Earnings call transcript Q3 2022

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Operator

Hello, and welcome to the urban-gro 2022 Third 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 telephone conference line. Please note that this conference call is being recorded, and a replay will be available on the company's website following the end of the call.

At this time, I'd like to turn the conference 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

in include that in to Commission available press like made loss with the call to financial be our GAAP. metrics, These in of and remind urban-gro's adjusted adjusted listeners Form items be prepared release accessed discussion I'd a our should substitute non-GAAP of website. for Reconciliations accordance not section of GAAP our are and our our the net during remarks EBITDA Securities and this EBITDA from with our XX-Q filed backlog. including Relations and will Investor Exchange utilized results as can

we intentions, uncertainties. risks involve or this beliefs, statements are may and These On management's expectations forward-looking state projections. future and call,

based of and harbor Forward-looking securities laws statements the materially. differ to on are safe urban-gro's pursuant this are federal the results made could on current provisions call and actual expectations,

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

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

that is may copy of website Relations found ir.urban-gro.com. Investor and webcast on section a the replay for Lastly, our be today's call earnings of release press our at the

now turn will call the that, Brad. over With to I

Brad Nattrass

questions. and our results and call update your state welcome. And call on by financial Dan. open you, conditions focus then execution, vision. today's everyone, of to and in a providing This will an greater followed begin Dick our we'll including our be the market good reviewing on by results, the Thank I'll business, afternoon, detail,

that adjusted satisfied. we pleased not on revenue guidance and as I'm being exceeded both should that misconstrued While EBITDA, revised our be

directly expenditures strategy within the the While diversification our associated that and sector aspects capability paying results of by our of with off. were performance headwinds demonstrate our is impacted our cannabis one positive results the sector, decreased capital

diversification of as the Professional been a to record, year-over-year that XX is built $XX building clear over have million strength and able This both million, I'm with quarter backlog coupled environment. delivery project months, $XX dynamic that proud to of strategy we've indication model what our we sequential the is built a Services the of intended, working a an basis. This amid the as over and increase our we've model on end, of has last that company this accomplish been

million which of million, is standpoint construction touching achieved million, Briefly our quarter million of we million. revenue quarter Design-Build results, our revenues by $XX.X guidance increased third $XX.X above acquisition. tied being the by macroeconomic resulting increases with sector. to the pressure decrease further are year-over-year growth creating with to by both cannabis we cultivation delays this driven regulatory due $X.X Services million a increased and $XX our synergies and strategic positive year-over-year, $X.X Offsetting revenue Professional revenue state in $XX equipment third to on the conditions was from From

to $X.X the $X.X negative our to continue scaling of for and service third to was quarter of negative end million, XXXX high team our million. range expanding in million EBITDA European operations, our both guidance above the just adjusted $X.X we As demand invest into

us it as with and in to and continue And growth. sheet, is QX to cash entering balance million flexibility debt, agile remains providing pertains with the our investing it $XX.X of approximately strong, no

XX-person balance the DVO, CEA The why or and we're made that firm decision most now Van commercial current world-class sectors. to Dawson outlook I'll services seeing Texas experience indoor sectors we precisely acquire shift Orden to recent the acquisition, trends for is demand sector for increasing XXXX. on. based engineering expertise the and of considerable all in market in and our a our Moving in with the

This Design-Build all accretive and To and demand and immediate strong and DVO's Professional margins increasing both well engineering, Services, opportunities our further both for synergistic as and clear, transaction including our rapidly. provides sectors Professional existing Services increases is the our solution clients cross-selling and across leverage as both to turnkey contracts. revenues urban-gro be

plumbing services engineering acquisition bench clients. As allowed in transaction as includes deep construction company. structure as specifically, and immediately talent such, More this efficiently to a mechanical, us electrical, and of leading from team to our of this and expertise that adds safety been global our the and recruited leadership of and an engineering well suite the areas industrial prior to engineering new of had fire procurement a architecture addition depth add enhanced service

in several of teams together projects close, be in lie front that able our quick I'm opportunities working the see and that process integration immense months take joint the the respective that over to to experienced next Given smooth confident have of a we'll us. prior and advantage

plan region. that about build office the to and identified I'm CEA we excited both build Furthermore, opportunities have Texas. commercial in in a Located to out opportunity in we accommodate hub to the Houston, our

accessible only pool legalization influential a cannabis solid Not in an business opportunity work provide we the state labor that the forward determined to and is considered we there's as with, looking, have future. expect to but

our sector weakness material of our have our to the in impact a shifting promotes consistency the our bridge beginning effectiveness experienced, out and it strategy. thought executed the on Now business to effectively sector. and Not is and commercial cannabis beginning only truly development also is well success M&A financial performance positive here to

single aspects clients' and second of to Design-Build the a our our possess the we within point service the turn, across in in through levels Following provided of all add Management now launch the successful operations. acquisition Construction division Emerald quarter, responsibility of ability value of

the health our which is and Last projects These been contracts third of quarter. we from of has growing. qualified are over strong, of the million new launch month, contracts, in $XX announced pipeline signing successful Design-Build clients, industrial The and global a Services from of a including only Professional equipment portion packaged that for we are are any CEA, project Design-Build associated contracts the leading or separate enterprise, and and consumer goods signed. care

are demonstrates term. confidence and Design-Build engagement and in great gives for This client the to progress the making urban-gro growth and consistent continued the that investments has sustainable in interest our gain over as global business me capabilities are long expected momentum positioning that we turnkey

now XXX employees, enables our relationships. including that to team exceeds opportunities DVO, and continued the with acquisition, collectively address markets recent decade-plus-long on now combined integration adjacent Coupled of where our built larger us in we've market Emerald a XWR, and capitalize

to of have of these end-to-end team. with and penetrate Our of quality capabilities cross-selling new and well a opportunities the set set service high-profile customers we ability our markets both the to speaks experienced

I'll outlook. Now our provide

investment an 'XX For out negative by forecast loss million. in demand continued the be building we continue anticipate and to $X.X Very to fourth that expenses European operations. the approximately million revenues address our important quarter, adjusted rapidly to to meet our anticipated influenced is team EBITDA incurred $XX our EBITDA approximately the to and be adjusted

business to sheet, in balance stewards we our good invest continue we'll shareholders. of the and remain ways reward expect in We our will

sales and continued equipment material we expect demand accelerating supported result Design-Build backlog, we all increase XXXX, for in to recovery sector a Services solution is expect the sectors anticipated as next Further, our of that expanding by construction year, Professional a as ahead the operate. our Looking in that cannabis well. we

soon are Based opportunities intention, upon to from on our we we seeing cash client we our rapidly my will emerge as as backlog, flow we handle and investing importantly, constructive while in be are and as to scaled the pipeline demand be positive possible. to business, on sentiment remain and returning ready focused rebound. Again, clear well this strengthening as

have working future it In strategy only to position committed larger to of reduce continue for as this expect intended, we our risk, term, model insulating help for in to We investments we believe growth. urban-gro. performance us to new strong but the advancing and sector built the in closing, avenues we and is will expect exposure the not and continue short diversification term, have over long us and we to will result we made remain make the

In identify cross-selling to and and ahead, drive tangible for continue opportunities value we'll and our build the efficiencies acquisitions, of integrate quarters backlog in which clients for all shareholders. our towards our model, creating our geared is

Dick. Thank the over will now you. call to that, And with I turn

Richard Akright

in Banking third delays Revenue significantly was period. cannabis equipment reduced market industry year in million models in $XX.X cultivation $XX.X equipment movement compared decrease ongoing process $XX.X a financial driven This lack to Brad. decrease the of the systems million, the quarter well of awarding was of by key state reflecting in Act. million regulatory revenue U.S. as prior the as Thanks, primarily the of as such because license demand the SAFE of support level in XXXX

the was as by the $X.X well Management July This of XXXX revenue incremental with partially of decrease accretive Design-Build acquisition April in $X.X a of XXXX. revenue acquisition XWR in million increase Construction with in of offset of million as Emerald construction services associated

profit in million year million, XX% the a was driven margin compared XXXX of decrease construction $X.X $X.X $X.X by third period. lower-margin acquisition. Gross revenue prior in to represents XX% Emerald in profit The in This revenue. from or to or Design-Build gross revenue of the quarter the of was decrease million of the decrease the revenue correlating

an assisting third the $X.X onetime in in $X.X in and client million period, a attributable negative legal expenses, international representing the quarter million. to of including in $X.X situation manufacturer, increase enterprise prior quarter operating Operating to a compared the million lighting of $X.X development expenses nonrecurring $X.X million year expenses an and are million Included business transaction with disclosed in expenses, costs. million key third were XXXX expense previously $X.X with severance a

increased The the expenses was and in for operating in European to increase driven current company's both support by and growth. headcount demand investment continued solutions future remaining

year onetime investment, in the prior loss impairment which expenses negative income outlined was basis Edyza negative compared operating entirety This on made our third in of $X.X well a was of XXXX breakeven $X.XX quarter the $X.X of $X.X million net $X.X million as period. of in diluted or loss for a Net years. million or the share as prior includes the share per per million as a to above

EBITDA was strategic to of in adjusted lower a Adjusted decrease as in the adjusted growth. investments in period. profit the million well $X operating expenses as revenues million year XXXX, and The negative by prior EBITDA gross to quarter which third compares drive driven of and was EBITDA $X.X

of of nine months loss first to XX%. first the representing million the Net negative million reported XXXX, months net increase a and positive a was million For in we $XX.X EBITDA the million of $X.X $X.X negative period. total nine $XX.X $X.X million of negative a revenue comparable of to year XXXX, compared $XX.X loss adjusted compared million compared to was in prior an

our balance Now sheet. turning to

Our capital and in flexibility necessary structure entered condition. market remains provides to which while with cash potential including through macroeconomic $XX.X million fueling on the excellent of additional our no simultaneously our strategy, manage the M&A debt, balance targets. circumstances us sheet QX growth We

stock Additionally, urban-gro's an of during the third of $X.XX. share price quarter, we average per repurchased million $X.X at

reported backlog. to Moving

of and $X second total million Our the of backlog This of equipment of was approximately million systems $XX reported the million XX, construction end contracts. XXXX. of $XX of at is and comprised we the of million Professional as that XXXX, up backlog is million from Design-Build, September $X Services quarter $XX

in several the a and While that period. during are revenue signed from two primary change factors orders influence stipulated are orders backlog, signed the there variables recognized

the dependent backlog delivery these dollar relates in orders customers, customer orders. signed can to commitments Revenue made on amount expenditure capital of fluctuate Because is by then materially. individual our periods recognition of our

That please call remarks. Operator, the concludes open questions. our for prepared

Instructions] a comes with conducting [Operator Our line first Lauriers question your be now from question. the Capital Please Des We'll you. Group. of Thank session. Eric with proceed Craig-Hallum question-and-answer

Eric Des Lauriers

mix probably non-CEA enterprises win kind strong then to help Hey, on and And in between synergies see is this quarter. CEA those some the It's us answer. thanks coming a contract for go-forward contract a congrats hard you wins? know in. great those global the I question there. CPG you to and on of know bit mentioned a basis, questions. this taking of Can I And my understand difficult

it's in is you of the the but and way going forward? acquisitions say CEA help non-CEA know fluctuate, you diversification mean Thanks. would you've just what strategy I factoring made, But your I going sort can mix recent of us would maybe great. any be understand to

Brad Nattrass

Eric. Perfect. Thank you,

in idea good XX% concerned, in is of the forward. majority that other. looking $XX and backlog's us backlog about gives the as is That space, it's far that the million. As About a CEA cannabis, XX% is and of

about that's construction backlog number of For the Design-Build, million. XX% $XX of

again was look So third in for CEA still us at And is you really space, well. majority CEA, when the as to the to close continues majority cannabis with our quarter, XX-XX. but be it the

Looking the example, greater our that's at acquiring with for the nice company, that we some urban-gro the And of we sheet, balance -- with projects. them long-term projects of strength the decade-plus and increased with value from able provide to CPG a Management. Emerald client about of Construction relationship also part were a of this number discussed,

synergy. So it great was definitely a

Eric Des Lauriers

to Yeah. hear. great It's really

Like for? might else the diversification, understand list? out the be bench that you what disclosed have Thank M&A reach the sort the sort just services, of your guys front, feel do obviously, on On geographic bench help you for? you wish that is Can anything geographic us other Or maybe you. recently still looking depth, sort and still that you you're looking there services, you're of of DVO. there

Brad Nattrass

good, greenhouses greenhouses. and part CPA of Feel that that urban-gro's reach food-focused CEA and in with only is now. right Eric, with involved moreover, There's we today, built the that one have not out really

aggressively So at well adding in that's one geographies been for new we've European in area future. relocated as in quarter. the some to some third enter investing that We've employees we'd employees. over operations, sure, look Europe the our To

engineering probably some a now, countries in different smart firms the future. to with working be European right piece would strategically we're that at firms, but look So architect in

we as Also lot right I've clear, have more XX than now, it in And in mode right have evidenced U.S. a made positions the we momentum. with the It's market right full we're growth really open hiring. of now. backlog that We're now.

get whether to, be service ready trained efficiently in is costs job Dick QX being the clients our Our it cost people to EBITDA, them by alluded hiring, or so influenced bringing they're associated placement these as definitely with in beyond. and to

acqui-hiring model also don't -- and acquiring to acqui-hiring is move So companies right great contracts have stock right ability great for with also It the have we're that we we If the we're job that have done terms in and something maybe talent, a right for adds creating at, we've of for we some that these the earnout. right cash, the is now. that us. looking a services looking model

Operator

Thank you.

line of Brian next with proceed Wright Our question. from Capital. question Please the your ROTH comes with

Brian Wright

flow path a that on to a a bigger Thanks. of flow I positive? -- is guess, a about taking flow Congratulations such think in a cash cash quick have if positive rebound. to M&A back right of the stacked now have going soon kind flow cash back or we positive, to with comments that would of as future as -- possible. accelerating M&A cash think light about breakeven back getting Like to then get you lot things and conversion? I picture But with regarding you step like of kind on. to

do Could the that kind think dynamic. thinking way you of if additional picture, about just, big kind of to that you accelerate about But you're of it. how kind would it? that M&A Is

Brad Nattrass

at be Brian, Well, acquisition. about absolutely all of our service cash definitely we've all it We've and flow not would, it's we're companies positive right, it not at time been help, but looking them but it. with it. therefore, you're And been acquisitions, and how consistent how thinking that's would of additive

Brian Wright

just That's an added us. benefit Okay. for

Brad Nattrass

correct. That's

Brian Wright

you. back get in queue. That's great. Thank I'll

Brad Nattrass

Appreciate Brian. it. Thanks,

Operator

Thank you.

Research. the question. next with SCC line proceed Eric Please Beder Our your from of comes question with

Eric Beder

evening. Good

Brad Nattrass

Hi, Eric.

Eric Beder

Hi.

how the the -- we for be construction long And should about in backlog be realized projects thinking we be should is now. those forward? of revenue How to pieces going margins your is So of terms about other take versus pieces those significantly thinking this how the segment?

Brad Nattrass

Eric. Thanks,

As for vary. it time line, does the

commercial the on depending On the to six project. projects, the of nine size months,

and that contracts, facilities equipment doesn't I'd future months either. to Design-Build include But -- make it's our the really doesn't -- it Services Design-Build side, On backlog also and the for it's clear like Professional contracts any to of we any include CEA say, XX of there. as XX those

call So are to don't additive. are I them those want those but gravy,

backlog now future. in the of And to is good the expect so a indication what

so don't margins, we deliver would of look means We Design-Build the single that GC for to point we Design-Build, full we're GC. when maintain If so that the control, side. run hammers. swing through frame we're urban-gro, urban-gro -- lowest we facility As the don't in can client. But time the and the possible doing that at the running We urban-gro. a is outsourcing through have not

In that up equipment to the brought depending the the about also side XX% going Professional project. case, the XX% high-margin of the then X% margin is size be well. sales only on that is construction of and plus side to Services But with as

blended, our commercial XX%. So we'd a target XX and the right be around to Design-Build XX of large on somewhere margin CEA a would facility, blended months, be

see, -- going So overall revenue in Eric, increase -- it the because as dollars as you you're you're gross the to see at going going drive but see see on you in as a margin begin side, decrease see quarters a profit are strong to result, revenues we're those to to look will going substantially. is what up future a to

Eric Beder

do other when might you that at look Europe, that I where it? started know you putting out hearing started we're When more ramping you just now cannabis or and up goes into Germany there? Perfect. it do recreational think countries given you less excited there. you Are And potentially

Brad Nattrass

price the In market European in significantly food, it's a extremely interesting downturn energy, bit East market, traditional now, a of of Middle because right for In into going market. terms Europe, sure. the little raising That an the it's of it's horticulture. strong, of Yeah, multiples. is food

For right definitely in urban-gro, is the our side strength. cannabis now Europe

We building and going cannabis. their in look only importing. opening be that country the they have other to they're with Germany facilities countries fact past, import are not the to up, up not Germany and to Canada opening and In

working is in couple well. an Macedonia and the absolutely urban-gro now increase a as Kingdom also in Israel. but So -- there, missing also right The demand there. I'm Netherlands, Greece, Portugal, United

So months. seen couple the demand we've that last there's and of strong increase over demand,

Eric Beder

demand you -- what come optimistic seeing going And driving people to -- of finally, states are somewhat industry, at act -- the quarter. of seeing here how Who we more QX terms driving levels is are get the the some you online at when normalized was or a come And look these are in in that their forward? tough back going U.S., obviously, together? that is to are seeing or looking you are back to

Brad Nattrass

licenses cannabis XX business of increase. of of the the states, that use urban-gro's adult to results be means therefore, of be two expect election Missouri the states, couple built. working We're nights awarded less we legalizing, majority The and projects those ago, between Maryland, and will now is that Mississippi, right two on will facilities and and a east than

non-CEA to be variety up, As begins those And the which same. see its of now we're the exact states in QX of delays open because dispensers, a in of anticipate therefore, or aggressively being division, states And the staffing York, licenses, and next some is the urban-gro, division, commercial of like the state strength -- reasons, those the own facilities, state built. happen will will we'll for awards country. Each it's they our up. relax, year, like when that certain right New we Florida in delays in experienced the of QX

we'll and them. So we'll the supply to employees ready, team team XXX today ready have the growing, have

Another there, in I'll New is add one Jersey.

its in right growth mode New Jersey now. is

Eric Beder

luck Okay. holidays. Congrats the good and for

Brad Nattrass

you Thank Eric. too, you. Thank

Operator

you. Thank

Please with question McGovern of Group. your from next proceed Our line the with Thomas question. comes Maxim

Thomas McGovern

Hey, my questions guys. for touched just up some have taking question. follow you just I on the couple Thanks stuff a to of on.

those as guys the of want just diversification. individual top how that, pursuing searching on versus are of looking been down looking firstly, in members your of, your I like at CEA you diversified contracts at kind looking on you cannabis-related channels? internationally? up some you're at of versus have teams, also of successful breaking And teams, an of with -- you domestically to are how kind development So understanding get building it approaching non-cannabis, how for

Brad Nattrass

look then to worked We've look don't expertise we time backlog, pipeline look team, example, and backlog. this point. convert we for out additional We the at and each for our when expect bottom-up As pipeline that at CEA-specific for at that we strong in division. to

a individuals. discounted pipeline X it hire many have we Then to need in we down formula, backlog this equals amount X a and amount in to

in -- we're country. working the because has helped helped, remote to they At we've office. across That's point, able to different really So people have be don't in Thomas, us. absolutely hire specific this locales a

new with individuals when on use have individuals. And we for firm, also have. incentives very well placement they strong that to as we they others as able for we're join the of bring And connections some join look a through us, to

little and gives working train the medical and we or also that's -- architects. instead the more facility. them to bit work a cross or very for type time, hospital projects for same of a a a smaller on doing But hotel all on them, of important engineers excitement It

which a architect, cultivation facility. a it's an contains exciting larger versus For pretty box,

important. really So cross-training's really,

But domestically of get the service know will our in Design-Build full Europe, a it's client. terms searching we to offer deliver this carte. and level in for offer that to to a We architecture. la it's domestically cultivation get contracts we'll Maybe client. at services the design just high where And And side. engineering maybe either we or point, just

holding of part We or And them want great come whether not that make anymore. helping we to and it's client's in. offer. back. whether hey, it? a would do then It's job, path bid them hands, on they typically, about other like selling they more taking the it's equipment It's in ask, decisions, down we you the about and services to bring So this

now, on been there's focus that a of right not have facilities Europe In the side built. cannabis lot in of internationally, terms especially

that this you a these don't list eight I out look large can It's XX year no marketing. It's conferences. go attended, at different find to to to guerilla in clients. grassroots. It's there's getting We So countries. about know,

so years during And been time. Europe license clients on be awarded process. had in for a joined helping on that that team focused And acquire focusing or consultant our we're having full consultant two licenses

we've something the different a than it's what but like or done years the ago. five lot market, in the So U.S. it's in U.S. was where U.S., six earlier

And helping as us well. so that's bring success

year social it's social And quite we our website. new of invested driving side program, heavily in this the inquiries our through and marketing our campaign, opportunities and

So on having market go Europe. mouth more little the grassroots to more and much guerilla in of word over U.S., a in we're established a and

Thomas McGovern

very my And was answer. the that. thorough seeing see on helpful I'll bit DVO and a That Great. follow-up little question you Could hop or I acquisition? of elaborate the of before appreciate some queue. margin out last benefits the you're a then to expect from

Brad Nattrass

Sure. commercial. The I'll with start contracts,

construction architects full they the with the they -- where side now contracts engineers, with are opportunity have urban-gro in the bring management doing And handling were they bringing grow our were DVO. in -- So or giving Design-Build. or there's that some they to handling for example, now

That's And getting it's all for. we look a just shock.

show and to be our the we're let's the and dance Just able a them client then or let convince solution. team quality get why their good quality, our to leadership, of the let

opportunities So that multiple there's on side.

and able of us we reverse, relationships hey, the be and side more strong In on the space, responsibility. to say, engineering little to that a and design want the cannabis single thing, for it's point bit architecture same

if immediately. one to to wrong, on one something or there expense decline, high So individual goes focus fix deliver we're it company a to

in we're to Emerald that in those clients. with meet And case so bringing

Thomas McGovern

on this again you taking Congrats the my quarter. And performance Thank for questions. strong Great.

Brad Nattrass

I it. appreciate Thomas. Thanks,

Operator

you. Thank

Our Partners. next Alliance comes Grey of with Aaron from Global with your question the line proceed Please question.

Aaron Grey

for questions. evening. Hi, And good thanks the

I first is go of assurance on to wanted for question some pretty just gave capital one those to you I before. human positions color because good really mentioned, I to guys. important me, back the for open and you just want But know So you some

to know there risk is a XX So that's you're and I kind do of cross-training, any to looking creating higher also some more. bottleneck?

to deliver you. feel those have being So products you able going? some to in terms guys bottleneck your some to before find ability or personnel slots in confident guys of creating delay qualified have do fill you type to those of Thank you the of

Brad Nattrass

Aaron. appreciate Thanks, it. I

placement we us It in as firms that different in where So opposed internally, be specialized. area and of that firms hiring could to individuals does markets first and a multiple the offices, requirement removed job one we using are there helped to help, that's in foremost, did access firms work start so that slowdown.

work. are individuals And so open to

market, the office right Houston have DVO, XX-person offices firm XX in now. ability their to close to

in there's doesn't Houston we've there. great that strong it So a that construction be found area, so surrounding pool in have just and individuals will to labor in engineers. There office be engineers, architects,

at looking has locales really different helped. So

U.S. the in now. offices eight have we well As

I over those together portion starts on CEA outside as firms. not services roughly to so and the mentioned, to about of six the So eight like months it XX we're worried around bottleneck on the where our months, the side. I'm efforts in of backlog. side, It's Design-Build and offices XX not each to It's putting using high immediately. commercial

there. So have we time

the ready. and everything superintendents architects And that we're it's managers. site engineers construction sure in we to have So U.S. project now right to hot on And make but those secure quickly. are and can are talent economies, we side, roles then the high-quality it's doing

Aaron Grey

Thanks, That's helpful. really Brad.

I in of some urban-gro. SAFE your industry you of me, still for It's again could a guys question year. is just for you're think going. get states in uncertain commentary still in impact though people's for be more want plant-touching. outside with even of hopefully, the a capital few now possible of us terms potential lot by to into Banking past that bring uplisting. Obviously, obviously election of the end minds Second the past

sit you the know Cannabis on Roundtable. I

impact passed for So any of now -- kind chances end being urban-gro? be have session terms of of you. lame-duck Thank thoughts the we're that that might you might of potential year by in what included, to and in that coming

Brad Nattrass

to For for architecture in design impact, build the provide engineering it's or ready case the services being and clients. cultivation the sure, design,

they So there clients. when ready and be support they're are we to will funded, the

safe hours NCR terms meeting not confidence official with the of XX sort greater now, In of -- But but NCR. almost in even with flux complete, crops form the in XX% than of will another the state session this now are level election before meeting. and It's of the was the one board year. of a pass end of the or board today's the call there today still

will in them. single just, I at for end to uplift that the the ability provide in least state -- next operators. don't to had for I or them or think exchanges MSOs But and banking or the institutional attract hoped funds the and for to to now happen investment. rates the year larger allow to multistate going access quarter allowing key that's believe would it two. more the it the banking from is by next of for the at stronger a standpoint, We

Aaron Grey

jump And color queue. helpful there. I'll go Really back the in great. and Okay,

Brad Nattrass

Appreciate Aaron. it. Thanks,

Operator

Thank you.

with line of ROTH final your Brian question. with Capital. Our question from Wright comes the Please proceed

Brian Wright

and along, I Like progress kind and think about the in wanted you be kind anything just getting just about or Thanks. that but bit to anything it in and of the that's be to kind thinking end-to-end may is the there But -- with there? backlog step closed know mean direction that's I a of a too soon about to that. a process, recently of I contracts. talk little rolled,

Brad Nattrass

about that is a the and the the on. full But from which depending side of have four the space dispensaries Design-Build or passing were cannabis other contracts Design-Build backlog. Brian, large space specific cultivation CEA, of a legalization Yeah, cannabis in XX facility on financing. that in there in working states the cannabis of we're Many their potential, of contracts -- sorry, the securing we

to of And Brian, so what food-focused for month the ago. positive that and happened of large multiple nights per for we vertical contracts side, that's with couple and In election all food CEA, the potential the CEA a indoor those greenhouses. continue in farms sign urban-gro with developments

We're it's mechanical systems with them. solving when solving we have and day-to-day see we're will on food just guidance U.S. from building And very We're providing the with Typically, working in our point. issues helping they But a Design-Build We Design-Build to the credibility. opportunity environmental we're it's that with and love be in helping this basis. where problems. not vertical at farming encounter it interesting

But a presents both we'll areas. the vertical the to study going energy and study, efficient And in ready of on those there's course, of opportunity right index be lot of of water. globally key now efficient is when itself. use use The of farming,

a move the in working you around And on is that, and early, that. U.S. six, the that the And the too, how there facility. is Europe handful, automation, the very probably crop are second XX companies and

farming. is CEA the we're efficiencies. about all vertical food on forefront. early it's So We at in feel

have right right And the the hiring the have we're our we partnerships. employees help We that knowledge to clients. that have

tremendous a environment that, I One that Crop vision mean, trust recently we'll the help level. Lo finish Sonia and will it's board build And right helping in environment before urban member. was in urban-gro controlled areas brain we a the Ag of has clients good growing take next and ag have to our off really CEO Sensei of most with,

So we've exactly to partner what services clients, to trusted our a from do. level just we're becoming out set that

Brian Wright

Thank you. Great.

Brad Nattrass

you. You're welcome, Brian. Thank

Operator

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

Brad Nattrass

course, raise is sector The we it. our our at it's synergistic And in on company. to immediately supported the anticipated. as you, made everyone, In continue model our and acquisitions XX months executing and And be to of thanks end record Thank we've prove the today. and that Design-Build diversification accretive to $XX the listed for since closing NASDAQ is working. building over completed Michelle. appreciate I quarter ago Professional Services chiming in been closing, of and strategy, But million that all of of by backlog we've the growing. this that

mode. of for and QX, very in a carry we company XXXX. service said, go, in confident eliminating any on as momentum as And Aaron XXXX. strong we'll and scaling to got bottlenecks the be this are we chance into to as We're company going we're ready We've growth demand, focused that's therefore,

much interest, for your you a evening. thank So your ongoing wonderful have support, very and

Operator

teleconference. today's concludes This you. Thank

your wonderful for lines disconnect Thank you day. at may And You have this time. your a participation.

urban-gro (UGRO) 10 Nov 222022 Q3 Earnings call transcript