GrowGeneration Reports Second Quarter 2023 Financial Results
- GrowGeneration's net revenue increased by 12% in Q2 2023, reaching $63.9 million.
- The company achieved a non-GAAP Adjusted EBITDA profit of $0.9 million in Q2 2023.
- GrowGeneration completed three M&A transactions in Q2 2023 at desirable valuations, indicating sustainable growth.
- Comparable store sales decreased by 15.1% in Q2 2023 compared to the prior year.
- Changing guidance for full-year 2023 revenue to be $220 million to $225 million and Adjusted EBITDA to be a loss of $4 million to $6 million reflects a softer industry outlook.
Net Revenue of
Net Loss of
Second Quarter 2023 Highlights
-
Net sales increased
12% quarter-over-quarter to$63.9 million -
Comparable store sales decreased
15.1% to the prior year -
Gross profit margin of
26.8% , decrease of1.7% to the prior year -
Net loss of
and Adjusted EBITDA(1) gain of$5.7 million $0.9 million -
Year-to-date cash flow provided by operations of
$7.4 million -
Cash, cash equivalents, and marketable securities of
$70.6 million -
Changing full-year 2023 guidance for revenue to be
to$220 million and Adjusted EBITDA(1) to be a loss of$225 million to$4 million $6 million
Darren Lampert, GrowGeneration’s Co-Founder and Chief Executive Officer, stated, “I am pleased with our performance and results in the quarter. GrowGen is proud to share that we generated net revenue of
Lampert continued, “While I am encouraged by our results in the first-half of the year, it is no secret that the cannabis market landscape remains challenged, and these challenges are flowing through to ancillary businesses like GrowGen. The industry continues to face headwinds as it relates to capital availability and investment, as well as legislative efforts. Given the softer than anticipated industry outlook for the back-half of the year, we are changing our guidance to better align with that reality. GrowGen remains in a strong financial position to continue investing for growth while putting profitability at the forefront, all while positioning ourselves as a stronger, nimbler, and more efficient organization.”
Second Quarter 2023 Consolidated Results
Revenues declined
E-commerce revenue was
Revenue from non-retail operations, including distributed brands and MMI, was
Gross profit was
Store and other operating expenses in the second quarter of 2023 were
Selling, general, and administrative expenses in the second quarter of 2023 were
GAAP pre-tax net loss was
Non-GAAP earnings before interest, taxes, depreciation, amortization, and share-based compensation (Adjusted EBITDA)(1) was
Cash and short-term marketable securities as of June 30, 2023 were
Total current liabilities, including accounts payable, accrued payroll, and other liabilities, increased from
Geographical Footprint
The Company’s operations span approximately 953,000 square feet of retail and warehouse space at 64 existing locations across 19 states.
Fiscal Year 2023 Financial Outlook(2)
Revenue guidance for 2023 is changed to be between
Adjusted EBITDA(1) guidance is changed to be between a loss of
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 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, August 8, 2023, at 4:30PM Eastern Time. To participate in the call, please dial (888) 664-6392 (domestic) or (416) 764-8659 (international). The conference code is 95565917. This call is being webcast and can be accessed on the Investor Relations section of GrowGen's website at: https://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 owns and operates specialty retail hydroponic and organic gardening centers. Currently, GrowGen has 62 stores across 18 states. GrowGen also operates an online superstore for cultivators at growgeneration.com. GrowGen carries and sells thousands of products, including organic nutrients and soils, advanced lighting technology and state of the art hydroponic equipment to be used indoors and outdoors by commercial and home growers.
Forward Looking Statements:
This press release may include predictions, estimates or other information that might be 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,” “expect,” “believe,” “continue,” “building,” 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 those contemplated in 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.
GROWGENERATION CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except shares and per share amounts)
|
June 30,
|
|
December 31,
|
||
ASSETS |
|
|
|
||
Current assets: |
|
|
|
||
Cash and cash equivalents |
$ |
29,587 |
|
$ |
40,054 |
Marketable securities |
|
40,986 |
|
|
31,852 |
Accounts receivable, net of allowance for doubtful accounts of |
|
7,318 |
|
|
8,336 |
Notes receivable, current, net of allowance for doubtful accounts of |
|
— |
|
|
1,214 |
Inventory |
|
76,689 |
|
|
77,091 |
Prepaid income taxes |
|
477 |
|
|
5,679 |
Prepaids and other current assets |
|
7,864 |
|
|
6,455 |
Total current assets |
|
162,921 |
|
|
170,681 |
|
|
|
|
||
Property and equipment, net |
|
30,682 |
|
|
28,669 |
Operating leases right-of-use assets |
|
42,692 |
|
|
46,433 |
Intangible assets, net |
|
26,707 |
|
|
30,878 |
Goodwill |
|
16,808 |
|
|
15,978 |
Other assets |
|
881 |
|
|
803 |
TOTAL ASSETS |
$ |
280,691 |
|
$ |
293,442 |
|
|
|
|
||
LIABILITIES & STOCKHOLDERS’ EQUITY |
|
|
|
||
Current liabilities: |
|
|
|
||
Accounts payable |
$ |
17,905 |
|
$ |
15,728 |
Accrued liabilities |
|
2,575 |
|
|
1,535 |
Payroll and payroll tax liabilities |
|
2,828 |
|
|
4,671 |
Customer deposits |
|
3,746 |
|
|
4,338 |
Sales tax payable |
|
1,473 |
|
|
1,341 |
Current maturities of lease liability |
|
8,152 |
|
|
8,131 |
Current portion of long-term debt |
|
17 |
|
|
50 |
Total current liabilities |
|
36,696 |
|
|
35,794 |
Commitments and contingencies |
|
|
|
||
Operating lease liability, net of current maturities |
|
37,191 |
|
|
40,659 |
Other long-term liabilities |
|
316 |
|
|
593 |
Total liabilities |
|
74,203 |
|
|
77,046 |
|
|
|
|
||
Stockholders’ equity: |
|
|
|
||
Common stock; |
|
61 |
|
|
61 |
Additional paid-in capital |
|
371,863 |
|
|
369,938 |
Retained earnings |
|
(165,436) |
|
|
(153,603) |
Total stockholders’ equity |
|
206,488 |
|
|
216,396 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
280,691 |
|
$ |
293,442 |
GROWGENERATION CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
|
For the Three Months Ended June 30, |
|
For the Six Months Ended June 30, |
||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
||||
Net sales |
$ |
63,925 |
|
$ |
71,093 |
|
$ |
120,752 |
|
$ |
152,860 |
Cost of sales (exclusive of depreciation and amortization shown below) |
|
46,788 |
|
|
50,866 |
|
|
87,326 |
|
|
110,493 |
Gross profit |
|
17,137 |
|
|
20,227 |
|
|
33,426 |
|
|
42,367 |
|
|
|
|
|
|
|
|
||||
Operating expenses: |
|
|
|
|
|
|
|
||||
Store operations and other operational expenses |
|
12,269 |
|
|
13,767 |
|
|
25,235 |
|
|
28,299 |
Selling, general, and administrative |
|
7,503 |
|
|
9,759 |
|
|
14,341 |
|
|
19,368 |
Bad debt expense |
|
107 |
|
|
888 |
|
|
424 |
|
|
1,602 |
Depreciation and amortization |
|
3,824 |
|
|
4,783 |
|
|
7,756 |
|
|
9,289 |
Impairment loss |
|
— |
|
|
127,831 |
|
|
— |
|
|
127,831 |
Total operating expenses |
|
23,703 |
|
|
157,028 |
|
|
47,756 |
|
|
186,389 |
|
|
|
|
|
|
|
|
||||
Income from operations |
|
(6,566) |
|
|
(136,801) |
|
|
(14,330) |
|
|
(144,022) |
|
|
|
|
|
|
|
|
||||
Other income (expense): |
|
|
|
|
|
|
|
||||
Other expense |
|
1,391 |
|
|
104 |
|
|
2,595 |
|
|
513 |
Interest income |
|
— |
|
|
45 |
|
|
— |
|
|
47 |
Interest expense |
|
(431) |
|
|
(10) |
|
|
(5) |
|
|
(13) |
Total non-operating income (expense), net |
|
960 |
|
|
139 |
|
|
2,590 |
|
|
547 |
|
|
|
|
|
|
|
|
||||
Net income (loss) before taxes |
|
(5,606) |
|
|
(136,662) |
|
|
(11,740) |
|
|
(143,475) |
|
|
|
|
|
|
|
|
||||
Provision (loss) for income taxes |
|
(93) |
|
|
283 |
|
|
(93) |
|
|
1,919 |
|
|
|
|
|
|
|
|
||||
Net income (loss) |
$ |
(5,699) |
|
$ |
(136,379) |
|
$ |
(11,833) |
|
$ |
(141,556) |
|
|
|
|
|
|
|
|
||||
Net income (loss) per share, basic |
$ |
(0.09) |
|
$ |
(2.24) |
|
$ |
(0.19) |
|
$ |
(2.33) |
Net income (loss) per share, diluted |
$ |
(0.09) |
|
$ |
(2.24) |
|
$ |
(0.19) |
|
$ |
(2.33) |
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding, basic |
|
61,077 |
|
|
60,756 |
|
|
61,053 |
|
|
60,742 |
Weighted average shares outstanding, diluted |
|
61,077 |
|
|
60,756 |
|
|
61,053 |
|
|
60,742 |
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):
|
For the Three Months Ended June 30, |
||||
|
|
2023 |
|
|
2022 |
|
|
(000) |
|
|
(000) |
Net income |
$ |
(5,699) |
|
$ |
(136,379) |
Income taxes |
|
93 |
|
|
(283) |
Interest income |
|
— |
|
|
(45) |
Interest expense |
|
431 |
|
|
10 |
Depreciation and amortization |
|
3,824 |
|
|
4,783 |
EBITDA |
$ |
(1,351) |
|
$ |
(131,914) |
Impairment loss |
|
— |
|
|
127,831 |
Share based compensation (option compensation, warrant compensation, stock issued for services) |
|
947 |
|
|
1,106 |
Restructuring charges |
|
1,220 |
|
|
— |
Fixed asset disposal |
|
40 |
|
|
(12) |
Adjusted EBITDA |
$ |
856 |
|
$ |
(2,989) |
|
|
|
|
||
Adjusted EBITDA per share, basic |
$ |
0.01 |
|
$ |
(0.05) |
Adjusted EBITDA per share, diluted |
$ |
0.01 |
|
$ |
(0.05) |
|
For the Six Months Ended June 30, |
||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
(000 |
) |
|
|
(000 |
) |
Net income |
$ |
(11,833 |
) |
|
$ |
(141,556 |
) |
Income taxes |
|
93 |
|
|
|
(1,919 |
) |
Interest income |
|
— |
|
|
|
(47 |
) |
Interest expense |
|
5 |
|
|
|
13 |
|
Depreciation and amortization |
|
7,756 |
|
|
|
9,289 |
|
EBITDA |
$ |
(3,979 |
) |
|
$ |
(134,220 |
) |
Impairment loss |
|
— |
|
|
|
127,831 |
|
Share based compensation (option compensation, warrant compensation, stock issued for services) |
|
1,514 |
|
|
|
2,689 |
|
Restructuring charges |
|
1,498 |
|
|
|
— |
|
Fixed asset disposal |
|
21 |
|
|
|
(84 |
) |
Adjusted EBITDA |
$ |
(946 |
) |
|
$ |
(3,784 |
) |
|
|
|
|
||||
Adjusted EBITDA per share, basic |
$ |
(0.02 |
) |
|
$ |
(0.06 |
) |
Adjusted EBITDA per share, diluted |
$ |
(0.02 |
) |
|
$ |
(0.06 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230808545176/en/
ICR, Inc.
GrowGenIR@icrinc.com
Source: GrowGeneration Corp.