Management expects MJ12 Design Studio and its parent company to generate $7-$9 million of revenue and $1.5-$2.0 million of Adjusted EBITDA over the next 12-month period;

Management expects that the synergies of adding architectural planning and design services to its existing solutions offering will add incremental engineering services and cultivation equipment revenues of more than $10 million over the next 12-month period;

Acquisition drives high margin services revenue and adds approximately 70 open projects, allowing the Company to now offer on-site project management and complete design packages for retail, extraction facilities, and processing facilities.

LAFAYETTE, Colo. (GLOBE NEWSWIRE) — urban-gro, Inc. (Nasdaq: UGRO) (“urban-gro” or the “Company”), a fully-integrated architectural, engineering and cultivation systems integration company for commercial cannabis and food-focused Controlled Environment Agriculture (“CEA”) facilities, announced that it has completed the acquisition of MJ12 Design Studio and associated companies, 2WR of Georgia and 2WR of Colorado (2WR+ Partners). The acquisition extends urban-gro’s services into early-stage conceptual design and planning, and it creates the industry’s first fully integrated architecture, engineering, and cultivation systems company serving the cannabis and food-focused CEA sectors.

urban-gro funded the $9.1 million transaction with a combination of cash and UGRO common stock (issued out of corporate treasury stock from prior buyback program), including contingent consideration of up to $2.0 million based on achievement of certain performance metrics. The company expects the transaction to be accretive to earnings within the first year and drive significant waterfall revenue opportunities for urban-gro’s existing suite of products and services. In a pandemic-impacted 2020, 2WR+ Partners improved upon 2019 numbers and reported revenue of $6.2 million, net income of $0.9 million, Adjusted EBITDA of $1.0 million, a gross margin of 43% and an operating margin of 16%.

“In addition to increasing the value to our shareholders through an increased earnings per share in the first year following consolidation, we believe that this acquisition creates more than $10 million in incremental waterfall revenues for our existing offerings of engineering and design services as well as cultivation equipment sales,” said Bradley Nattrass, Chairman and CEO. “With the inclusion of architectural design to complement our existing services, we can now offer fully integrated design solutions for processing, extraction, and retail facilities as well. With this acquisition and continuing to work closely with our existing strategic manufacturing partners, we are much closer towards delivering complete, end-to-end turn-key indoor CEA facilities for our clients.”

“We have a long history of working with MJ12 Design Studio on a variety of major CEA projects. The past successes of urban-gro and MJ12 Design Studio provide an excellent framework for how our teams will come together as one entity moving forward, providing significant value to our customers. We’ve already launched this integration, recently bringing the company’s now combined 80 employees together to kick-off this exciting new stage of urban-gro’s evolution,” added Mr. Nattrass.

MJ12 Design Studio Principal, Sam Andras, AIA, will join urban-gro’s senior leadership team in the role of Executive Vice President of Professional Services. Andras will lead urban-gro’s full building and cultivation systems design services. Collectively, the Company’s portfolio of experience totals over 450 CEA facilities.

“On behalf of our 23 employees, we are excited to become part of the urban-gro team,” Andras said. “Through the synergies of our two firms, we can leverage the collective experience and expertise of our professionals to deliver high performance facilities that will allow for cultivating the highest quality production of plant-based medicines and food crops at the local level across the globe. We bring with us a deeply experienced team with over 110 CEA facility designs comprising over 9-million square feet in 21-states and four countries. I view the ability to provide fully integrated design solutions under one roof as a natural step in the progression of offerings within the CEA industry and something the industry has needed.”

“While urban-gro will acquire MJ12 Design Studio for coordinated architecture design services in the CEA market, urban-gro will continue to work with other architectural partners at our clients’ request,” said Dick Akright, Chief Financial Officer. “Similarly, 2WR+ Partners will continue to work with and develop new relationships with other engineering and design partners, as well as provide services in non-cultivation markets including education, healthcare, commercial, civic, multi-family, and hospitality. The addition of these high margin services to our revenue mix as well as the significant waterfall opportunities from this acquisition will continue to strengthen urban-gro’s financial position for the future.”

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