urban-gro, Inc.

First-quarter 2024 revenue was $15.5 million, down 7% from $16.8 million in the prior-year period but up 4% sequentially from $15.0 million in Q4 2023. Gross profit was $3.1 million, or 20% of revenue, versus $2.1 million, or 17%, a year ago and $1.7 million, or 11%, in Q4 2023. Net loss was $2.1 million, or $(0.18) per diluted share, compared with a net loss of $5.1 million, or $(0.48) per diluted share, in the prior-year quarter. Adjusted EBITDA was a loss of $0.3 million, an improvement of $3.1 million year over year and $2.7 million sequentially. Operating expenses were $5.2 million, down from $7.9 million a year ago. Cash at quarter-end was $0.7 million, with $2.0 million drawn on the line of credit. Backlog was approximately $99 million, down $11 million, or 10%, sequentially. For full-year 2024, management reiterated guidance for more than $84 million of revenue and positive adjusted EBITDA; it said this guidance does not include any benefit from the day’s cannabis rescheduling developments.

Brad Nattrass framed the DEA’s reported move toward rescheduling cannabis as a potentially major catalyst for the industry and for urban-gro’s business, arguing it could free up operator cash flow for reinvestment in facilities and equipment. He emphasized that the company’s diversification into commercial sectors helped offset cannabis and vertical farming weakness, and said the firm is well positioned with a strong backlog and improved cost structure. His tone was upbeat but measured: he repeatedly said the company is being cautious, under-promising, and not changing guidance yet because timing and implementation remain uncertain.

Dick Akright focused on the quarter’s operating leverage: revenue of $15.5 million, gross profit of $3.1 million at a 20% margin, operating expenses of $5.2 million, net loss of $2.1 million, and adjusted EBITDA of negative $0.3 million. He highlighted that the company benefited from expense optimization and resource reallocation, with management targeting $8 million in G&A savings in 2024 and already realizing $2.8 million of improvement versus Q1 2023. On the balance sheet, he said urban-gro ended with $0.7 million of cash and $2.0 million on its line of credit, and added that the company does not currently see a need for new dilutive capital because the working-capital line of credit provides flexibility.

Analysts focused on Florida, the timing of cannabis-related spending, the cadence of 2024 revenue, backlog mix, and whether Q1 margin strength was sustainable. Management said Florida interest is rising, but big orders are not yet fully flowing; projects can take roughly 9 months to 2 years from initial discussion to completion, and the company said it will watch Q2 backlog and services signings as early indicators of a capital-spending pickup. On margins, management said Q1 was unusually strong but not a one-off, citing legacy-project clean-up, better internal controls after moving acquired businesses onto the same ERP, and improved construction margins; they do not expect Q1 margin levels to repeat exactly, but also do not expect a major falloff.