UGRO - Earnings call transcript Q1 2022

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Operator

Hello, and welcome to the urban-gro, 2022 First Quarter Earnings Conference Call.

As a brief reminder, all participants are currently in a listen-only mode. [Operator Instructions] Following the presentation, there will be a question-and-answer session for those on the teleconference line. Please note that this conference call is being recorded and a replay will be made available on the company's website following the end of the call. At this time, I'd like to turn the conference call over to Dan Droller, Executive Vice President of Corporate Development and Investor Relations at urban-gro. ahead. go please Sir,

Dan Droller

thank by joining Chief Brad Akright, and and will Executive Today's be Dick Officer. Financial led Nattrass, Chief you afternoon us. for call Officer; Good Chairman and

utilized EBITDA on GAAP. should open prepared our call a for prepared metrics, I'd as that our remarks, non-GAAP to will remarks not this adjusted the Following include up accordance made discussion line. in teleconference urban-gro's of and during we for to items financial the Reconciliations Relations loss in future questions remind risks available be backlog. our uncertainties. our statements listeners These of like those substitute call including this On section will accessed results SEC, may adjusted and in filed forward-looking and XX-Q involve EBITDA be with the our management's or website. of are expectations GAAP we intentions, net beliefs, Form and projections. call, release Investor our state and are the press These can to from with

Forward-looking on Harbor based Provisions materially. statements Federal to the and are the and are Safe call Securities Laws current results on could of expectations actual differ pursuant urban-gro's made this

result, undue forward-looking place As should reliance any on you a not statements.

the results factors documents are documents in forward-looking available in to to the cause website review and carefully. encourage Commission's you Investors by These on Commission. company's urban-gro of website. Securities and and Exchange periodic Exchange these materially that of filed contemplated could reports statements from these Some the the differ discussed actual We such are with Securities section the the

Investor Relations may release at Lastly, the section on ir.urban-gro.com. earnings a website copy press our found of of our be

to our would call replay for will the section the available call Brad, to turn that, like I Chairman In and over With Events site. CEO. be addition, a IR on now today's webcast of

Brad Nattrass

our XWR financial quarter as well expectations the thus doubled acquisition record the more Driven second and existing EBITDA. by Thank results, record services nearly offering business, is our service revenue be in-house for waterfall seventh quarter the call far detail, it Management with the diversifies a immediately including the services sectors the our adds of and as Construction our further in our opportunities in the QX quarter. Management almost acquisition. business, and incremental of Ag another turnkey providing urban-gro, vision, with closing of of clients to and we're call earnings. our transaction continue to this start, future also I'm we'll quarter off a firm Dan. questions. single of significant of of on to execution incredibly solutions. design platform. transaction capabilities experience integration developments up on versus known offering stream vast to overview architect strong Controlled construction will a then an simultaneously for full expertise providing key our CEA, update yet altogether will procurement of suite offerings expands our and XX% only and of and today's represents fulfilling Emerald of believe are with your only further design couple revenue growth the marks our CEA. revenue outside company. excited the complete to welcome. begin include XWR, Not adjusted services XXXX exceed build value-added Construction from also and then weeks quarterly few responsibility not also firmly the results our in bolsters it complete point pipeline, of by accretive updates afternoon, We include la I'll as our drive review continues of build the but or celebrated A and project management we The a very and milestone Good organic revenue With consecutive a and service, significant as of everyone, this to positive EPC Dick you, full ago, into an services. assets to our share first deep our pipeline carte vision performance the design, It XXXX. for equipment that and revenues Environment open engineering,

new already were hearing. As exciting been close, process to smooth our midst announcement several a projects of and partnering the the prior have we the integration that in look months to respective over the commercial teams some forward next of

operating we recurring advantageous training, offering, service-oriented whole, high-touch, operators the building base focus ongoing our utilizes it's highly branded fundamentally gro-care, and to to deep strength to We're company our continue on our of programs. people. revenue offering assist the also the comprised remote troubleshooting, provide a services with out services experts. with maintenance knowledge The and remote For the on-site and monitoring facilities, that company expertise extremely in-house them bench behind model of managed a as managed both

With of CEA, the sectors It IP. these remote crop approximately They and who employees, our the specialists of plant immense history have health value our define engineers, superintendents of the are experts respective their regard little addition cultivation strongest growing projects is working advantage. And XX managers the horticulturists XXX highly multiple provide XXX these holistic those and and urban-gro’s on in sets and designers, more the are clients whom collection scientists to on-site competitive of which a Emerald, are a integration than or acquired strong and that clear, a from project over it's areas. skill to we care now experts of we and expertise said that architects, types. indoor industrial within

a for quarter a capabilities company. revenues our have of maximize adjusted little achieve EBITDA. seventh QX tackle quarter of the growth positive From of services XXXX. bring just which XX% achieved QX versus perspective, our projects We generated investment fantastic to adjusted represents which goals. million, $X.X first of and We positive approximately over their over best-in-class and financial their to $XX EBITDA clients consecutive of globally million, We cultivation marks a was quarter

We responsibility have foundation to service their strong aspects our results QX, spending of sheet in and only deliver continue growing speak operations. all includes to cash point to geographic the treasury a amid vertical of backlog farming after position environment of debt From proposition, a but a of we our and revenue food-focused of three This sector, a operating across through a CEA CEA's the date, health urban-gro’s level entering two, changing QX. stock further three, within base sector; over is success These And well. client-centric a the industrial which delivering expansion our we're ability focus million, within to areas; of it's only buyback single such million one, our growth of continued not perspective, diversification world-class as $X.X and balance of care and $XX maintain a growth million. and zero the in on key just $XX expansion expansion; service our on capabilities, client strong to not focused fluid dynamics. industry sectors value

expansion. geographic First,

is region EMEA on plan. the into expansion Our

than has growth of that employee Netherlands, drive will be this in in vertical markets, and cannabis We of and Managing continue the who we'll hiring Based serve long-term our to the individual food-focused European soon in on Director strategy shaping and help the in core our will farming and build key Operations. experience the and the of automation, announce decades more he'll I'm horticulture invaluable region. two presence as in our European-based us confident a

conferences events, terms in of further, conferences, presence and progress In and Germany, in Dubai, to-date trade at and by leading visible The so global and in attending, presenting, also including one of UK, exhibiting signed horticulture key at be EMEA, with the Israel, to industry our far Israel. the in the we in XXXX Portugal, Netherlands. We've continue shows expanded in exhibiting additional contracts Macedonia. Greentech June North near-term Spain, we'll our in And

and second urban expansion ag more of farming. focus is specifically, controlled within the Our food-focused vertical sector area environment

and services our Our agnostic. the help capabilities to procure equipment plant we

So, into a entry working the valuable with world great one has in point the most crops of produce. given us

to sector North American strong the has European that seven signed in and markets. end, contracts the farming our indoor To see immense project and both We since capabilities five momentum North with food-focused have indoor America. vertical the team in start service of XXXX, operators

with processes for design provides project Urban their coming quants. for Farms our across XX In first expect this reported in to up all, their We urban-gro engagement before, months selection launch built Europe. as to Europe facilities they to deliver full as the turnkey exclusive site Health complete in

further opportunity Today, ago. construction and in strategic urban-gro in and to in-house that I'm the affirm well. is ancillary urban-gro our growth acquisitions, beyond health offerings suite care, vertical includes reflection build cannabis set of in further created broadly The capabilities our industrial sectors diversify to turnkey indoor proud approach, of year third providing provides CEA engineering, of the a with to and is continued and sectors. a of now value-added over final to within health utilized EPC, we've as service food-focused more This the sector CEA to I procurement, evolution of expansion expansion capabilities as vision revenue leader a and known a care full the bit industrial out area market urban-gro services also of farming, that services. global market. be the thoughtful Through diversification The and

crop to crop from we're to the specializing protection the of in planning indoor responsibility the where indoor enormous the dominate midsized of design in CEA and of sector expertise stage, with preconstruction CPA gro-care the title. provides an We're the with their build we point support only experience build regardless the aim clients CEA we're for offer asset global life through to market. grows. The in and there As in design facility. CEA sector, turnkey clients value horticulture, a And single added indoor the via to working an cultivation value company of global operational indoor of CEA and value-added our the EPC full-service

able accelerated As our a more of ensure an as EPC, across we capitalize to demand the as variances the in an relationships, to and on market acquired built Emerald to foster Construction market resources trust. larger businesses This our and By Management large multiple architects, as evolves where based sectors, to opportunities we EPC. engineers a serves have and continue cure we've cycles an with have address rationale. demonstrated in hours. our our corporate flow. expertise we clients that expanded a our adjacent keep From utilizing these are will and designers access markets, project and companies attribute has opportunities perspective, on us acquisitions now to and urban-gro execution completely ebb maximizing optimized fully The translated can importantly, these and and strategic XWR acquisition each allows allocate by efficient managers segment, teams diversification billable in we operational key as that

are the projects client will talent. But of able we're to We the attract changing very in best environment array team. talent bear amazing having cognizant run, and growth overhead. wide in of helped run, labor long-term and support bring access our a us team long our through to absorb the interesting diversification to challenging In for this the short and

the also to mindful macroeconomic and quarter, uncertainty but also current environment, had to the specific in industry. pressures, relates look, aspects great broader XXXX, including for it As year be want inflationary a guidance labor of full the we've tightening market cannabis of we

While we including in health CEA, elevated immune our on commercial and factors, and in care solutions these our levels we're agnostic, in XXXX, interest not remain markets, strategy crop remain indoor, addressable bullish sectors. our to

our call; than annual greater how Dick. and ago segment, ecstatic this these expect impacting our and that monitor exposure are help of XXXX over closely our our greater we the to well. strategy, now come. last this adjusted than $XXX will, with and made evolved closing, any in maintaining and With earnings focused In We're or While the to our as that, guidance At one to turn, I'll that we've provided in we call shareholders will we're on two manufacturing million. the million rapidly EBITDA how quarters insulate and our company region, market us to the clients we continue $X partners efficiently we've factors reduce and which advancing point, over I’m months on to acquisitions year. and the years turn and reward diversification revenues

Dick Akright

Thanks, Brad.

of revenue financial was Our in the strategy and represents the systems XXXX. of underlying loss first Adjusted increase revenue first the Net million the million period. $X.X future percentage business. revenue will first in positive basis an Revenue a an tied new revenue, million year This demonstrate $X.X in $X.X strategic XX% of results million quality financial which another grow and net including acquisition revenue reported in built year to a increase to services million. revenue results The million million of associated or the growth revenue. $X.X Adjusted the in negative existing in by period, a the in initiatives, XXXX, compared compared profit, year $X.X and quarter attributable million increase primarily our margin systems of million The was $X.X representing of to compared profit of in improvement was of the increased the in prior services million $X.X increase EBITDA the the of period, cash a of our first points percent an momentum of increase is prior million our increase by the of a first record driven loss including XWR continue in was primarily meaningful from revenues. is way. of smart, was quarter year the of in increase operating EBITDA to was in contribution XX%. is of quarter to was growth approximately period costs a of in potential period flow increase go-forward year in by dollars quarter acquisition. increase the in revenue prior XXXX and dollars was entities This basis. and increase quarter We in $X.X generated continued which and to upon continue of quarter and The or the of of investments $X.X million. profit $X.X acquisition $X.X first driven or in year $X.X or the to Operating period. expenses on primarily a again the XXXX, that growth. XXXX, to compared increase $X.X $X.X million the prior systems evidence prior representing enhance revenue million of prior equipment to XWR, current July Gross XWR or XXXX, XX% to million equipment than $XX which services $XX.X an numbers services increase acquisition. million expenses headcount in offset of and in XXXX, growth to to an $X.X due This growth in at the gross high-margin the equipment operating in driven quarter were XXX expenses an end of by as clients support to driven XWR by gross compares drive with in and million

to Moving reported backlog.

of $XX XXXX $XX backlog of and comprised $X of $X million, to million was $XX Our million which XXXX, million total $XX comprised XX, XX, which of services of as of services equipment and March million, backlog December compared of backlog. million backlog of equipment was approximately as

$XX backlog March a XXXX. signed then there are materially. that the is that during a at sequentially While orders. period. generally as in lower amount end customers, on from recognition of We of orders now this quarter, XX, shifted from that quarter revenue discussed recognized dependent will the And our backlog, result of capital the XXXX, individual expenditure Because Nonetheless, and believe signed our our Backlog of we in periods out the by variables dollar reported customer to primary is a orders in factors above. fluctuate rapidly stipulated QX, it several environment. are made Revenue the XXXX million delivery two the we revenue expand. commitments continues orders signed can these change the influence generation of are entering of is by service transitory revenue as are believe although now, purchases Brad are believe several early for impacting we that for be to to we macroeconomic second it, of backlog that quarter this variables below anticipating our eye to the has timing close that be revenue on But is first as our clients as due indicated and keeping changing XXXX. relates

guidance intact. However, remains as above, Brad annual year our did full note

provides growth excellent flexibility position capital is is with Now $XX.X look QX, our of After turning our necessary questions. our are targets. M&A to call In in repurchasing Operator, million we experts. sheet, quarter, for concludes circumstances incredibly team no to this prepared please financial have and $X.X summary, structure That the macroeconomic market strategy, our additional cash manage and for including our past QX which to fuel pleased open our continuing the debt, remarks. of forward balance stock we us entering results million, we potential our while execute our with condition. to in the year, growing the

Operator

you. your we'll SCC be Eric Thank Please with this a conducting comes from question-and-answer Instructions] first Beder time, session. At question [Operator question. with proceed Research. Your

Eric Beder

a start on Good the afternoon and to year. congratulations solid

Brad Nattrass

Eric. Thanks,

Eric Beder

you What driving revenue in that here, on be to you forward pieces at guidance here what backlog the been that has forward the with additional key and the piece with where to other your increased focusing of spend should has confidence is. going When you? maintain look giving been add and terms customers we even going it marketing the driving the on

Brad Nattrass

levels, have our have increased. some and made we think I uplifted Eric, greatly service acquisitions strong

prior "Hey, XX to with contact work months asking facility service start-ups. clients together? we We're to clients, months, phenomenal hello, delivering us, and We making can probably have our we're initially XX -- they're

clients, not with work making share long help But lot avoid best methods we or a should efficiencies manufacturer. case they road have with to our mistakes, them We We're a that their on, for a learnings use. manufacturers. of facility

able share procure with we're specify and a to also we systems. integrate each solutions variety as in So them category of equipment

supply just over example I XX allows have chance extend. our think that patch it's with us So issues. that organization months, the is in to One theirs to relationships multiple chain

tremendous the commercial talk then, do well. owned with And as you projects our far balance of as we've old But because cooling build from allows organization, it's we've taken that strength three, industry versus months our Emerald, in chain able in avoid earlier, six strength if and it with also acquisition engage balance upside a guidance they've the an these sheet, now on the organic great me includes period client our supply to Emerald our us there's space management. could, they prevalent as seven eight centers, hear are learned -- of sheet mechanical CPG the take short To they think balance second the Emerald that we're companies in distribution we're many little design months or issues. that gave, had more touching okay, standpoint, And of we equipment that and clients this of helping we've urban-gro. now are. about done the process that just is going than by before with to XX-year I that of a sheet, relationships industries. the more we're question, to bit family the in job an job your racks new opening or And what systems are answer quicker and company, part but construction

that and it's the we’re assets, that are and about that of can is the projects CEA of across So maximized as sector, but other industry flows. course, our and efficiently that because focused engineers business our billable our designers, many diversification architects key we the using hours ebbs ensure on talked I majority,

Eric Beder

Okay.

Brad Nattrass

get all of I the answers? Did

Eric Beder

think I so.

Brad Nattrass

Okay, good.

Eric Beder

it the QX the you Emerald, No, include Because not end you of at not did I think anything where -- you own Emerald? that’s it. Did right? backlog did does from

Brad Nattrass

is Yeah. correct. That

job But months in it's on this over we great $X the point very to eight equipment, contracts, turns and to quarter. if doing talked QX said the million of million. last a and decrease, the Eric, right to $X look we which we down out our On the million right, backlog, at $XX eventually, little backlog, in And sign the $XX course, And is it on services And that at did XX% million. the contracts the when with plus are service future we've a quarter end into component, from important you QX backlog as service a for business. equipment before, to focused of continue we're of it it here something year down and indication it's road. increased

finding when of timing. comes equipment to and a it's it However, equipment just contracts, matter

the quite following of And for quarter sometimes, the time can quarter-to-quarter important and those it's keep an ebbs flows. contracts But easy. we look on period backlog that push I sure into over how focusing think at and see extended to

Eric Beder

good year. Okay, rest the of luck for the guys,

Brad Nattrass

Thank you. I appreciate it.

Operator

Your question your proceed Anthony question. next with Maxim. Vendetti with from Please comes

Anthony Vendetti

you. Thank

follow-up a and of additional bit little a question. then I had an on the Just backlog,

of had obviously, from And revenue a just now, you of a revenue beat that is what Thanks. terms and feel of around based in quarter, as bit kind be give backlog up that you a able here. revenue. were you a in second you color from it a a current recognize in way decrease. on or Do we're mentioned, this were deals as of signed was Maybe the little the just thing what beat quarter little pull-forward would to pull that more backlog the bit timing more you did So, to that you able little helpful?

Brad Nattrass

Anthony. Sure. Thanks,

trend. overall So demonstrating first is of revenue definitely all, an

contracts quarter million, two will it's business one the backlog of QX, would this that -- with indication quarters. we're signed backlog and the trending because be it’s at shift clients, that a adding quarter, exceed At to the we equipment each of services in up fill our million, end of is our direction. hopefully able end new increases, As in good right $XX to typically $XX back that

ship ship and the of And but side is would strong QX, that weeks, if and did when So the equipment we sorry, ready QX that the into the line, equipment remainder again, back is that indication we the in expected. have equipment in equipment QX, But and signed side, on on the that contracts good, we'll -- there in wasn't confirm supplier is will is financial when to a if a manufacturer all can quarter. or a push but client timing. or sometimes ready push few that also time

Anthony Vendetti

Okay.

So, before maybe me another question. that to takes my -- that to question last I get

So, then. about pipeline maybe talk

So to grow level they're signing is your where the so you but customer/dollars, not backlog, the pipeline and contracts, that see but of customer quarter? of interest close yet, maybe first part in they're did haven't

Brad Nattrass

a confident our on some industrial future the in working quite what couple now of and Emerald so we've it, recognized in healthcare and space about pipeline, outside I backlog confidence of gives in for -- build been numbers how months both in our question, is design pipeline It's call inside future projects with as but well. in side we report also pipeline confidence, the very the earlier Anthony. although And cannabis, food CEA pipeline, and a therefore, don't and us course, we're great And the revenue. mentioned CPG, the

Anthony Vendetti

Okay.

and... -- So

Brad Nattrass

to confidence pipeline gave That maintain debt. the confidence the us that in

Anthony Vendetti

Okay.

backlog. you trending your gives pipeline the confidence in So pipeline trending the you in up, confidence directionally, have that's the which

Brad Nattrass

correct. is That

Anthony Vendetti

Okay.

And so…

Brad Nattrass

ahead. Go sorry. I’m

Anthony Vendetti

No, ahead. go Yeah.

Brad Nattrass

early backlog acquisition have of acquisition and in this with the services architect XXXX. QX from see the Management Construction firm the the of can the success increasing. that the shows with Emerald And CEA It of of -- they pipeline You sorry, for revenue and have as the of well. us -- side inherited track a to that opportunities as outside There's waterfall both lot recurring revenue CEA. projects they we've revenue that on waterfall and in now well,

Anthony Vendetti

update was the there Okay. business that the on business bit at farms. urban Good. an Is particular due European this or vertical that on farms, that point? last war any the impact in to Is And the agreement just little health for a Ukraine hold? on regarding question

Brad Nattrass

forward, it Yes, it's didn't give but or as Director to the in it's two-decade-plus a moving well. Netherlands, our to that's acquisitions we office number than investment for taking deep definitely the not hold, portoculture automation aggressively facilities we anticipated, announced Managing that [indiscernible] definitely opening experience longer building last out fact But with look QX the we on year. when and are or why for and continuing choose hiring a forecast a team in in horticulture service that there,

So good strong that a that, believe it's will good a strong opportunity -- that blossom. it's to we begin indication

Health and sites in Farms have we those they in They with facilities. multiple the multiple at end For Urban the users. signed looked deals design of then then countries full themselves, step build the and do

as in and great step first maintain I and So it, in forward initiative Europe. soon for as past I I've a our signed committed definitely that we contract, great urban-gro we'll announce the a Anthony, because think, it's

Anthony Vendetti

I’ll queue. it. back the Appreciate in Thanks. hop Great. Okay.

Brad Nattrass

All right. Thank you.

Operator

from Global next Grey Aaron Your proceed with question Partners. Instructions] Alliance [Operator Please question. with your comes

Aaron Grey

Good and thanks question. the for evening, Hi.

So first one me. for

at you a have CEA, on talk like the you've can reliance think diversification do can you about right forward little Just mix the looking about I to about and maybe would that you mix some acquisitions, had that beyond talking bit today. on you're cyclical. just Obviously go build-out, want which given be how a

back Thank M&A you of potentially plays how off diversification? the utilize you. how of buyback $X of just capital you it's repurchases to and how M&A for versus especially recently think stock and diversification that look for So then the that, about into kind million

Brad Nattrass

of Emerald, far first these service relationships it architecture, it guess, business so the we've didn't made acquisitions then take it's could Aaron. you profitable companies, regardless, Dick for portion. engineering, number the same two in you, Thank when had on didn't we the part, we is was well-known and CEA will construction margin – material. to I'll type material the the or to mainstream, pass made I'll the the three that management Aaron, brand addition stock we EPC buyback it as the And partnership mentioned, their last non-CEA, have while chains, had in down year, businesses now be shut wasn't acquisition or majority group, a I groups feel because our the businesses. I so like built outside, with, that Emerald, more group, CEA, of an of hotel relationships completed strong And as company, is the year if until model. they've in tri-factor, launch CPG XX-plus and that healthcare until with they we want also the there's a profile of We that material. the family or of really now the

progress breakout In non-CEA, I would would early I year's year. of for terms or less this a opportunities as future down that significantly, percentage probably But into in definitely But business. XXXX, in the and cannabis see nail don't non-CEA between XX% that of both vertical beyond, now I and design say, farming probably changing it's this it's bidding that CEA little bit say, of build the to of because and we as well. we're on

because by Aaron. acquisitions have companies. not done are growing. won't accretive percentage then synergistic, we We employees. And for either, we're change globally, an and the markets, The And the able client XXX aggressive of much both service contracts sides still mentioned So, rapidly these appetite bringing word don't entering demand. we're new today, also on, to that feel sets skill access I perhaps we're have profitable

right and open for have job dozen have two said also XX engineers. well recs as to that now We architects XX

or the on, to do from talking take maybe add us. if meet front it right like, to Dick, about the buybacks. in we're demand now want there and you So hiring of you'd

Dick Akright

way the the an unique of standpoint therefore, on be reducing we shares sure. a of protecting the where process the some of kind effect the we shareholder good basis, acquisition the knowing from outstanding complete. Aaron, standpoint to buybacks, with certainly, and in of of was outstanding things, from a basically acquisition once shares, just of going base from Yes, the at were net standpoint And a the that the opportunity, were opportunity the maintaining looked

doing close of we stock and availability treasury the we to ready as out those make was, where and the acquisition, I said, I that have that given like saw the unique repurchases. it of marketplace, price to of share when kind that a So, And kind then shares, were acquisitions, opportunity things just cash, the stock, then have but part of issued from standpoint it earn-out, total outstanding shares. we all the of contingent as when they part really when shares, which issued our of where the of were kind we we part then and been maintained the part

our of basically issuing from base, those kind from standpoint from to So, shareholders of standpoint, shareholder good then of shares having protecting any really not pre-acquisition. kind and our dilution the

thought it. So of that on was really basis kind a

Aaron Grey

Great. Okay.

really think That helpful. I great color. was

about on but through been touched call, Second me. of I players. might even I have it couple question other we announced a today XXXX an know this hydroponics talked last previously for tougher because more environment West those little a some But know I and are were to including that, have states. guys Coast from you insulated other states exposure bit expected. about Michigan that didn't you otherwise. talked than

at clients to how U.S.? the just bit some to cost with I off backlog you're down also the new specifically coming And environment go have build-out online, a those looking given of quarter, the XXX, you just want in potentially modes just XXX this adult-use like the of states then opportunities. So new back within and the coming the roughly or processing. bringing licenses new the standing are Thank Jersey, where they conditional you Where capitalize sure in on applications cultivation those you. mostly to with make New market and

Brad Nattrass

company, an somewhat The services What we Aaron. And something reach. are critical gives we that, you're it's in company take us a so the service company. building quarters insulated. a messaging, cannabis are We're also I'll fact ancillary global a right, much larger that ahead. our than as

travels IP of as a levels Emerald specifying, integrating a dispensary. But a on in design-built and a Both procuring in also and manufacturer, work we or and full well. all equipment, providing our XWR not the services wholesaler of well. on focused dispensary. variety offer And U.S. now different we're and client distributor. dispensaries very also to We're Our solutions facilities

licenses the in So the a the distributor right. we durable on But clients year to states after handed just fact the we're a go England, we're transactional a don't the being goods basis. have Midwest, to to that and the doing We've out. prior our sell not new we those Northeast, in New opportunity in working US been growth jobs the our market,

they right They the are Our clients what's new clients -- targeting. and they state or we're the the a operators as dispensaries new will US. the MSOs in that be built regardless happening beside award expand. are in those in and of the And that's single-state licenses facilities state. those And

team You marketplace, beefing now. well. markets we're full up pushed entering European the which in right take European pandemic. to model it wasn't enough the mentioned The that earlier momentum have pause service the the operating And cannabis in the European pandemic. now a countries There same the space model over delivery as during to Europe. in we're And I there

and so of coming that of excitement Europe. globally companies And lot for have and a the services farming demand a we the that, in facilities. XXX vertical US then there's lot And finally, and they're those of the from both out there's now food

I've few So me well. building from maximized It's facilities great hear a assets. and those staying for the the business hours inefficient life the clients messaging times job. to large and and as lot it's we're a that a extremely mentioned having doing having managing that part It's a -- diversification our billable of be close not will of you

the us use next we time as they go so well. And

So but I answered want you that to fully me the helpful? feel, on Aaron, question, I to is Do add end there? back your

Aaron Grey

into was appreciate I’ll back and queue. great, Much that No, Brad. the go

Brad Nattrass

Thank you. Awesome. Okay.

Operator

Des comes with Capital from question. Eric proceed Lauriers today question final with Group. Craig-Hallum Please your Your

Eric Des Lauriers

quarter my here. solid taking congrats for Thanks question and Great. a on

of, So kind spot a services, bright quarter in both, and here. backlog the the with certainly

Is two of quarter. business backlog quarters, the coincidental revenues of higher for a next It's that suppose past quarters backlog? that backlog the seeing in a bit the two kind equipment kind a past conversion of in the I housekeeping, we're converts just, to a Thanks. of backlog percentage thing reason the there compared to of, that of, kind at looking question structural conversion, here. any is greater Looking or like and

Brad Nattrass

Eric. Thanks,

Dan Droller

Dick. ahead, go Please

Dick Akright

least to to say now. Well, equipment to -- have, great was in converts Those standpoint revenue system quarters, so things the that won't the sales that two or the equipment in beginning we quickly the those in has a going quarter necessarily that was is times dependent a instance, into next observant. pretty HVAC, I next From that those -- that that the can -- influence next question of we lights see benching for yes, very Eric, And quarter. highly of times, lead we setting convert in But the backlog setting just it what will from which quickly. the into Those the period of on extent lead our and standpoint long the way revenue have backlog, convert are as do if and backlog. are taking type they in at type pretty or backlog the right percentage turn the revenue longer from backlog. a

So that's we first into the and that converted with some quarter part what some venturing saw lighting of in revenues.

a of the the percentage range in better time that. of that little of, at of standpoint of of in that unusual been the start XX% -- look next But But or period type was of at the It that of what just in in revenue from, kind the our nothing maybe from we backlog. period. from that's So bit was anyway, the it happened was quarter. kind of perspective, a gee, backlog became well, a backlog so clarification -- period on over XX%

flows So on that just kind of us. ebbs and

Eric Des Lauriers

backlog, we is so service Should then than convert And supply backlog issues in to there percentage HVAC no systems? chain the the of for higher a subsequent expect quarter there. services obviously, cement Yes. for general type

Dick Akright

with the on the that you're partly XWR because not quarter, historically material. obviously been backlog a any third-party services, with dependent then It of been higher vendor the that in of that of has really kind subsequent entities you us for it's with supply acquisition a the percentage to became revenues

don't long type as to with move customers and them but the architects service hit interactive go of a an of a you as provide, with that all to whether regard the from from then you of a So process on the giving that facility a customer forward little facility, can and to of of standpoint drawings some designers pretty of the with quickly, bit chain on certainly can wanting that have feedback it's equipment architecture side that do basis issues forward, things. moving standpoint the we the supply completing our

conversion. higher So a percentage that's tended to be

Eric Des Lauriers

respect with our in comments then to projects. I industrial-type diversification And -- specifically, guys terms hospital you of the Okay. appreciate XWR with provided that have and

those see more service do and the guys that product project you well? we revenue as hospitals of from understand revenue, or some should of synergies CEA I for potential revenues much projects, XWR In some synergies there So does. think these sales and industrial systems, pretty as type equipment only,

Dick Akright

service be focused. Eric, they'll

Brad Nattrass

systems the especially we're From irrigation at engineers of the project, controls lights, the don't more the but like any bring systems off-the-shelf an cater time, management don't general our mechanical or that engineering handle systems we [indiscernible] expertise contracting. in managing can and selling where environmental we our EPC this we've there. intentions to site, equipment risk building or want the products with construction to that standpoint, and and to We or custom cultivation design of built we have not take can distribution But designers culminate like construction GCs, is on and our environmental the of CEA all documents. require but

So is it for and strong specifying, and money and But good, one, the in and EPCs pays EPC in stock. integrating ease procuring in value-added that's food. the in expertise – that cannabis us

Eric Des Lauriers

Yes.

the Okay. Yes, I clarification. makes sense. appreciate

one Just can. more me, I for if

you've for on understand kind of overall reception so just the early street far there. days y. update had provide any I that gro-care? gro-care, could Thank But it's you So to here the certainly

Dick Akright

on take important. be company, mistakes also very the because shareholders and can fits to reporting where -- important training. question, want of in -- efficient it lot all And sure. a of I a to And solutions the definitely one trying to and material, adds staying so It's priority And needs. the to definitely this we under utilizing in and more sorry, build address to ways often it's value our roof, priority. clients, contact wait we'll our for help it our It going it's think but great them investment. it is business, the here. can't it this we're to fits a find business constantly perfectly I Yes, the -- making I that with services shoe additional but quicker, point, we're expertise client a is at to be all not to long-term it's be because, to for material and more But it here avoid only we're

Eric Des Lauriers

that. appreciate Thank I you.

Dick Akright

Thank you.

Operator

comments. questions. we That reach turn back call investors@urbangro.com the for for out additional any have Please questions now to Mr. to closing over Nattrass will is all today. I with the

Brad Nattrass

and your Great. and appreciate to chicken Thanks. course, interest grateful back for long-term I'm ongoing it all. for value delivering clients. shareholders dedicated of I’d [ph] our support. We're sustainable

If Dan you here ICR or your And have for Droller out to again, please thanks more a reach evening. time. internally. questions, wonderful Have

Operator

day. conference. all This you participation. Have Thank great today's a your concludes for

urban-gro (UGRO) 13 May 222022 Q1 Earnings call transcript