In a tumultuous revelation, design-build provider to the cannabis industry Urban-Gro (UGRO) witnessed a sharp decline in its stock value by 23.42% in just 24 hours following the disclosure of its financial performance for the full year and Q4 of 2023. The troubled stock plummeted to $1.4, signaling a significant setback in market confidence.
The financial statements portrayed a bleak picture, with a reported net loss of $18.7 million, representing an alarming 18.2 percent surge from $15.3 million in 2023. Adjusted EBITDA mirrored this negativity, plunging to a staggering $9.7 million from a hopeful $3.9 million in the previous year. Despite a modest YoY revenue increase from $7.1 million to $67 million, the company finds itself entangled in a web of challenges, chiefly attributing these setbacks to market vicissitudes and a towering backlog worth $110 million.
Unveiling Financial Highlights of FY 2023
The fiscal year 2023 witnessed revenue of $71.5 million, a tepid increase of $4.5 million when juxtaposed against the 2023 figures. The escalating net loss of $18.7 million and the deteriorating Adjusted EBITDA, plummeting from a negative $3.9 million to a disheartening negative $9.7 million, paint a grim picture of Urban-Gro’s financial health.
When delving into the specifics of the Q4 2023 financial performance, a distressing pattern emerges. Revenue spiraled downwards from $15 million in 2024 to a dismal $17.3 million in 2023. Gross profit also dipped significantly to $1.7 million. The net loss of $4.7 million, translating to a loss of $(0.40) per share, and the negative Adjusted EBITDA of $3.0 million further compound the company’s financial woes.
An Optimistic Outlook Amidst Turmoil
Chairman and CEO Bradley Nattrass reflected on 2023 as a transformational year marked by a diversification strategy to navigate the shifting landscape. He highlighted a revenue increase of $26.4 million from construction endeavors but lamented a substantial drop of $20.7 million in equipment systems revenue.
The persistent demand slump in the CEA sector and the persisting regulatory gridlock at state and federal levels cast a lingering shadow of uncertainty over Urban-Gro’s immediate future. Nattrass expressed faith in the company’s trajectory, anticipating margin improvement through enhanced service delivery efficiency and streamlined operations.
Despite numerous project delays straddling into the fiscal year of 2024, management exudes confidence in the prospective profitability of Urban-Gro. With a promising backlog poised to catalyze a revenue surge exceeding $84 million in 2024, representing a commendable 17.4% growth rate, the company projects a return to Positive Adjusted EBITDA territory by the conclusion of the current fiscal year.
