rescheduling related developments, as there are still unknowns including timing that need to be clarified,” Nattrass said.
“In the interim, and while we wait for the rescheduling narrative to play out in the months ahead, we’re expecting to see steady activity and to continue signing both services and construction contracts and legal markets across the U.S. as operators work through persistent state-level regulatory and legal delays,” he said.
The company had $700,000 in cash and a $2 million balance on its credit facility at the end of the quarter.
