Earnings Call: Q2 2021

Aug 11, 2021

Hello, and welcome to the Urban Grow 2021 Second Quarter Earnings Conference Call. Following the presentation, there will be a question and answer session for those on the teleconference line. For those on the webcast, the company will follow-up with you after the call. Mode. Note that this conference is being recorded at the company's request and will be made available on the company's website following the end of the call. At this time, 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, and may state management's intentions, beliefs, expectations or future projections. These are forward looking statements and 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 and 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 to the financial results to differ materially from these contemplated by such forward looking statements are discussed in the periodic reports Urban Growth files with the Securities and Exchange Commission. Listen only mode. These documents are available in the Investors section of the company's website and on the Securities and Exchange Commission's website. We encourage you to review these documents carefully. I would now like to turn the call over to Bradley Nattress, Chairman and CEO of Urban Gro. Mr. Nattress, please proceed. Thank you, Hillary, and good afternoon, everyone. As noted, I'm Bradley Nattress. I'm the Co Founder, Chairman and CEO of Urban Grove. Also joining me on the call today is our Chief Financial Officer, Dick Ackroyd, who you'll hear from a little bit later. We truly appreciate your continued interest in the company and further the strong turnout for today's call. I'm excited to both update you on our progress through the end a listen to our Q2. Our momentum continues to strengthen. And once again, we've delivered record results in Q2. Highlighting these successes, we achieved record revenue of $12,800,000 We achieved record positive adjusted EBITDA of approximately $600,000 and positive net income of $1,300,000 We finished the quarter with a record backlog of $27,900,000 which for Urban Gro is signed client contracts on equipment systems with deposits. In turn, these contracts will transition into recognized revenue at shipment, which is predominantly over the ensuing two quarters. We maintained a cash position of over $50,000,000 We successfully announced a very accretive acquisition. Initially announced in Q2, we subsequently completed the acquisition of 2WR Partners and their subsidiary, MJ12 Design studio 2 weeks ago. They are a leading 23 person architect and interior design firm that not only will to provide a significant boost of high margin services and revenue, but it presents a phenomenal cross selling opportunity and allows us to engage new clients approximately 3 months earlier than we traditionally have been. With this acquisition, we've also added construction management expertise and have extended our service offering to also include the design of dispensaries, extraction facilities and processing kitchens. And finally and most exciting, for the first time, we're providing the following forward looking guidance for our shareholders. We anticipate our full year 2021 revenues will be in a range of $54,000,000 to $59,000,000 and we anticipate our full year 2021 adjusted EBITDA will be in a range of $4,000,000 to $5,000,000 which represents approximately 7.5% to 8.5% of revenue. Moreover, even at the low end of this range, This is almost a $5,000,000 increase of adjusted EBITDA over full year 2020. And as I like to say, we're just getting started. Today, Urban Gro is a fully integrated architectural engineering and design company that integrates equipment systems into controlled environment ag of facilities. Further, for operating facilities, we offer a managed services platform, GrowCare, that leverages our team's expertise and provides our clients with the suite of solution services focused on increasing crop yields, preventing downtime and also driving overall business continuity. We're in our 8th year. We have 80 employees, of which approximately 2 thirds are what we refer to as experts. A variety of architects, engineers, cultivation designers and plant scientists and horticulturists who have a and a strong history of growing multiple crop types. It's these skill sets and the expertise acquired from working on more than 450 controlled environment ag facilities that sets us apart and provides a competitive advantage in the marketplace. As we move into the second half of 'twenty one, we're continuing to execute on opportunities in both cannabis and food focused markets. And after primarily working in the legalized cannabis space since our inception, this acquired massive knowledge from working with one of the most valuable crops in the world has to the call. It's given us a great entry point into food. Not only are we continuing to capture more market share in the global cannabis market, but we're also successfully expanding our reach within the food focused vertical farming market as well. Looking forward now and ensuring that we finish this year strong, there are 3 key growth initiatives that we remain focused on. First, We continue to focus on the continued expansion of our high margin services offerings, both pre and post operation startup. With the successful acquisition of NJ12, as I mentioned earlier at the start of the call, we've now expanded our existing offerings to include architecture and interior design services. And as a company, we're diligently working to blend our existing engineering and cultivation design services into their 70 open projects, definitely a phenomenal cross selling opportunity for our team. We continue to focus on building out our managed service offering, GrowCare as well. We have the expertise that operators and facilities desire to assist them by providing training, support, monitoring and a variety of programs, including maintenance. Further, We continue to have a robust M and A pipeline and we continue to examine acquisition and investment opportunities that are profitable, service based, accretive and synergistic to our core offerings. Our second growth initiative revolves around a goal that I set for the Company, to be the leading provider of turnkey indoor high performance cultivation facilities in the global controlled environment ag market. Urban Gro defines turnkey as delivering a fully operational, customized high performance facility. And looking forward and the key takeaway here is by utilizing our permit ready construction documents, We're confident that we'll be able to deliver these facilities much more quickly than operators have experienced to date. Very, very important in new markets as they open in the United States. Lastly, we're making solid progress with our expansion into the European market, both in cannabis and food. In addition to making significant advances working with our commercial agents that we signed in Q1, We've retained the Vice President of Sales based in the Netherlands, who has strong horticulture ties to the European and Middle Eastern markets. Further later this month, we're opening we're both opening our European entity in the Netherlands. And we're also exhibiting a large cannabis trade show in Germany. In closing, I'm very proud of the progress that we've made in the first half of the year, and we remain focused on continuing to execute on our strategic initiatives over the next two quarters. And with that, I'll turn to the presentation over to our CFO, Dick Ackroyd, to present our financial results for the Q2 and for the first half of twenty twenty one. And then after he finishes, we'll move over into the Q and A session. Edith, please take it from here. All right. Thanks, Bradley, and good afternoon, everyone. I'm excited to share our financial results with you today. They demonstrate that we are successfully executing our business strategy and clearly reflect that we're continuing to grow in a smart and meaningful way. We entered the year with a lot of momentum from the second half of twenty twenty and carried that into the Q1 of this year. We were able to continue this momentum and growth in the Q2 of 2021 and are pleased to report the following results. To any revenue from the recent MJ-twelve acquisition. Our backlog at the end of Q2 2021 was a record to $27,900,000 which was an increase from the $15,400,000 at the end of Q1 2021. As Brad indicated, we define backlog as signed equipment contracts for which we've received deposits but have yet to recognize revenue. While the product mix of our backlog has an impact on when we will recognize this future revenue, historically, the majority of our backlog We generated revenue of $12,800,000 as compared to $12,000,000 in Q1 2021. The current quarter revenue more than tripled from revenue of $4,000,000 in Q2 of 2020. The increases in revenues were primarily driven by increases in the shipment of complex environmental and cultivation equipment systems During the Q2 of 2021, we generated positive income from operations of $222,000 and losses from operations of $927,000 in Q2 2020. Adjusted EBITDA was also a record of $583,000 versus a loss of $275,000 in the same period last listen only for the Q1 of 2019,000 Adjusted EBITDA was $1,100,000 in the first half of twenty twenty one compared to a negative $1,200,000 in the first half of twenty twenty call for an improvement of $2,300,000 The 2nd quarter really marks a milestone for Irrigo as we turned profitable in the quarter. Our net profit in the Q2 of 2021 was $1,300,000 as compared to a net loss of $1,600,000 in the Q2 of 2020. During the current quarter, we did benefit from the SBA's PPP loan forgiveness program, recording $1,000,000 in non operating income from that debt forgiveness. For the first half of twenty twenty one, of $3,300,000 or $0.69 per common share in the first half of twenty twenty. To non operating expenses in the first half of twenty twenty one are primarily related to amounts associated with the pay down and termination of a high interest rate debt facility and interest expense associated with the conversion of Bridge Financing in a listen The elimination of these non operating expenses will positively impact our net income results in future periods. Turning to our balance sheet, I want to point out that cash as of June 30, 2021 is over $50,000,000 and we have no debt outstanding. We intend to grow our existing business in a profitable manner and be able to take advantage of a variety of opportunities that we anticipate will become available to us. The net proceeds from our equity offering in Q1 2021 for $62,100,000 With these funds, we paid off $6,000,000 of debt and repurchased $3,000,000 of common stock, which is available to be used in connection with future acquisitions. And lastly, as Bradley had indicated, we are providing revenue guidance of $54,000,000 to $59,000,000 and adjusted EBITDA guidance of $4,000,000 to $5,000,000 for our full year 2021. We are focused on growing the higher margin components of our revenue mix and expanding our reach through key initiatives. We will continue to focus on reducing operating expenses as a percentage of our revenues as we execute our growth plans. We've come a long way in improving our results and this quarter is a great example of those efforts. We will continue to be focused and work hard to deliver value to our shareholders in 2021 and beyond. In closing, we are incredibly pleased with these results and our continued momentum. With that, I'll turn the call back to Bradley. Thank you, Dick. Hillary, Dick and I are now ready to take questions. Please proceed with the next portion of the call. Thank you, Bradley. At this time, we will be conducting a question and answer session. A listen Our first question is from Gerry Sweeney of ROTH Capital Partners. Please state your question. Hey, good afternoon, Bradley, Dick and thanks for taking my call. Thanks, Jerry. Just I wanted to If you could, obviously, I'm a little bit newer to the story, but maybe just entertain a couple of questions on the backlog side. Obviously, you have a defined backlog with, I guess, a down payment. But if you move beyond that backlog, do you have any sort of internal pipeline metrics that you look at, people you're talking to get a little bit more visibility beyond maybe the next two quarters that I think Sure. Let me start with that and thanks for your question. The backlog for us is certainly a key component, a key leading Indicator that we track, as you indicated, we don't call anything backlog until we have signed contracts and are deposited in place for those. So That's the metric that we report. But going to your specific question with regard to kind of beyond that, Do we have an internal funnel where we are tracking opportunities? We do. But We don't report any of those numbers. We're just we want to be comfortable that we have the actual signed contract before we put anything out in terms of the press release or in our quarterly reporting. So yes, like most companies, we do have a funnel of opportunities that we anticipate certain percentage will become backlog, but don't report that number outside of internally with the company. But Brad, did you want to add to that? Yes, sure. Jerry, we utilize sales force across the board to track everything and all those opportunities and have a variety of different levels. But we just at this point feel comfortable releasing what is contractually signed. That's to the call releasing what is contractually signed. That's fair. I thought so. I figured I'd give it a shot. I do appreciate it. And then just on NJ12, how do we look at that? So Architectural Services and how will you be able to give any metrics on that? I don't know if it's Projects in the pipeline or things like that? And do they have any numbers in that backlog being provided. Well, I bet you disclosed it, but curious as to how we look at that. Sure. Dick, do you want to start with the financial side? And then I'll try and answer more about the project revenue. Sure. Yes. We certainly view the MJ12 acquisition as a fantastic opportunity for us at a very nice price. So I think we've indicated that we anticipate over a 12 month period $7,000,000 to $9,000,000 of incremental revenue from that acquisition. And then in addition to that, We talked about the concept of waterfall revenue coming to Urban Gro from those opportunities that they have of being at least $10,000,000 for us over that same 12 month period. So the nice part about the acquisition of MJ12 is With them being associated with customers kind of sooner than we were as much or like up to a 3 month period, Then gets us into a customer sooner, so we'll have their revenue, but then also the design service revenues from our standpoint to enhance our existing business and kind of expand our product and service offerings. Listen. Got it. And I'll add on to the back end, Jerry, a little bit. There's about 70 open projects right now. Okay. And so those are our strong qualified leads. We're collectively working closely together to integrate in The service offerings that we currently have and then also equipment solutions as well to build up to that waterfall in the minimum $10,000,000 that we announced. But adding to our service offering with the dispensaries, extraction and processing facilities, really plays in nicely to the turnkey offering that we're focused on. It allows us to really now have everything under one roof that a client would need when building out a full turnkey facility. And to have all of those services under one roof as well, Just from a holistic design standpoint, having one belief system on how to build out that most efficient high performance facility. It's really exciting. But I'll also add, we acquired a phenomenal team. There was 4 lead partners. Everyone's excited. They're wired. They're not tired. And we had all 80 employees together about a week ago, and there's a lot of integration between the companies and moving leaders to and from. So, We're already comfortably working closely together and we're going to be very efficient. Got it. And a follow-up to that. Mode. Obviously, you talked about turnkey projects. And then in your script, you also talked about permit ready dock. Have you even done any review, maybe how much Time or how much money do you see from permit ready the design documents may save customers and Obviously, it could be a pretty big drenching advantage against some competitors. How do I look at that? Yes, it's a great question. And Sam Andress, our EVP of Professional Services, he was the lead managing partner for 2WR MJ-twelve and also has a great relationship in the industry reputation, sorry, and a lot of relationships in the industry. But he believes that it's at least 3 months. We can save at least 3 months by having those permit ready docs. And Jerry, When there's a new state open and they're only handing out so many licenses for cultivation, it listen. Our next Profitability this quarter. I'd like to kind of focusing in on the backlog or Maybe even beyond, it sounds like the backlog is basically 6 months out, roughly speaking. So not necessarily limiting to that, but just as we kind of look forward, Can you help us understand how your pipeline backlog, whatever is split between Cannabis, food and then I guess over Europe and I guess maybe I was supposed to start. Is that sort of The right three verticals to be thinking about here? Yes, it is. And by the Food Focus sales team that we have. We actually just created a standalone EMEA region sales team, hired that Vice over in the Netherlands, and that was because we see a tremendous amount of demand. We're working on a lot of Early stage projects that we haven't announced yet. And as you move closer to the Middle East, predominantly food focused vertical farms I'll add cannabis in Europe. Erica, I look at that market Sort of similar to where the U. S. Was 5 years ago with cannabis. It's a $250,000,000 market reported to exceed $30,000,000,000 in the next decade. So what we're finding is just a tremendous demand for our services. And when we uplisted and had our roadshow, we talked a lot about how turnkey was very key in Europe as well, because they would like the design services to include all of the above, all of the services we have now. They want the on-site project management and they want somebody there to help guide and hold their hand as they start up the facility and train their teams. So, this acquisition really Have tremendous momentum on the cannabis side. On the vertical farming side, there's a lot of large players that are raising substantial amounts of money. And one of the issues that has hurt the vertical farming industry over the last 5 years is controlling the environment and underspecified mechanical systems. So, we have engaged on projects to help peer reviews, what we call them help rectify some of those situations, utilizing our 450 facilities of experience and our mechanical engineering team that has been in the middle of 100 of those, we're able to provide solutions. So the way I look at it is We earned the trust, the confidence, the respect of that client early. And then as they expand, we're brought in to expand with them. So, we're absolutely It's progressing. The food focused vertical farming side is progressing faster than we had anticipated. And We haven't made any significant announcements on that side yet, but we will when we close the deals. Listen only. Okay, great. That's helpful. And I guess, could you help us understand how your Service level or offerings might differ between those three verticals. Should we think of these as basically similar offerings for each of these verticals. Is there anything unique about food versus cannabis or about Europe versus North America that Might lend itself to a different level of services or offerings that you guys provide? Sure. From our perspective, I think we really look at those as being very similar from the standpoint of the services we're providing from the standpoint of architecture design or the equipment systems being sold into them. So I wouldn't use the word just totally agnostic, but there's just so many similarities between all of those that listen. So it's just we're just benefiting a lot from that experience that we have. And I'll add to that, Eric, in 2020, we completed a 6 month study when we started to look at moving in that direction as well. And what we learned is, it's the regardless of the crop, it's the same architecture, it's the same engineering, it's the same cultivation design Teams required for both. It's the same complex environmental equipment systems and regular equipment systems That are used in both. Most of those systems were born in the global horticulture space, and we've brought them over in a listen So, overall, I'd say the expertise that we have on staff, those plant scientists, the horticulturists, when I mentioned at the start that they have experience with multiple crop types, They were all born as well in field farming or greenhouse growing. So, they have that background. We are nailing the nutrient programs for the leafy greens to the current day specifications. So we make sure we're right on and right accurate and very accurate. Then one more thing to add there, local regulations change not only by City or county or state and also country. And we have a partner that reviews our documents in other countries just to make sure we're designing to those local regulations. In the U. S, one example would just be wastewater treatment, changes by state, by county as well. So that service that we have is applicable across for that kind of service solution. Okay, great. And then I guess just last one for me here. You mentioned you're still active on M and A. Could you maybe provide some color there? I mean, it seems like you guys are You're already able to service sort of fully the design through commission phase. So could you help me understand maybe what you guys are looking at in your M and A pipeline? And if it's new services, new geographies, just any color on the M and A pipeline would be great. Thanks. Sure. In the U. S, we are adding rapidly to our team of engineers and architects to support the demand. That could be individuals, it could be smaller companies as well. As we look overseas into new markets, We'll enter that market and what's the best path to grow our business the quickest? Is it through building it organically on our own? Or is it through an acquisition? Is it looking at engineering architect firms in other parts of the world? So, we're taking that into consideration. But, We're really focused on being great in the service area. We do not have the intention to be a manufacturer. We want to be the best on the service side. So we'll continue to go down that path and it's most definitely working. I also look at acquisitions and investments as a lead generation tool. So if we're making that acquisition, we get to access their current clients, maybe someone that we're not working with here in the North American market, over in the European market as well. Also a chance to access their vendors, potential vendors that we're not working with today. So all of those are taken into consideration. Dick, will you add to that at all from a financial standpoint? No, right I mean right on with regard to all that, Opportunities that we have, if it makes sense to take a look at, whether it's an architecture or engineering firm maybe operating in Europe that Would make sense to be added in. That could be a nice acquisition for us. But we kind of go through a process relative Do we grow it or do we buy it type thing as any company would. But those are kind of the areas that we're highly focused on right now from those services standpoint. And also profitable. We worked very hard to get to this point. That's always nice. We're not going to go back. Yes, for sure. Our next question is from Ashok Kumar of ThinkEquity. Please state your question. Good afternoon. Thank you very much. Could you provide some color on your margins relative to the historical target levels? Specifically, I think On the GrowCare, your target level is 30% to 60%, more recently coming in the upper piece of that range and then No recurring revenue component in the equipment mid teens to low 30s and the consumables in the low to mid to 2020s. So, where are you performing relative to your target levels and your outlook for 'twenty one as well, please? Thank you. Dick, will you take that to start, please? Yes. Sure, Shirk. Thanks for the question. We're highly focused on increasing our margins from the standpoint of the equipment systems side of things, because of the scale we're now getting, we have the ability through purchasing to kind of improve upon those margins to really kind of to beef those up. Our services revenues are still kind of in the 40% to 50% range, and you'll see from the financials that were listen to profit margins, they're in the low 40%, so exactly what we were looking for from the standpoint of an acquisition. The way things are from the standpoint of the equipment side, it does go from kind of mid teen percentage to mid-twenty percent, even high 20 percent gross profit margin, dependent upon the system. So the margins that we see in any given quarter become a little bit dependent on, well, what customers bought what products from us during that or what systems from us during that quarter, but we're keenly focused on looking to try to improve all of our margins to the extent that we can and taking advantage of opportunities that are out there to us. But Brad, do you want to add? To that as well. Ashok, the rapid pace that we're growing here in the North to market and then the expansion to Europe as well. Those first touch points are service contracts. And with the acquisition of The Architect Firm, not only do we have those 70 projects that we're working on, but we're now touching our clients 3 months earlier than we have in the past. And so it's a much shorter timeline as we enter new markets around the world from introduction to close of the 1st service contract. Got it. I think in terms of rank ordering your 3 growth initiatives, One being expanding your service offerings, both prior to facility build out and after the facility is operational, 2 being The end to end turnkey facility solution and third is your global reach. They are first among equals from a near term perspective. And then just in terms of progress, Scott, in Europe, I think that's a key growth initiative. You had indicated to commercial agent representation agreements and you're working on multiple opportunities As a result of those agreements, so where do those stand? Thank you. You bet. So the easy answer would be they're all important. However, The first are working on the increasing the high margin services And then the 3rd expansion, the Europe, it all plays into the challenge or the goal for our organization. It's to be the leading provider of turnkey indoor high performance cultivation facilities in the global controlled environment ag market. So it all plays into that. Mode. And from an acquisition point, we probably are just one more away from being able to manage the entire process from start all the way through to delivering an operational facility. In Europe, Ashok, it was time. The commercial agents really helped the market in the cannabis market in Europe. It didn't really have the momentum that we did in the U. S. Listen as the pandemic started. And so the industry really paused over there. So we didn't lose a lot of momentum. But with the commercial agents, we were able to get going a lot quicker. We've already spent a lot of time in Europe in the last 6 weeks, and we have another team going over in the next 2. So I don't want to call it a race, but with the opening of our entity in a couple of weeks and then a full trade show presence in Berlin shortly thereafter at the end of the month. We're building our team. We're setting up our infrastructure to successfully grow equally as fast in Europe, but we definitely are wanting to move as fast as we can, but ensure that we're delivering the same high quality Service levels and intimate customer experiences that we do here in the U. S. Got it. And can you sorry, go ahead. Go ahead, Ashok. Listen. I would just say, as Brad indicated, I mean, just as we look at our All of those are just really important to us from the standpoint of delivering on our future results. So Brad kind of joked about a little bit, but it's like the easy answer is they're all important. But the fact is they are all important, and we have to stay highly focused on all of them kind of at the same time. Nice for us as they all fit nicely into everything we've been doing. Europe is a logical expansion for us and then kind of continuing with our focus on our high margin service offerings. Just we are highly focused on it. The acquisition plays in directly to that. So, anyway, nothing outside our bailiwick here, that's for sure. Ladies and gentlemen, due to time constraints, we ask that you limit yourselves to one question and one follow-up per person. Our next question is from Alan Brochstein of ICB Media. Please state your question. Hey, Brad. Congratulations on the and having confidence to provide guidance. Thank you very much. Thank you. I just had one question and I'll stick with the rules. You may have adjusted already. I apologize if I missed it. But what drove that monster growth in the backlog exactly? Well, I'll start Dick and then I'll move it over to you. As we continue to deliver strong customer service levels and our customers are expanding. We're expanding with them. So it's a combination of new business contracts that we're securing and followed by expanding with current clients as they expand across the country. As a follow-up, was any of this related to the acquisition? I know we're not closed after Just everything that historically we've done from the standpoint of Erbicrow is all that's in the backlog. And on that note, nothing in our financials, of course, Alan, in the Q2 financials, are tied to the acquisition either. Right. Of course. Our final question is from Scott Weiss of SEMCO Capital. Please state your question. Thank you, Scott. Greatly appreciate it. I have two quick things. With regard to the backlog, one last question on that. Was there any benefit in your opinion from the reopening of the economy? Not in our backlog. No. I would say that effect maybe had a little bit on the Q1 backlog. But this is purely tied to rapid expansion, good demand for our solutions. Okay. And then second question with regard to the GroCare business. Can you update us on how many customers that you now have taking GroCare? And how big do you think this business can be by, say, the end of this year and by, say, the end of 'twenty two? So Scott, we're not going to release the number of customers or today The revenues and margins from that unit, but rest assured that that recurring revenue managed service initiative It's key. For the future of Urban Gro, we're engaging, we're holding our clients' hands throughout the whole process until they turn until the green button is pushed to turn the operation on. We want to be there for the life of that facility. We will have built an intimate relationship with the client and we want to utilize that same those same experts to work closely going forward. That being said, to do it right, We have to make sure that we have the right infrastructure in place, the right software solutions in the form of a portal that we're in the process of building with software engineers, started implementing it already and make sure we have very strong EdTech solutions support from ongoing consulting arrangement, so we're there to answer the phone and then training of their staff and just being there in case they have any issues to fight through. But, it's a key focus of the company and we are absolutely investing and growing it. And I do look forward to in the future releasing more significant information and details like you're asking for You're not the only one, and we just want to make sure we do it right before we announce it. So with the acquisition now complete of MJ, listen. You're offering a complete soup to nuts from the very beginning of the project and with GrowthCare to the very end of the project and can carry you through. Who else Can offer the services, the turnkey solution that you guys can offer? Today, nobody fully focused on the horticulture space. There are Architect firms or engineering firms will just focus on their piece. There are some consortiums where it's really a strategic alliance, but it's still P stat is not being designed holistically like we do. And then that knowledge space with our plant scientists and horticulturists being there every step of the way to make sure that we're doing a great job. It doesn't exist. The only piece, Scott, that we do not own is the general contracting piece. So that piece, we're building strong relationships in different regions. So we could sub out that piece and manage those contractors with our construction management initiative That is all the questions we have for today. Please reach out to investors at urbangrow.com with any additional questions. I will now turn the call back over to Bradley for closing comments. Thank you, Hillary, and thank you everybody for those great questions. Listen. We really appreciate you taking the time to hear more. Great, great turnout. We continue to have record quarters with revenues, adjusted EBITDA, backlog and now profits. And I'm confident that the initiatives discussed today are absolutely going to continue and drive future momentum. The controlled environment ag opportunity is Strengthening for both cannabis and food, both very strong sectors and RIP, the experts and our acquired expertise to take advantage and capitalize on these global market opportunities. We're continuing to add members to our teams to support Our increasing demand and as Dick alluded to our leadership team, we're driving future growth by continuing to vet potential accretive acquisitions and also investments in other companies, both inside and outside of the cannabis and horticulture spaces. Most importantly, it's our dedication to work side by side with our clients. And that is what is allowing us to organically expand with them as they expand and it also attracts new clients to Urban Grove and that's combined what's driving continued revenue and market share growth. So we are and fully expect to continue to delivering sustainable value to our clients and our shareholders. Listen. And thank you again for your interest. We look forward to another great call in a quarter and have a wonderful evening. Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.