Urban-gro grows loss, prunes revenue

LAFAYETTE — Indoor cannabis agriculture engineering and dispensary design firm Urban-gro Inc. (Nasdaq: UGRO) trimmed its revenues in the first quarter of 2023, resulting in a growing year-over-year net loss.

Sales in the most recent period were $16.8 million, down from $21.1 million in the first quarter last year. 

“This decrease from the prior year period was predominantly driven by a $14.2 million decrease in equipment systems revenue reflecting significantly reduced equipment demand in the U.S. cannabis market as a result of ongoing state-level regulatory delays in the license-awarding process, as well as the lack of movement on passing key legislation impacting the industry,” the company said.

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Urban-gro’s net loss was $5.1 million in the first quarter of this year, down from a net loss of $700,000 in the same period last year. 

“Our first quarter performance is consistent with our expectations as we continue to demonstrate that the acquisitions and investments we made have created a more durable and uniquely diversified company,” UG CEO Bradley Nattrass said in a prepared statement. “We continue to see demand for our solutions in all sectors.”

Looking ahead, Urban-gro is projecting full-year 2023 sales to total between $100 million and $120 million.

“Our primary near-term corporate priority remains our focus on achieving positive adjusted EBITDA as quickly as possible. While we continue to focus on increasing our business with the Fortune 50 and Fortune 500 clients with whom we work as well as signing new turnkey design-build contracts in the (controlled environment agriculture) space, we are also continuing to drive operational efficiencies,” Nattrass said. “To that end, in the second quarter, we initiated a cost optimization strategy that so far has generated annualized savings of approximately $2 million, and we will continue to seek efficiencies where available. All combined, we are positioning the business for long-term profitable growth.”

Urban-gro’s stock finished trading Thursday at $1.30, down 25.71% on the day.