GrowGeneration Reports Fourth Quarter and Full Year 2023 Financial Results; Provides First Quarter and Full Year 2024 Guidance
- Exceeded full-year revenue guidance with $225.9 million in net revenue.
- Reported a net loss of $46.5 million for the full year 2023.
- 2024 outlook projects revenue between $205 million to $215 million.
- Reviewing strategic opportunities for MMI, focusing on benching, racking, and storage solutions.
- Net revenues decreased by approximately 18.8% compared to the prior year.
- Adjusted EBITDA(1) showed a loss of $5.6 million for the full year 2023.
- Same-store sales decreased by 3.6% in the fourth quarter of 2023.
Insights
The reported full year net revenue of $225.9 million surpassing guidance and a net loss of $46.5 million present a mixed financial health for GrowGeneration Corp. The revenue beat indicates resilience in their business model despite a notable 18.8% year-over-year decline. The gross profit margin improvement by 180 basis points suggests effective cost management and a strategic shift towards higher-margin proprietary products. However, investors should consider the significant net loss, which, although improved from the previous year, still reflects challenges in achieving profitability.
Furthermore, the reduction in operating expenses by $13.6 million and the lack of debt on the balance sheet are positive indicators of financial prudence. The company’s cash position of $65.0 million provides a cushion for future strategic initiatives. However, the forecast for 2024 with revenues expected to decline further could be a concern, indicating either a conservative outlook or underlying market challenges.
The decline in same-store sales by 19.3% is a critical metric indicating the company's organic growth challenges within existing locations. This metric, often used to gauge a retailer's health, suggests that GrowGeneration is facing competitive pressures or market saturation. The strategic decision to close and consolidate 14 retail locations aligns with efforts to optimize the operational footprint and may improve efficiency but also highlights the need to recalibrate market presence.
The company's pivot towards the home gardening market with The Harvest Company could signal an attempt to diversify revenue streams and reduce reliance on the cannabis sector's legislative volatility. This diversification could potentially open new customer segments and revenue channels, but it also requires careful navigation of consumer preferences and market dynamics.
The strategic review of MMI, the storage solutions business, suggests a focus on core competencies and potential divestiture to streamline operations. Engaging Lake Street Capital Markets indicates seriousness in exploring strategic opportunities, which could result in a sale or spin-off. The success of MMI, with $31.4 million in revenue and $8.9 million in operating profit, demonstrates its viability as a stand-alone entity or as an attractive acquisition target.
However, any transaction would be subject to regulatory approvals and market conditions. The outcome of this strategic exploration could have significant implications for GrowGeneration's capital allocation and focus on its Cultivation and Gardening segment. Stakeholders should monitor this process closely as it could impact the company's strategic direction and financial position.
Full Year Net Revenue of
Full Year Net Loss of
2024 Outlook Calls for Revenue from
Company to Review Strategic Opportunities for MMI
Fourth Quarter 2023 Highlights Compared to Prior Year
-
Net revenues decreased approximately
9% to , and same-store sales decreased$49.5 million 3.6% -
Gross profit increased to
, or$11.6 million 23.5% of net revenues, from , or$9.6 million 17.6% of net revenues -
Net loss of
, or$27.3 million per diluted share, compared to a net loss of$(0.44) , or$15.0 million per diluted share, primarily due to non-cash impairment$(0.25) -
Adjusted EBITDA(1) loss of
, compared to a loss of$3.7 million $10.2 million
Full Year 2023 Highlights Compared to Prior Year
-
Net revenues decreased approximately
18.8% to , beating the Company’s previous guidance$225.9 million -
Gross profit decreased to
, or$61.3 million 27.1% of net revenues, from , or$70.3 million 25.3% of net revenues -
Net loss of
, or$46.5 million per diluted share, compared to a net loss of$(0.76) , or$163.7 million per diluted share$(2.69) -
Adjusted EBITDA(1) loss of
, compared to earnings of$5.6 million $16.7 million -
Reduced operating expense and selling, general, and administrative expense base by roughly
through operating efficiencies and strategic cost rationalization$13.6 million -
Cash, cash equivalents, and marketable securities of
as of December 31, 2023, along with no debt$65.0 million -
Generated
of operating cash, primarily driven by reduction of inventory$1.4 million
Darren Lampert, GrowGen’s Co-Founder and Chief Executive Officer, stated, “I am pleased that our hard work and dedication to executing our strategic initiatives in 2023 allowed us to surpass our full year revenue guidance and be in line with our full year Adjusted EBITDA guidance. Our profit margins increased nearly 200 basis points as well, driven by more proprietary product sales and consumable product sales as a percent of total sales. Lastly, we ended 2023 with
Mr. Lampert continued, “2023 was a year of strategic execution and resilience for GrowGen, and we continue into 2024 laser-focused on positioning the business for long-term, profitable growth. One key pillar for growth is continuing to enhance our brand portfolio, including launching new products and increasing sales in our higher margin proprietary brands. We are also expanding into the home gardening market with The Harvest Company, which we launched earlier this year. We believe GrowGen’s expertise in advanced cultivation technologies and sustainable practices developed within the cannabis industry will allow us to succeed in this new market, where consumers are seeking home gardening products to grow healthy, organic, and sustainable microgreens, fruits, and vegetables. Lastly, we remain focused on creating and sustaining operational efficiencies to position ourselves to capitalize on market opportunities as they arise, and I believe they will arise sooner than later as the legislative landscape around cannabis continues to become more favorable.”
Reporting Segments Update
During the fourth quarter of 2023, the Company realigned its operating and reportable segments to correspond with changes to its operating model, management structure, and internal reporting, and to better align with how the Chief Executive Officer makes operating decisions, allocates resources, and assesses performance. Accordingly, the Company identified two operating segments, each its own reportable segment, based on its major lines of business: the Cultivation and Gardening segment; and the Storage Solutions segment.
Fourth Quarter 2023 Consolidated Results
Net revenues decreased
Gross profit was
GAAP net loss was
Non-GAAP Adjusted EBITDA(1) was a loss of
Cash, cash equivalents, and marketable securities as of December 31, 2023 were
Full Year 2023 Consolidated Results
Net revenues decreased
Gross profit was
GAAP net loss was
Non-GAAP Adjusted EBITDA(1) was a loss of
Geographic Footprint
The Company’s geographic footprint for its Cultivation and Gardening segment spans approximately 942,000 square feet of retail and warehouse space across 18 states. During 2023, the Company acquired or opened 5 new locations and expanded its physical retail presence into 2 new states. The Company also reduced redundancies in cost structure by closing and consolidating 14 retail locations in 2023, where we were generally able to serve the same customer base through a single location. To date in 2024, the Company further closed and consolidated 3 additional stores and may consider additional store consolidations in the future.
First Quarter and Full Year 2024 Outlook(2)
-
Full year 2024 net revenues in the range of
to$205 million $215 million -
Full year 2024 Adjusted EBITDA(1) from a
loss to a$2 million profit$3 million -
First quarter 2024 net revenues in the range of
to$45 million with Adjusted EBITDA(1) between a$48 million loss and breakeven$2 million
Exploring Strategic Opportunities for MMI
The Company also announced today that it is exploring strategic opportunities for its benching, racking, and storage solutions business, MMI, which was acquired by the Company in late 2021 and currently constitutes the Company’s Storage Solutions segment.
Mr. Lampert commented, “MMI has continued to exceed our expectations, with full year 2024 revenue of
Footnotes
(1) |
|
Adjusted EBITDA represents earnings before interest, 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 2023 and 2022, but do not include any unannounced acquisitions. |
Conference Call
The Company will host a conference call today, March 13, 2024, at 4:30 PM Eastern Time to discuss financial results for fourth quarter and full year ended December 31, 2023. To participate in the call, please dial (888) 664-6392 (domestic) or (416) 764-8659 (international). The conference code is 80413128. The call will also be webcast and can be accessed here or in the Investor Relations section of the GrowGen website at: ir.growgeneration.com.
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 GrowGeneration Corp.
GrowGen is a leading developer, marketer, retailer, and distributor of products for both indoor and outdoor hydroponic and organic gardening, as well as customized storage solutions. GrowGen carries and sells thousands of products, such as nutrients, additives, growing media, lighting, environmental control systems, and benching and racking, including proprietary brands such as Charcoir, Drip Hydro, Power Si, Ion lights, The Harvest Company, and more. Incorporated in
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 United States Securities and Exchange Commission, available at: www.sec.gov, and on the Company’s website at: www.growgeneration.com.
ITEM 1. FINANCIAL STATEMENTS
GROWGENERATION CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands except shares) |
|||||||
|
December 31, 2023 |
|
December 31, 2022 |
||||
ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
29,757 |
|
|
$ |
40,054 |
|
Marketable securities |
|
35,212 |
|
|
|
31,852 |
|
Accounts receivable, net of allowance for credit losses of |
|
8,895 |
|
|
|
8,336 |
|
Notes receivable, current, net of allowance for credit losses of |
|
193 |
|
|
|
1,214 |
|
Inventory |
|
64,905 |
|
|
|
77,091 |
|
Prepaid income taxes |
|
516 |
|
|
|
5,679 |
|
Prepaid and other current assets |
|
7,973 |
|
|
|
6,455 |
|
Total current assets |
|
147,451 |
|
|
|
170,681 |
|
Property and equipment, net |
|
27,052 |
|
|
|
28,669 |
|
Operating leases right-of-use assets, net |
|
39,933 |
|
|
|
46,433 |
|
Notes receivable, long term |
|
106 |
|
|
|
— |
|
Intangible assets, net |
|
16,180 |
|
|
|
30,878 |
|
Goodwill |
|
7,525 |
|
|
|
15,978 |
|
Other assets |
|
843 |
|
|
|
803 |
|
TOTAL ASSETS |
$ |
239,090 |
|
|
$ |
293,442 |
|
LIABILITIES & STOCKHOLDERS’ EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
11,666 |
|
|
$ |
15,728 |
|
Accrued liabilities |
|
2,530 |
|
|
|
1,535 |
|
Payroll and payroll tax liabilities |
|
2,169 |
|
|
|
4,671 |
|
Customer deposits |
|
5,359 |
|
|
|
4,338 |
|
Sales tax payable |
|
1,185 |
|
|
|
1,341 |
|
Current maturities of lease liability |
|
8,021 |
|
|
|
8,131 |
|
Current portion of long-term debt |
|
— |
|
|
|
50 |
|
Total current liabilities |
|
30,930 |
|
|
|
35,794 |
|
Operating lease liability, net of current maturities |
|
34,448 |
|
|
|
40,659 |
|
Other long-term liabilities |
|
317 |
|
|
|
593 |
|
Total liabilities |
|
65,695 |
|
|
|
77,046 |
|
Commitments and contingencies |
|
|
|
||||
Stockholders’ Equity: |
|
|
|
||||
Common stock; |
|
61 |
|
|
|
61 |
|
Additional paid-in capital |
|
373,433 |
|
|
|
369,938 |
|
Retained earnings (deficit) |
|
(200,099 |
) |
|
|
(153,603 |
) |
Total stockholders’ equity |
|
173,395 |
|
|
|
216,396 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
239,090 |
|
|
$ |
293,442 |
|
GROWGENERATION CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) |
|||||||||||||||
|
|||||||||||||||
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
||||||||
Net sales |
$ |
49,452 |
|
|
$ |
54,456 |
|
|
$ |
225,882 |
|
|
$ |
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FAQ
What is GrowGeneration Corp.'s (GRWG) full-year net revenue for 2023?
GrowGeneration Corp. reported full-year net revenue of $225.9 million for 2023.
What was the net loss for GrowGeneration Corp. (GRWG) in 2023?
The net loss for GrowGeneration Corp. in 2023 was $46.5 million.
What is the revenue outlook for GrowGeneration Corp. (GRWG) in 2024?
The revenue outlook for GrowGeneration Corp. in 2024 ranges from $205 million to $215 million.
What strategic opportunities is GrowGeneration Corp. (GRWG) exploring?
GrowGeneration Corp. is exploring strategic opportunities for its benching, racking, and storage solutions business, MMI.
GROW GENERATION CORP
NASDAQ:GRWGGRWG RankingsGRWG Latest NewsGRWG Stock Data
98.05M
54.61M
7.51%
49.41%
6.07%
Specialty Retail
Retail-building Materials, Hardware, Garden Supply
United States of America
GREENWOOD VILLAGE
|