Urban-gro Reports Q2 2024 Revenue Decline to $17.9 Million, Net Loss of $3.0 Million

urban-gro, Inc. reported its financial results for the second quarter of 2024, revealing a total revenue of $17.9 million, a decrease of approximately 3% from $18.5 million in the same period last year. The decline in revenue was attributed to a $1.3 million drop in equipment systems sales due to challenging market conditions in the Controlled Environment Agriculture (CEA) sector, alongside a $0.7 million decrease in service revenue. However, construction design-build revenue increased by $1.5 million, reflecting the execution of a new contract in the CEA sector. The company recorded a net loss of $3.0 million, or $0.24 per share, compared to a net loss of $5.8 million, or $0.53 per share, in the prior year.

For the six months ending June 30, 2024, urban-gro's revenues totaled $33.3 million, down from $35.2 million in the same period of 2023, marking a 5% decrease. The company experienced a similar trend in revenue components, with equipment systems and services revenue declining by $1.7 million and $1.0 million, respectively, while construction design-build revenue saw a modest increase of $1.0 million. The gross profit for the first half of 2024 was $5.4 million, consistent with the gross profit margin of 16% from the previous year. Operating expenses decreased significantly by 28% to $10.6 million, primarily due to cost-cutting measures, including a reduction in workforce.

In terms of operational developments, urban-gro's total assets increased to $55.0 million as of June 30, 2024, compared to $49.5 million at the end of 2023. The company reported a significant rise in accounts receivable, which increased to $28.9 million from $21.6 million, indicating a growing backlog of uncollected revenue. The company’s liabilities also rose, with total liabilities reaching $49.2 million, up from $39.4 million, largely due to increased accounts payable and contract liabilities. The company’s employee headcount has been reduced as part of its strategy to improve financial performance.

Looking ahead, urban-gro's management expressed cautious optimism about future performance, citing ongoing efforts to enhance liquidity and operational efficiency. The company has taken steps to reduce costs and is exploring options for raising additional capital, including potential equity offerings. However, management acknowledged that the CEA sector continues to face challenges, including tight capital access for clients, which may impact project initiation and execution. The company remains focused on its strategic initiatives to navigate these market conditions and improve its financial standing.

Overall, urban-gro's financial results reflect a challenging environment, but the company is actively implementing strategies to address its operational and financial hurdles while positioning itself for future growth in the CEA and commercial sectors.