When design-build provider to the cannabis industry Urban-Gro ( UGRO ) announced its financial results Wednesday for the full year and 4Q 2024, the company's stock price plunged to $1.4 - a 23.42% decrease in just 24 hours

The report indicates a net loss of $18.7 million, an 18,2 percent increase as compared to $15.3 million in 2023. Adjusted EBITDA was also increasingly negative at 9.7 as compared to $3.9 in 2023. Revenue YoY increased $6.7% from $7.1 million to $67 million.

The company attributes the hurdles to shifts in the market and a backlog of $110 million.

FY 2023 Financial Highlights

Revenue of $71.5 million, a 4,5 million increase compared to 2023

Net Loss of $18.7 million

Adjusted EBITDA increased from negative 3.9 to negative 9.7 million

Q4 2023 Financial Highlights

Revenue decreased YoY from $15.0 million in 2024 to $17.3 million in 2023.

Gross profit was $1.7 million, also a decrease YoY.

Net loss was $4.7 million, or $(0.40) per share.

Adjusted EBITDA was negative $3.0 million as compared to negative $1.7 million in 2023

Management Confident In Future Positive Changes

Chairman and CEO Bradley Nattrass regarded 2023 as a "transitional year" in which the company deployed a diversification strategy, following shifts in the market. He said an increase of $26.4 million in revenue during 2023 came from construction but was offset by a significant decrease of $20.7 million in equipment systems revenue.

While this shift reflects a continuation of significantly reduced demand in the CEA sector, critical comments about the ongoing state-level regulatory delays in the license-awarding process were made, as well as the lack of movement on passing key legislation impacting the industry at a federal level.

"We continue to see strong momentum across multiple sectors and with the increased productivity in our services delivery to start the year, we expect to realize margin improvement as well," Natrass said. "Our guidance implies a strong year of organic growth based on the latest estimates of project timing and the impact of our streamlined operating structure."

Management added that many projects were delayed and pushed into fiscal year 2024 and is confident in the future profitability. The company expects the backlog entering 2024 will translate to a revenue increase of more than $84.0 million in 2024, representing growth of at least 17.4% and Positive Adjusted EBITDA for the current year.

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