GrowGeneration Reports Fourth Quarter and Full Year 2022 Financial Results; Provides First Quarter and Full Year 2023 Guidance
GrowGeneration Corp. (NASDAQ: GRWG) reported a full-year net revenue of $278.2 million, at the high end of guidance, but experienced a significant net loss of $163.7 million for 2022. The fourth quarter saw revenues fall to $54.5 million, a 40% decrease, with same-store sales down 51.9%. The gross profit for the year also declined to $70.3 million, representing 25.3% of revenues. The company projects 2023 revenues between $250 million and $270 million, with adjusted EBITDA expected to improve from a loss of $4 million to a potential profit of $1 million.
- Projected 2023 revenue guidance of $250 million to $270 million.
- Full-year operating cash generated of $11.9 million attributed to reduced inventory.
- Successful cost reduction efforts, including $20.7 million in operating expenses cut.
- Net loss increased significantly to $163.7 million in 2022, compared to prior year profit.
- Full-year net revenue down 34.2% compared to 2021.
- Significant 51.6% decrease in same-store sales.
Full Year
Full Year
For Full Year 2023, Expected Revenue in the Range of
Fourth Quarter 2022 Highlights Compared to Prior Year
-
Net revenues decreased approximately
40% to and same-store sales decreased$54.5 million 51.9% -
Gross profit decreased to
, or$9.6 million 17.6% of net revenues, from , or$23.1 million 25.5% of net revenues, primarily due to aggressive inventory clearance and an increase in inventory reserves -
Net loss was
, or$15.0 million per diluted share, compared to net loss of$(0.25) , or$4.1 million per diluted share$(0.07) -
Adjusted EBITDA(1) was a loss of
, compared to a loss of$10.2 million , due in part to approximately$1.7 million in expense associated with closure of$1.0 million Las Vegas , Compton, and Cotati locations and nearly associated with inventory cleanup measures$4.0 million -
Cash and short-term securities were
as of$71.9 million December 31, 2022
Full Year 2022 Highlights Compared to Prior Year
-
Net revenue decreased approximately
34.2% to , towards the high end of the Company’s previous guidance range$278.2 million -
Gross profit decreased to
, or$70.3 million 25.3% of net revenues, from , or$118.2 million 28.0% of net revenues, with the decrease primarily due to a decline of in same-store sales, representing a$178.0 million 51.6% decrease, which is primarily attributable to the downturn in the business cycle for cannabis cultivators, resulting in less supply and equipment demand -
Net loss was
, or a loss of$163.7 million per diluted share, compared to net income of$(2.69) , or$12.8 million per diluted share$0.21 -
Adjusted EBITDA(1) was a loss of
, or$16.7 million per diluted share, compared to earnings of$(0.27) , or$34.2 million per diluted share$0.57 -
Reduced operating expense and selling, general, and administrative expense base by roughly
, primarily through workforce reduction, store closures, and tighter day-to-day expense controls$20.7 million -
Invested approximately
for payments associated with technology, supply chain, and distribution investments$9.0 million -
On a full-year basis the Company generated
of operating cash, primarily driven by the reduction of inventory$11.9 million
Fourth Quarter 2022 Consolidated Results
Net revenues decreased
Gross profit was
GAAP net loss was
Non-GAAP Adjusted EBITDA(1) was a loss of
Cash and short-term securities as of
Full Year 2022 Consolidated Results
Net revenues decreased
Gross profit was
GAAP net loss was
Non-GAAP Adjusted EBITDA(1) was a loss of
M&A Activity
The Company consummated the following acquisitions in the fourth quarter of 2022:
-
On
November 3, 2022 , the Company purchased certain assets ofSt. Louis Hydroponic Company , a hydroponic retail store inSt. Louis, Missouri .
Geographic Footprint
The Company’s supply chain spans approximately 946,000 square feet of retail and warehouse space across 16 states. In the full year 2022, the Company closed 8 stores and opened 5 new stores that included 4 new states where the Company did not previously have retail operations.
Full Year 2023 Outlook(2)
-
Full year 2023 net revenues in the range of
to$250 million $270 million -
Full year 2023 Adjusted EBITDA(1) from a
loss to$4 million profit$1 million -
First quarter 2023 net revenues in the range of
to$55 million with Adjusted EBITDA(1) loss between$57 million and$2 million $4 million
Footnotes
(1) |
Adjusted EBITDA represents earnings before income, taxes, depreciation, and amortization as adjusted for certain items as set forth in the reconciliation table of |
|
(2) | Sales and Adjusted EBITDA(1) guidance metrics are inclusive of acquisitions and store openings completed in 2022 and 2021, but do not include any unannounced acquisitions. |
Conference Call
The Company will host a conference call today,
A replay of the webcast will be available approximately two hours after the conclusion of the call and remain available for approximately 90 calendar days.
About
Currently, GrowGen has 60 retail locations across 16 states in the
Forward Looking Statements
This press release may include predictions, estimates, or other information considered forward-looking within the meaning of applicable securities laws. While these forward-looking statements represent current judgments, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect opinions only as of the date of this release. Please keep in mind that the Company does not have an obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. When used herein, words such as “look forward,” “believe,” “continue,” “building,” “may,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “hopes,” or the negative of these or similar terms, or variations of such words, and similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially from any forward-looking statements made by us herein are often discussed in filings made with the
ITEM 1. FINANCIAL STATEMENTS
|
||||||
|
|
|
|
|||
ASSETS |
|
|
|
|||
Current assets: |
|
|
|
|||
Cash and cash equivalents |
$ |
40,054 |
|
|
$ |
41,372 |
Marketable securities |
|
31,852 |
|
|
|
39,793 |
Accounts receivable, net of allowance for doubtful accounts of |
|
8,336 |
|
|
|
5,741 |
Notes receivable, current, net of allowance for doubtful accounts of |
|
1,214 |
|
|
|
2,440 |
Inventory |
|
77,091 |
|
|
|
105,571 |
Prepaid income taxes |
|
5,679 |
|
|
|
5,856 |
Prepaids and other current assets |
|
6,455 |
|
|
|
16,116 |
Total current assets |
|
170,681 |
|
|
|
216,889 |
|
|
|
|
|||
Property and equipment, net |
|
28,669 |
|
|
|
24,116 |
Operating leases right-of-use assets, net |
|
46,433 |
|
|
|
43,730 |
Intangible assets, net |
|
30,878 |
|
|
|
48,402 |
|
|
15,978 |
|
|
|
125,401 |
Other assets |
|
803 |
|
|
|
800 |
TOTAL ASSETS |
$ |
293,442 |
|
|
$ |
459,338 |
|
|
|
|
|||
LIABILITIES & STOCKHOLDERS’ EQUITY |
|
|
|
|||
Current liabilities: |
|
|
|
|||
Accounts payable |
$ |
15,728 |
|
|
$ |
17,033 |
Accrued liabilities |
|
1,535 |
|
|
|
2,044 |
Payroll and payroll tax liabilities |
|
4,671 |
|
|
|
7,440 |
Customer deposits |
|
4,338 |
|
|
|
11,686 |
Sales tax payable |
|
1,341 |
|
|
|
1,923 |
Current maturities of lease liability |
|
8,131 |
|
|
|
6,858 |
Current portion of long-term debt |
|
50 |
|
|
|
92 |
Total current liabilities |
|
35,794 |
|
|
|
47,076 |
|
|
|
|
|||
Deferred tax liability |
|
— |
|
|
|
2,359 |
Operating lease liability, net of current maturities |
|
40,659 |
|
|
|
38,546 |
Long-term debt, net of current portion |
|
— |
|
|
|
66 |
Other long-term liabilities |
|
593 |
|
|
|
— |
Total liabilities |
|
77,046 |
|
|
|
88,047 |
Commitments and contingencies |
|
|
|
|||
Stockholders’ Equity: |
|
|
|
|||
Common stock; |
|
61 |
|
|
|
60 |
Additional paid-in capital |
|
369,938 |
|
|
|
361,087 |
Retained earnings (deficit) |
|
(153,603 |
) |
|
|
10,144 |
Total stockholders’ equity |
|
216,396 |
|
|
|
371,291 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
293,442 |
|
|
$ |
459,338 |
|
|||||||||||||||
|
Three Months Ended
|
|
Twelve Months Ended
|
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
||||||||
Sales |
$ |
54,456 |
|
|
$ |
90,579 |
|
|
$ |
278,166 |
|
|
$ |
422,489 |
|
Cost of sales (exclusive of depreciation and amortization shown below) |
|
44,894 |
|
|
|
67,490 |
|
|
|
207,903 |
|
|
|
304,248 |
|
Gross profit |
|
9,562 |
|
|
|
23,089 |
|
|
|
70,263 |
|
|
|
118,241 |
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Store operations and other operational expenses |
|
12,796 |
|
|
|
14,094 |
|
|
|
54,680 |
|
|
|
49,742 |
|
Selling, general, and administrative |
|
8,594 |
|
|
|
11,367 |
|
|
|
36,758 |
|
|
|
39,469 |
|
Bad debt expense |
|
(37 |
) |
|
|
555 |
|
|
|
1,737 |
|
|
|
1,428 |
|
Depreciation and amortization |
|
3,968 |
|
|
|
4,090 |
|
|
|
17,132 |
|
|
|
12,600 |
|
Impairment loss |
|
— |
|
|
|
— |
|
|
|
127,831 |
|
|
|
— |
|
Total operating expenses |
|
25,321 |
|
|
|
30,106 |
|
|
|
238,138 |
|
|
|
103,239 |
|
|
|
|
|
|
|
|
|
||||||||
Income (Loss) from operations |
|
(15,759 |
) |
|
|
(7,017 |
) |
|
|
(167,875 |
) |
|
|
15,002 |
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense): |
|
|
|
|
|
|
|
||||||||
Miscellaneous income (expense) |
|
137 |
|
|
|
(248 |
) |
|
|
684 |
|
|
|
(216 |
) |
Interest income |
|
390 |
|
|
|
51 |
|
|
|
580 |
|
|
|
486 |
|
Interest expense |
|
(5 |
) |
|
|
(12 |
) |
|
|
(21 |
) |
|
|
(43 |
) |
Total non-operating income (expense), net |
|
522 |
|
|
|
(209 |
) |
|
|
1,243 |
|
|
|
227 |
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) before taxes |
|
(15,237 |
) |
|
|
(7,226 |
) |
|
|
(166,632 |
) |
|
|
15,229 |
|
|
|
|
|
|
|
|
|
||||||||
Benefit (provision) for income taxes |
|
248 |
|
|
|
3,126 |
|
|
|
2,885 |
|
|
|
(2,443 |
) |
|
|
|
|
|
|
|
|
||||||||
Net income (loss) |
$ |
(14,989 |
) |
|
|
(4,100 |
) |
|
$ |
(163,747 |
) |
|
$ |
12,786 |
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share, basic |
$ |
(0.25 |
) |
|
$ |
(0.07 |
) |
|
$ |
(2.69 |
) |
|
$ |
0.22 |
|
Net income (loss) per share, diluted |
$ |
(0.25 |
) |
|
$ |
(0.07 |
) |
|
$ |
(2.69 |
) |
|
$ |
0.21 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding, basic |
|
61,064 |
|
|
|
58,427 |
|
|
|
60,813 |
|
|
|
59,223 |
|
Weighted average shares outstanding, diluted |
|
61,064 |
|
|
|
58,427 |
|
|
|
60,813 |
|
|
|
60,464 |
|
|
|||||||
|
Years Ended |
||||||
|
|
2022 |
|
|
|
2021 |
|
Cash Flows from Operating Activities: |
|
|
|
||||
Net income |
$ |
(163,747 |
) |
|
$ |
12,786 |
|
in) operating activities: |
|
|
|
||||
Depreciation and amortization |
|
17,132 |
|
|
|
12,600 |
|
Bad debt expense, net of recoveries |
|
1,737 |
|
|
|
1,428 |
|
Stock based compensation |
|
4,967 |
|
|
|
6,585 |
|
Impairment loss |
|
127,831 |
|
|
|
— |
|
Provision for deferred income taxes |
|
(2,359 |
) |
|
|
1,609 |
|
Loss on disposal of fixed assets |
|
568 |
|
|
|
198 |
|
Other |
|
— |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
||||
(Increase) decrease in: |
|
|
|
||||
Accounts and notes receivable |
|
(3,106 |
) |
|
|
(1,896 |
) |
Inventory |
|
32,890 |
|
|
|
(34,690 |
) |
Prepaid expenses and other assets |
|
10,827 |
|
|
|
(9,937 |
) |
Increase (decrease) in: |
|
|
|
||||
Accounts payable and accrued liabilities |
|
(3,359 |
) |
|
|
3,285 |
|
Operating leases |
|
508 |
|
|
|
1,282 |
|
Customer deposits |
|
(8,590 |
) |
|
|
6,362 |
|
Payroll and payroll tax liabilities |
|
(2,769 |
) |
|
|
4,785 |
|
Sales taxes payable |
|
(582 |
) |
|
|
762 |
|
Operating Activities |
|
11,948 |
|
|
|
5,159 |
|
Cash Flows from Investing Activities: |
|
|
|
||||
Assets acquired in business combinations, net of cash acquired |
|
(7,230 |
) |
|
|
(80,784 |
) |
Purchase of property and equipment |
|
(12,896 |
) |
|
|
(18,740 |
) |
Purchase of marketable securities |
|
(38,692 |
) |
|
|
(75,000 |
) |
Maturities of marketable securities |
|
46,633 |
|
|
|
35,207 |
|
Disposal of assets |
|
612 |
|
|
|
— |
|
Purchase of intangibles |
|
— |
|
|
|
— |
|
|
|
(11,573 |
) |
|
|
(139,317 |
) |
Cash Flows from Financing Activities: |
|
|
|
||||
Principal payments on long term debt |
|
(108 |
) |
|
|
(83 |
) |
Payments to tax authorities for stock-based compensation |
|
(1,618 |
) |
|
|
(4,391 |
) |
and options, net of expenses |
|
33 |
|
|
|
2,092 |
|
Activities |
|
(1,693 |
) |
|
|
(2,382 |
) |
|
|
|
|
||||
Net Increase (decrease) in Cash and Cash Equivalents |
|
(1,318 |
) |
|
|
(136,540 |
) |
Cash and Cash Equivalents at Beginning of year |
|
41,372 |
|
|
|
177,912 |
|
Cash and Cash Equivalents at End of year |
$ |
40,054 |
|
|
$ |
41,372 |
|
|
|
|
|
||||
Supplemental Information: |
|
|
|
||||
Common stock issued for intangible assets |
$ |
173 |
|
|
$ |
168 |
|
Assets acquired by issuance of stock |
$ |
5,710 |
|
|
$ |
37,272 |
|
Cash paid for interest |
$ |
21 |
|
|
$ |
43 |
|
Right to use assets acquired under new operating leases |
$ |
9,607 |
|
|
$ |
32,875 |
|
Cash paid for income taxes |
$ |
— |
|
|
$ |
6,072 |
|
Use of Non-GAAP Financial Information
The Company believes that the presentation of results excluding certain items in “Adjusted EBITDA,” such as non-cash equity compensation charges, provides meaningful supplemental information to both management and investors, facilitating the evaluation of performance across reporting periods. The Company uses these non-GAAP measures for internal planning and reporting purposes. These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income or net income per share prepared in accordance with generally accepted accounting principles.
Set forth below is a reconciliation of Adjusted EBITDA to net income (loss) (unaudited):
|
Three Months Ended
|
|||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
|
(000 |
) |
|
|
(000 |
) |
|
Net (loss) income |
$ |
(14,989 |
) |
|
$ |
(4,100 |
) |
|
Income taxes |
|
(248 |
) |
|
|
(3,126 |
) |
|
Interest income |
|
(390 |
) |
|
|
(51 |
) |
|
Interest expense |
|
5 |
|
|
|
12 |
|
|
Depreciation and Amortization |
|
3,968 |
|
|
|
4,090 |
|
|
EBITDA |
$ |
(11,654 |
) |
|
$ |
(3,175 |
) |
|
Impairment loss |
|
— |
|
|
|
— |
|
|
Share based compensation (option compensation, warrant compensation, stock issued for services) |
|
987 |
|
|
|
1,238 |
|
|
Fixed asset disposal |
|
487 |
|
|
|
197 |
|
|
|
|
|
|
|
||||
Adjusted EBITDA |
$ |
(10,180 |
) |
|
$ |
(1,740 |
) |
|
|
|
|
|
|
||||
Adjusted EBITDA per share, basic |
$ |
(0.17 |
) |
|
$ |
(0.03 |
) |
|
Adjusted EBITDA per share, diluted |
$ |
(0.17 |
) |
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
Twelve Months Ended
|
|||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
|
(000 |
) |
|
|
(000 |
) |
|
Net income |
$ |
(163,747 |
) |
|
$ |
12,786 |
|
|
Income taxes |
|
(2,885 |
) |
|
|
2,443 |
|
|
Interest income |
|
(580 |
) |
|
|
(486 |
) |
|
Interest expense |
|
21 |
|
|
|
43 |
|
|
Depreciation and Amortization |
|
17,132 |
|
|
|
12,600 |
|
|
EBITDA |
$ |
(150,059 |
) |
|
$ |
27,386 |
|
|
Impairment loss |
|
127,831 |
|
|
|
— |
|
|
Share based compensation (option compensation, warrant compensation, stock issued for services) |
|
4,967 |
|
|
|
6,585 |
|
|
Fixed asset disposal |
|
568 |
|
|
|
197 |
|
|
|
|
|
|
|
||||
Adjusted EBITDA |
|
(16,693 |
) |
|
$ |
34,168 |
|
|
|
|
|
|
|
||||
Adjusted EBITDA per share, basic |
$ |
(0.27 |
) |
|
$ |
0.58 |
|
|
Adjusted EBITDA per share, diluted |
$ |
(0.27 |
) |
|
$ |
0.57 |
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230315005864/en/
Investor Contact
GrowGenIR@icrinc.com
Source:
FAQ
What were GrowGeneration's 2022 earnings results?
What is GrowGeneration's revenue guidance for 2023?
How did GrowGeneration perform in the fourth quarter of 2022?