Urban-Gro (UGRO) Q3 2024 earnings summary

Executive summary

• Revenue for Q3 2024 was $9.9M, down 50% year-over-year, mainly due to a slowdown in construction design-build contracts and commercial services amid macroeconomic and political uncertainty.

• Net loss for Q3 2024 was $3.8M ($0.30/share), flat compared to Q3 2023; nine-month net loss improved to $9.3M from $14.8M year-over-year.

• Operating expenses decreased 20% in Q3 and 26% for the nine months, reflecting cost reductions and elimination of incentive retention plans.

• Adjusted EBITDA for Q3 2024 was $(2.4)M, an improvement from $(1.7)M in Q3 2023; nine-month Adjusted EBITDA improved to $(4.7)M from $(7.3)M.

Financial highlights

• Q3 2024 gross profit was $1.3M (13% margin), down from $2.4M (12% margin) in Q3 2023; nine-month gross profit was $6.7M (15% margin).

• Q3 2024 revenue breakdown: Equipment systems $3.7M (+$0.7M YoY), Services $1.9M (–$1.0M YoY), Construction design-build $4.2M (–$9.3M YoY).

• Cash at September 30, 2024 was $1.1M, down $0.1M from year-end 2023; negative working capital increased to $11.9M.

• Line of credit borrowings increased to $4.4M as of September 30, 2024.

Outlook and guidance

• Management notes continued macroeconomic headwinds, inflation, and political uncertainty impacting project signings and customer spending.

• Strategies to mitigate inflation include cost reduction, alternative sourcing, and passing costs to customers, though only partially offsetting impacts.