urban-gro, Inc. UGRO released second quarter financial results, revealing revenue was $16.3 million, an increase of 27%, compared to $12.8 million in the prior year period.
Revenue increase was driven by the accretive acquisition of Emerald Construction Management with a $2.9 million increase in construction design-build revenue for the two months in the quarter post acquisition, as well as the accretive acquisition of 2WR which was the primary driver of incremental services revenue of $2.7 million. These increases were partially offset by a decrease in equipment systems revenue of $2.1 million, primarily reflecting softer equipment demand in the U.S. Cannabis market.
Q2 2022 Financial Results
Gross profit was $3.5 million, or 22% of revenue, an increase of $600,000 compared to $2.9 million, or 23% of revenue, in the prior year period.
Net loss was $(1.7) million, or $(0.17) per share, in the second quarter of 2022, as compared to net income of $1.3 million, or $0.11 per share, in the prior year period included PPP loan forgiveness of $1.0 million.
Adjusted EBITDA was negative $(0.5) million in the second quarter of 2022, compared to $0.6 million in the prior year period.
Updated Revenue and Adjusted EBITDA Guidance
As a result of the dynamic macroeconomic environment, whereby inflation, supply chain issues and oversupply issues in the U.S. cannabis market are actively pressuring customers’ capital spending plans, the company believes it is prudent to withdraw its full year 2022 revenue and Adjusted EBITDA guidance, and diligently keep investors informed of significant backlog additions in the months and quarters ahead.
In place of a full year outlook, the company is shifting to a near-term outlook for the current forward quarter until visibility improves. For the third quarter of 2022, the company anticipates revenue in the range of approximately $10 – $11 million and an adjusted EBITDA loss of approximately $(2.6) – $(2.4) million.
Dick Akright, CFO, stated, “While we’ve shifted our guidance strategy to one that’s more focused on the near-term given the recent market volatility, it should not be inferred as a slowing of our opportunity pipeline. In that regard, we continue to have visibility to many large projects, several of which are with existing customers and other projects in new diversified industries. However, we believe it is prudent to position our outlook cautiously until improved visibility to customers’ capital spending plans emerges.”
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