The Colorado-based food and cannabis grower urban-gro, Inc. (Nasdaq: UGRO) on Monday reported a record backlog entering its 2023 fiscal year and reaffirmed its financial guidance for the fourth quarter of 2022.
The company expects to enter 2023 with record consolidated backlog of around $87 million, a sequential increase of approximately $20 million from the third quarter of 2022’s announcement of $67 million in the backlog.
”We have demonstrated through our record backlog entering 2023 and reaffirmed fourth quarter 2022 financial guidance that we can continue to deliver growth in the face of broader market headwinds due to our integrated solutions and sector diversification efforts,” CEO and chairman Bradley Nattrass said in a statement.
The news comes nearly a fiscal quarter after the company posted a 32% year-over-year drop in revenue and a net loss of $8.7 million for the third quarter, which Nattrass at the time blamed on “headwinds within the cannabis sector.”
Urban-gro has attributed the revenue decline to “a decrease in cultivation equipment systems revenue…primarily reflecting significantly reduced equipment demand in the U.S. cannabis market as a result of ongoing state-level regulatory delays in the license-awarding process.”
The company is reaffirming its expectation for fourth quarter 2022 guidance, with revenue of approximately $17 million and an adjusted EBITDA loss of around $1.5 million. This would be a sequential increase over the third quarter’s revenue of $12.4 million.
“As we move into 2023, our team is aligned and laser-focused on scaling the company to service the increased demand that is evidenced by the signed contracts present in our record backlog,” Nattrass added. “We are experiencing continued momentum in our commercial design-build and services businesses.”
Ancillary cannabis businesses on the cultivation side have been particularly hit hard as oversupply has caused many producers to scale back on large operations. Still, more markets are opening up as the U.S. northeast adult-use markets have begun launching.