Q4 2022 urban-gro Inc Earnings Call
Hello, and welcome to the urban growth 2022 fourth quarter earnings conference call.
As a brief reminder, all participants are currently in a listen only mode. If anyone requires operator assistance during the conference. Please press star zero on your telephone keypad.
Following the presentation there'll be a question and answer session for those on the teleconference line. Please note that this conference call is being recorded and a replay and a replay will be made available on the company's web site. Following the end of the call.
At this time I'd like to turn the conference call over to Dan Roller Executive Vice President of corporate development and Investor Relations at urban Hyphen grow Sir. Please go ahead.
Good afternoon.
Noon and thank you for joining us today's call will be led by Brad Mattress, Chairman and Chief Executive Officer, and <expletive> <unk> Chief Financial Officer.
I'd like to remind our listeners that remarks made during this call will include discussion of non-GAAP metrics, including adjusted EBITDA and backlog.
These items should not be utilized as a substitute for urban gross financial results prepared in accordance with GAAP reckon.
Reconciliations of our GAAP net loss to adjusted EBITDA are available in our press release.
Form 8-K filed with the Securities and Exchange Commission and those can be accessed from the Investor Relations section of our website.
On this call we may state managements intentions beliefs expectations or future projections. These are forward looking statements involve risks and uncertainties.
Forward looking statements on this call are made pursuant to the safe Harbor provisions of the federal Securities laws and are based on urban growth current expectations actual results could differ materially as a result, you should not place undue reliance on any forward looking statements.
Some of the factors that could cause actual results to differ materially from these contemplated by such forward looking statements are discussed in the periodic reports.
Securities.
These documents are available in the investors section of the company's website and on the Securities and exchange Commission's website. We do encourage you to review these documents carefully.
Lastly, a copy of our earnings press release and a webcast replay for today's call may be found on the Investor Relations section of our website.
<unk> dot urban dash CRO dot com with that I'll now turn the call over to Brad.
Thank you Dan.
Good afternoon, everyone and welcome.
I'll begin today's call by providing an update on the state of our business, including a focus on our execution results market conditions and vision.
This will be followed by <expletive> reviewing our financial results in greater detail and then we'll open the call for your questions.
2022 was a successful year of evolution for urban grill punctuated by our fourth quarter performance.
Those were well on our way to returning to revenue levels more aligned with our expectations.
Well, we also remain laser focused on getting back to positive adjusted EBITDA.
Despite headwinds encountered in the cannabis sector, our team advanced our business forward by executing on our sector diversification strategy and expanding both our service capabilities and the geographies in which we operate.
During the year, we added new capabilities and expertise to our business both organically and through the acquisition of Colorado based Emerald construction management, and Texas based D. D L engineering.
Not only did we further strengthened our leadership team with these acquisitions.
We also appointed a new CLO experienced and see a design build solution.
And we opened our first global office in the Netherlands.
Yeah.
All of this is made possible by our unique model, which encompasses our talented team of professional experts integrated solution.
And sector diversification.
Altogether differentiating us as a company that can continue to deliver growth in a turbulent environment.
And this growth.
Basketball diversification that we underwent this past year.
Debit and our records signed contract backlog of $93 million at the end of 2022.
Representing a sequential quarterly increase of nearly 40%.
And more than three times the backlog that we reported at the end of 2021.
This alone speaks to the incredible progress that we've made in transforming this business into a fully integrated value added engineering procurement and construction company.
To put even more emphasis on let this record backlog means for urban grow its over three times as large as our company's market capitalization.
Assign that we have a bright future ahead of us within all of the sectors that we serve.
We're unmatched in terms of our capabilities are applicable to clients within the endorsed our industry and our single point of accountability that we provide to all of our clients will see a and commercial is proving to be an extremely valuable point of differentiation.
The backlog, we reported today, which is made up of nearly 90% construction design built strongly suggest that others are taking notice of death and seeking us out as their trusted and preferred solutions provider.
We remain in growth mode and are focused on scaling up our business as quickly and as efficiently as possible.
Briefly touching on our results, we posted revenues of $17 $3 million for the fourth quarter and $67 million for the full year 2022.
Well I'm pleased that we exceeded our fourth quarter revenue guidance. These results still don't accurately reflect the full growth potential of our comprehensive business model.
Truly is being obscured by the pullback in candidates capex equipment spending.
The driving force behind our ability to achieve this revenue performance amid this thought.
Why isn't the business decisions made over the last two years.
To position our company as a diversified solutions provider.
And this success is represented by the numbers.
In the fourth quarter construction design build revenue increased by $11 $5 million and professional services revenue increased by $3 million year over year with both increases being driven by the synergies, we're creating with our strategic acquisition.
Well our focus on diversification began to have a material impact near the end of the year.
This growth was unfortunately, offset by a $13 $3 million year over year decrease in cultivation equipment revenue.
Adjusted EBITDA for the fourth quarter was negative $1.66 million.
Generally in line with our guidance of approximately negative one 5 million.
This represents our continued investment in.
Both the scaling of our team to service our strong backlog entering 2023.
Further in our European operation and the capabilities that we now bring to the market in that region.
For the full year 2022, adjusted EBITDA was negative $3 $9 million.
As it pertains to our balance sheet and ensuring that we remain in a strong and agile position, we head into 2023 with approximately $12 million of cash and no bank debt.
Decrease in cash of $6 $6 million is primarily attributed to the adjusted EBITDA loss in the quarter cash payments associated with the one time business development expense reported in the third quarter and.
And cash used to acquire D D L engineering.
Moving on I'll now shift to updating on our most recent acquisition current sector trends that we're seeing and our outlook for 2023. Following the November 2020 to close the deal engineering acquisition.
The integration of our full end to end engineering capabilities with proceeding nicely.
It's accretive and synergistic transaction increased our professional services revenues and margin and as anticipated is further providing cross selling opportunities to existing clients and contracts.
The demand for our professional services and turnkey design build solution remains strong and continues to increase rapidly as evidenced by our backlog.
Moving to credit sector trends.
The commercial or non T. A sector continues to bridge the short term gap left by continued softness in the cannabis sector.
And we have a pipeline of projects that are strong qualified and growing by the week.
In fact, we're not only signing single project contracts with our clients, but in some instances, we're signing long term master services agreements as well, which will bring repeat project opportunities to the company in the future.
Supporting the strength of our go to market strategy with a single point of accountability across all aspects of our clients' projects.
In the fourth quarter, we signed over $30 million of new design build contracts.
All with financially strong clients.
And they see a sector, but we continue to see increasing demand and signed contracts with a variety of produce focus clients, mostly tied to engineering services work Chan.
Challenges do continue for our candidates focused clients.
Urban grow the impact of the candidates sector weakness is fairly transparent to address there.
There are approximately nine key states that have approved the legalization of cannabis. However, the awarded the licenses have been tied up with regulatory delays.
Diving deeper.
We absolutely remain busy in these states and have signed and continue to sign engineering architecture and design contracts, but after the documents are complete the projects are essentially pausing until there's an official license award by the state.
When their licenses are eventually awarded we do expect a large proportion of our clients to move forward and sign design build contracts and subsequently equipment contracts three to six months after.
This model and assumption, that's proven to be accurate and the state of New Jersey.
When licenses were awarded key clients began moving forward, notably in December the <unk>.
First of our clients move, Florida urban growth secured a 20 million dollar design build contract.
The project kicked off later in the first quarter. This year and we're working diligently to bring our clients vision to life and have them operational by year end.
So it's not a matter of yes.
It's simply a matter of when and until these regulatory delays are worked out we expect our clients' capital expenditures to remain soft.
That being said outside of cultivation, it's important to note that our clients continue to expand their retail presence.
And in response to client demand and therefore.
Fourth quarter, we expanded our offering to also include retail dispensaries.
This has proven successful and then the last six months, we've been engaged to work on more than a dozen dispensaries across the country. Some of which were also peripheral design build contracts.
Finally regarding our ongoing investment into the Europeans EBITDA market well.
While demand from produce focus clients remain suppressed due to the impact of drastically higher energy prices. We've been excited by the forward momentum in the cannabis sector and the design contracts signed as a result.
Further and most exciting is the market development in Germany with adult use legalization in the pending requirement to supply the market with candidates growing in country.
Although we're still a few quarters from generating positive cash flow and our European entity.
This progress gives me great confidence that the investments, we're making in the business are positioning urban growth are sustainable and consistent global growth over the long term.
Now I'll provide our full year outlook and associated cadence.
For the full year 2023, we anticipate consolidated revenues to be within a range of $100 million to a $120 million in.
We expect adjusted EBITDA to be within a range of negative $3 million to slightly positive.
Our clients want to work with us they recognize the value urban growth, bringing to the industry to meet their needs and their signing contracts, but it's important to note that today's uncertain economic environment could potentially impact project timing.
As it specifically relates to the weakness in Capex spending in the cannabis sector. We anticipate positive sector expansion will resume later in the second half of 2023.
I'd like to emphasize that achieving positive adjusted EBITDA as our primary near term corporate priority. But this is also balanced against our needs to continue supporting the growth of our business evidenced by our extending backlog.
We remain good stewards of our balance sheet and we'll continue to invest in the business in ways that we expect will reward our shareholders.
To help inform your modeling we're also providing some additional color on our near term expectations and the cadence for the year.
For the first quarter of 2020 three we expect revenue dollars to come in slightly below that of the fourth quarter of 2022.
Due to the delayed kickoff of two key design build projects that ultimately began in March.
By virtue of this lower revenue, we expect first quarter adjusted EBITDA to also be below that of the fourth quarter of 2022.
That said as we look at the quarterly cadence for the year and the strength and timing of our backlog.
We expect to deliver sequential quarterly growth beginning in the second quarter through the balance of 2023, both in terms of revenue and adjusted EBITDA in order to meet our full year guidance that we're introducing today.
In closing.
We look more broadly to 2020 three.
We're focused on continuing to scale and integrate our operations to service the increased demand that is reflected in our record $93 million backlog.
We continued to see strong momentum in our design build and professional service solutions across all sectors and although early we do anticipate a recovery in the cannabis sector. Later this year and a corresponding increase in our equipment sales as well.
Today, we are a stronger more durable and more diverse company than we've ever been.
And we remain committed to driving efficiencies in our model leveraging our professional services to a diverse client base and optimizing the targeted investments we continue to make in the business.
All centered on returning to positive adjusted EBITDA as soon as possible.
Thank you and with that I'll now turn the call over to Dirk.
Thanks, Brad.
Revenue was $17 $3 million in the fourth quarter of 2022 compared to $19 million in the prior year period.
This decrease was driven by a decrease in equipment systems revenue of $13 $3 million, primarily reflecting significantly reduced equipment demand in the U S cannabis market because of ongoing state level regulatory delays in the license awarding process as well as full.
Lack of movement of key industry financial support models, such as the Safe Banking Act.
This decrease was partially offset by the accretive acquisition of Atmos construction management in April due to what's sort of $11.5 million increase in construction design build revenue as well as incremental professional services revenue of zero point $3 million associated with the acquisition.
D V O in November of 2022.
Gross profit was $3 $2 million or 19% of revenue in the fourth quarter of 2022 compared to $4 $9 million or 26% of revenue in the prior year period.
This represents a decrease of $1.7 million correlating to the decrease in revenue.
The decrease in gross profit margin was driven by the lower margin construction design build rapidly from the Emerald acquisition.
Operating expenses were $6 $2 million in the fourth quarter of 2022 compared to $5 $6 million in the prior year period, representing an increase of $6 million.
The increase in operating expenses was driven by increased head count related to the acquisitions of them hold the D V O in 2022 and in support of our future growth.
Nonoperating expenses were $1 $3 million in the fourth quarter of 2022 and included an impairment loss of $1 million related to settlement of a litigation receivable and point $4 million and expenses recognized from fully guarantee the remaining contingent consideration.
Associated with the two W or acquisition.
Net loss was $4 $2 million or a negative 39 cents per diluted share in the fourth quarter of 2022.
As compared to net loss of <unk> 6 million or negative six cents per diluted share in the prior year period, adjusted EBITDA was negative $1 six $6 million in the fourth quarter of 2022 compared to pause the point $5 million in the prior year period.
The decrease in adjusted EBITDA was driven by lower revenues and gross profit as well as strategic investments in operating expenses to drive growth.
On a full year basis, we reported total revenue of $67 million compared to $62 $1 million in the prior year, representing an increase of seven 9%.
This increase in revenue was driven by the acquisitions of our Melbourne D V O in 2022 and two W are in 2020 one.
Construction design build revenues and increased services revenues from these acquisitions were offset by decreased equipment systems revenues related to reduced equipment demand in the U S cannabis market.
Gross profit was $14 $2 million or 21% of revenue.
Paired to $14.8 million or 24% of revenue in the prior year.
This decrease in gross profit dollars and margin was the result of changes in the overall mix.
Operating expenses were $26 $8 million as compared to $15 million in the prior year.
Operating expenses in 2022 included a $3 $3 million, one time business development expense related to satisfying our lighting issue encountered by a major customer.
Remaining increases in operating expenses were driven by increased head count.
She added with the acquisitions of two W. R Emerald and D V O <unk>.
Expansion into Europe , and preparing for our planned future growth.
Non operating expenses were $3 million compared to $1 million in the prior year and include impairment losses of $2.7 million.
Net loss was $15 $3 million compared to a net loss of point $90 million and adjusted EBITDA was negative $3 $90 million compared to positive $2 $7 million in the prior year comparable period.
Now turning to our balance sheet.
Our capital structure remains in excellent condition.
We entered 2023 with $12 million of cash on our balance sheet and no bank debt.
<unk> provides us the necessary flexibility to manage through the macroeconomic market circumstances.
Simultaneously fueling our growth strategy.
Moving to reported backlog our total backlog as of December 31, 2022 was approximately $93 million and is up from the $67 million that we reported at the end of the third quarter of 2022.
This backlog is comprised of $82 million in construction design build.
$6 million of professional services and $5 million of equipment systems contracts.
While there are several variables that influence the change in backlog. The two primary factors are signed orders and revenue recognized from signed orders during a stipulated period.
Because our backlog related capital expenditure commitments made by our customers. The dollar amount of signed customer orders and individual periods can fluctuate materially.
Revenue recognition is dependent upon delivery of these orders.
That concludes our prepared remarks, operator, please open the call for questions.
Yeah.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
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One moment, please while we poll for questions.
Okay.
My first question comes from Eric <unk> with Craig Hallum Capital Group. Please proceed with your question.
My first one is on the commercial side of your business.
I was just wondering if you could provide a bit more color on some of the trends that youre seeing there.
You are able to help us quantify.
How much of the guide or backlog is a commercial projects versus M.
Thank you.
Thanks, Eric.
Yeah for sure.
And as I had talked about on the last quarterly call.
The strength of our balance sheet gave us the opportunity to increase the number of contracts also the size of contracts.
That Emerald construction was executing with these commercial clients and that continues to be the trend.
Mentioned.
In the call that we're signing new contracts weekly and these are varying in size from maybe a minimum of a million dollars to a maximum size right now of a little over $10 million.
When you look at the total backlog of $93 million at the end of the year about 80% of that is <unk> and about 20% of that is commercial.
And as we proceed into the year I would estimate that by the end of 'twenty three of about two thirds of our business will be N C. A and about a third will be in the commercial segment.
Okay, Great that's very helpful.
Yeah.
And then with regards to.
The cannabis rebound that you're expecting in the second half could you just provide a bit more color on that and perhaps help us understand the visibility that you have into such a rebound I know you mentioned New Jersey is an example of some of these projects.
Projects that may have been delay.
Delayed a bit in.
And that you know.
Perhaps you might seeing a.
The conversion from design build into some equipment sales.
Just kind of help us understand what what visibility you have into the rebound.
And and cannabis related revenues in the second half. Thank you.
Okay, I think its hurt our business in the Canada segment remains predominantly east of the Mississippi and when I talk about a rebound in the sector. It's all about the regulatory issues that some of these states are in the middle of and in turn delaying the award of life.
Since it to to our clients.
That part opening up so in new Jersey, they work through the awarded licenses and the clients that we had been working with an architecture and design.
Then we're able to access their funding when they were awarded a license and they move forward and find a design build contract with urban growth.
As it relates to sales or your equipment sales, you're absolutely right Eric in the design build model about three to six months and the clients who are at the juncture, we'll they'll make a decision on the equipment for the entire facility, whether it's mechanical that'll be typically the first because it's the longest lead.
Time, but then benching lighting air environmental controls and we would've been working with those clients for a couple of quarters before that providing them with a variety of options and have worked with them to choose a holistic solution for that facility depending on there.
Budget.
That continues to to be the trend as well with the with the group's before we signed the design build contracts. So looking now at the other states that are that are working through the regulatory issues, Alabama, Georgia, Missouri, even Florida.
Working through awarding additional licenses clients in those centers, we're working with them, there's probably a couple of dozen clients amongst those states and when those licenses are awarded.
We're very confident based upon the service levels that will that we've provided that we will be able to move to that design build state. So as we progressed through 2023.
At our other quarterly calls.
Be excited to share a lot more design build successes and it will be evidenced by a continued and continued growth in our backlog that we report each quarter.
Okay, Great I appreciate the color. Thank you.
Thanks, Eric.
Our next question is from Brian Wright with Roth M. P. M. Please proceed with your question.
Hi, Thanks, good afternoon.
And a couple of real quick questions I'm wondering to start off with just.
Theoretically with the with a big backlog build.
There are some instances of success on the full integration strategy the full one stop shop.
From from design, all the way through construction.
Yes. There is there is one that was announced in December it's a 20 million dollar design build contract in New Jersey.
And Brian when we signed the design build contracts, we typically do not sign an equipment contract because we're in the process of designing and going to pre construction and we wanted to keep those options open. So we can look at a variety of different equipment solutions. So that's typically signed a three.
Six months later.
So the so in actuality the backlog is probably even stronger than what you.
Put out there and is that all fair.
But yeah I think that's a that's a fair assumption, but we'll call it anticipated backlog because unless those contracts are signed and deposits received we don't classify it as backlog. So that 93 million that's $93 million of signed contracts that will depending on the.
The sector.
And depending on the category will be realized in anywhere from one quarter to go with it.
As it relates to him for a large canvas facility it could take up to 18 to 24 months.
Got it and then I guess you know we're here kind of towards the end of the first quarter is there any chance you'd be willing to share what where the backlog is now.
No, but with the growth that we're experiencing and the.
The infrastructure that we're investing in evidenced by the continued negative adjusted EBITDA that we gave color on in Q1.
I would hope I think it's a fair assumption to assume that it continues to strengthen.
Okay, great and if I could sneak one last one in can you just help us out with kind of the with the ramp with the first quarter kind of being a little bit below on the.
The fourth quarter on the revenue just like how to think about first half versus second half.
Yes for sure.
In terms of Q1, it is tied to two.
Design build projects that we expected to kick off in January and they ended up kicking off in March.
The good news is they kicked off we have boots on the ground and we're actively developing those projects one in commercial and one and see a and based upon the strength of the backlog now at the end of the year and Q1.
We have a lot more line of sight right now into the future and that's why we felt comfortable giving the guidance, but it will go where we actually give color on it as well, we're anticipating sequential growth quarter over quarter Q1 through the end of the year, both in revenue and our adjusted.
Adjusted EBITDA and we are all hands on deck working hard to bring positive get back to a positive adjusted EBITDA as soon as possible.
On the last call I said Q2 was the target still remains our target, but no guarantees that we'll get there in Q2, but we're working hard on it.
Great. Thank you so much thank.
Thank you Brian .
Our next question is from Anthony Vendetti with Maxim Group. Please proceed with your question.
Thanks, Brett.
Firstly I was just wondering if you could talk a little bit on them.
More of a macro level.
You know in terms of.
Tightening credits.
And.
Credit market and rising interest rates any of that impacting some of the capital equipment purchase or some of the longer term contracts.
And then.
Just a little bit of color on some of the long term.
Hum in the long term contract you did mentioned in this call.
How you expect that to to rollout.
Perfect.
Anthony ill start with our backlog the $93 million, that's all with both on the <unk> side and also on the commercial side.
With with very well funded strong companies on the <unk> side proof.
Proof of funds. We've seen so these are finance groups that are moving forward that don't have to hit funding milestones in order to continue.
Oh D. It.
From a from affecting our customers overall, I've always said because of state rights.
When a licenses awarded those facilities will be built.
And we haven't we had not had any issues on that countering that statement.
Earlier on in Q1, we did have a client that was awarded a license that we're still working to secure their fun, so but that that was before the recent banking pollo, we haven't seen any we haven't experienced any issues in the last week.
With the with the recent events at all.
And because we're on the larger design build contracts you know these are as I had mentioned in the CPA space.
12 to 24 months the the money, there's a large outlay that's required at the start and so the clients when they're moving forward and especially when we bring them into our backlog we know that the those groups are well funded for.
From an equipment standpoint.
You know existing clients that may be looking to retrofit their facility and upgrade their lighting and maybe moving into more energy efficient Leds, that's where we've seen.
A large fall off as compared to the last three quarters evidenced with.
With 85% drop in equipment revenues in Q4, 'twenty two for us versus Q4 of 21.
We don't see those those capex expenditures right now, they're they're on pause I believe our client single state multistate operators in the cannabis space are really hunkering down and cash is king and they're they're focusing on maintaining and building their cash as much as they can.
But in the design build contracts.
Clients are funded to take their facility through two operation and equipment is a natural evolution three to six months after its start so.
Where we're seeing the I guess across the board some strength.
And and then weakness in terms of existing facilities retrofitting.
One more piece I'll add on the commercial side, we're working with large global companies and when they cut appeal they've already allocated that capital to that project.
And.
You know they like the commitment to the timing of the funds are moving towards urban grow on a percentage of completion basis.
We've never had any issues whatsoever there.
Okay excellent. That's that's helpful. I'll hop back in the queue appreciate it.
Okay. Thanks Anthony.
Okay.
Our final question is from Eric better with S. C. C. Research. Please proceed with your question.
Good afternoon.
Sue.
I guess I had two two different questions kind of different areas first of all could you give us a little.
It'll feel besides.
I've read the same I guess, he says about Germany, potentially becoming a legalizing cannabis now when you look at Europe again, what is the timing of it.
How does <unk> grow.
I guess the competitive advantage either.
Where theres a lot of very large players in the agriculture sector.
Eric in the cannabis space in Europe , there was a lot of momentum before the pandemic.
And but there wasn't enough to to to pull it through aggressively like we experienced in North America or in the U S. So I looked at Europe is where the U S was probably six years ago now there is less north American influence in the cannabis market in Europe .
There was before the pandemic.
And clients are looking for that Knowhow.
They don't want to make mistakes that that's the single point of responsibility and accountability that urban girl brain.
Allows them to proceed further down the path without having to hire this expertise in house. So that's great for them are as far as Opex savings are concerned.
But so far in Europe , it's been all design contracts for us a little bit of equipment.
Predominantly all of the business. So far has been in architecture engineering and cultivation design.
Germany.
They're waiting for the EU to give the blessing on their request to have pick the candidate is growing in country.
You know everything seems positive right now it could take weeks it could take months COVID-19 quarters.
Until until there was a ruling there.
But once that ruling takes place there will be facilities built within the country. There's four current operators who are operating on the medicinal side of the business.
And would expect.
Spansion from them and then there'll be new entrants are entering the marketplace and in those new entrants have already started to.
To make an appearance on our team has been either exhibiting or a 10 day multiple trade shows and just like in the U S. Six years ago. The trade shows are aware.
Individuals are able to earn our clients are able to connect with future partners. So we've been having great success so far.
And the next three months I believe there's three more conferences that will be.
We are attending.
Okay.
Domestic you mentioned that.
Two projects have been pushed out and that was big enough to choosing to fire.
The flow of the guide to some extent.
What are you seeing in terms of your ability to have a bigger and bigger contracts.
Larger people going forward now that you've made these acquisitions and what do you think a potential what is is there another acquisition necessary to take it to the next level for you.
<unk>.
Be more synergy more opportunistic I guess in the acquisitions.
Yeah, and you know what the entering Q4.
Our backlog on construction design build was was 56 million, we recognized $12 million of that backlog in Q4, and then we signed $38 million of new construction design build contracts in Q4. So we ended at about $82 million and you know where.
It's a great question can we build upon Emerald construction management by hiring key individuals.
Where do we have to continue to look at perhaps other regional construction management firms to help complete it but the answer depends on the size of the projects and urban grow is focused on having.
You were projects that are much larger scale.
And when that is the case you need a strong project management team and you need a strong site superintendent onsite at each one.
So under that model under this go to under the.
This approach that we're taking into the to the market place, we can keep adding on key strong clientele or sorry key strong members to our team as opposed to needing to go continue the down the M&A front.
Okay. Thank you and good luck for lifestyle.
Thank you.
The dark.
That is all the questions. We have for today, please reach out to investors at urban hyphen grow dot com with any additional questions I will now turn the call back over to Mr. Mattress for closing comments.
Thank you Rob.
In closing, we continue to see strong momentum in our diversified professional services and design build model across all sectors in which we operate.
And although it's still too early to forecast, we do anticipate a recovery in the cannabis sector later this year.
Entering 'twenty three we're focused on continuing to scale and integrate our operations to service.
This increased demand evidenced with our $93 million backlog, which continues to strengthen.
We're stronger more durable or a more diverse company than we've ever been.
And we remain committed to return to positive adjusted EBITDA as soon as possible.
Half of our team we're grateful for your interest and ongoing support.
Thanks for logging in today and have a wonderful evening.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.