GrowGeneration Reports Second Quarter 2024 Financial Results
Net Revenue of
Gross Profit Margin of
Operating Expenses reduced by
Net Loss of
Second Quarter 2024 Summary
-
Net sales increased
11.8% quarter-over-quarter to$53.5 million -
Proprietary brand sales as a percentage of Cultivation and Gardening net sales increased to
21.5% as compared to16.7% in the same prior year period; -
Gross profit margin of
26.9% , a 110 basis point sequential improvement and an increase from26.8% in the comparable 2023 period; -
Operating expenses decreased
$2.5 million $20.9 million -
Net loss of
$5.9 million $2.9 million -
Adjusted EBITDA(1) loss of
$1.1 million $1.7 million -
Cash, cash equivalents, and marketable securities of
$56.0 million
Darren Lampert, GrowGen’s Co-Founder and Chief Executive Officer, stated, “We are very pleased to report solid second quarter results that reflect significant progress in several key areas of our business. Second quarter net revenue increased
“Recently, we provided details on a comprehensive restructuring plan designed to fundamentally reposition GrowGen as we focus on our proprietary brands, a digital sales transformation centered on commercial customers, and streamlining operations to align with current industry-wide conditions. By executing this plan, we expect to generate margin improvement, reduce expenses by approximately
Second Quarter 2024 Consolidated Results
Net sales declined
Additionally, net sales of commercial fixtures within our Storage Solutions segment decreased by
Gross profit was
Gross profit margin increased slightly to
Store and other operating expenses in the quarter ended June, 30, 2024 were
Selling, general, and administrative expenses in the quarter ended June, 30, 2024 were
GAAP net loss was
Adjusted EBITDA(1) was a loss of
Cash, cash equivalents, and marketable securities as of June 30, 2024 were
Total current liabilities, including accounts payable, accrued payroll, and other liabilities as of June 30, 2024 were
Geographical Footprint
The Company’s geographic footprint for its Cultivation and Gardening segment spans 879,000 square feet of retail and warehouse space and includes 43 retail locations across 18 states. In the first half of 2024, the Company consolidated 7 retail stores where it generally expects to be able to serve the same customer base through a single location, thereby reducing redundancies in cost structure. In July 2024, the Company announced the planned closure of an additional 12 redundant or underperforming stores in the second half of 2024 as part of a strategic restructuring plan, following which the Company would have a total of 31 retail stores operating in its portfolio.
Fiscal Year 2024 Financial Outlook(2)
As a result of its previously announced restructuring plan, GrowGen expects full-year 2024 net sales in the range of
Footnotes
(1) Adjusted EBITDA represents earnings before interest, 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 any acquisitions and store openings completed in 2024 and 2023, but do not include any unannounced acquisitions.
Conference Call
The Company will host a conference call today, August 8, 2024, at 4:30PM Eastern Time. To participate in the call, please dial (888) 836-8184 (domestic) or (289) 819-1350 (international). The conference code is 99524. 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 two hours after the conclusion of the call and remain available for 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
To be added to the GrowGeneration email distribution list, please email GrowGen@kcsa.com with GRWG.
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. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(Unaudited, in thousands, except shares) |
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|
June 30,
|
|
December 31,
|
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ASSETS |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
27,578 |
|
|
$ |
29,757 |
|
Marketable securities |
|
28,407 |
|
|
|
35,212 |
|
Accounts receivable, net of allowance for credit losses of |
|
9,663 |
|
|
|
8,895 |
|
Notes receivable, current, net of allowance for credit losses of |
|
838 |
|
|
|
193 |
|
Inventory |
|
60,639 |
|
|
|
64,905 |
|
Prepaid income taxes |
|
177 |
|
|
|
516 |
|
Prepaid and other current assets |
|
7,284 |
|
|
|
7,973 |
|
Total current assets |
|
134,586 |
|
|
|
147,451 |
|
Property and equipment, net |
|
24,410 |
|
|
|
27,052 |
|
Operating leases right-of-use assets, net |
|
38,984 |
|
|
|
39,933 |
|
Notes receivable, long-term |
|
— |
|
|
|
106 |
|
Intangible assets, net |
|
12,827 |
|
|
|
16,180 |
|
Goodwill |
|
7,525 |
|
|
|
7,525 |
|
Other assets |
|
844 |
|
|
|
843 |
|
TOTAL ASSETS |
$ |
219,176 |
|
|
$ |
239,090 |
|
LIABILITIES & STOCKHOLDERS' EQUITY |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
12,702 |
|
|
$ |
11,666 |
|
Accrued liabilities |
|
2,429 |
|
|
|
2,530 |
|
Payroll and payroll tax liabilities |
|
2,224 |
|
|
|
2,169 |
|
Customer deposits |
|
3,007 |
|
|
|
5,359 |
|
Sales tax payable |
|
1,221 |
|
|
|
1,185 |
|
Current maturities of operating lease liabilities |
|
7,632 |
|
|
|
8,021 |
|
Total current liabilities |
|
29,215 |
|
|
|
30,930 |
|
|
|
|
|
||||
Operating lease liabilities, net of current maturities |
|
33,867 |
|
|
|
34,448 |
|
Other long-term liabilities |
|
317 |
|
|
|
317 |
|
Total liabilities |
|
63,399 |
|
|
|
65,695 |
|
Commitments and contingencies (Note 13) |
|
|
|
||||
Stockholders' equity: |
|
|
|
||||
Common stock; |
|
61 |
|
|
|
61 |
|
Treasury stock, 938,949 shares and zero shares at cost as of June 30, 2024 and December 31, 2023, respectively |
|
(2,316 |
) |
|
|
— |
|
Additional paid-in capital |
|
374,737 |
|
|
|
373,433 |
|
Accumulated deficit |
|
(216,705 |
) |
|
|
(200,099 |
) |
Total stockholders' equity |
|
155,777 |
|
|
|
173,395 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
219,176 |
|
|
$ |
239,090 |
|
GROWGENERATION CORP. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(Unaudited, in thousands, except per share amounts) |
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|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Net sales |
$ |
53,536 |
|
|
$ |
63,925 |
|
|
$ |
101,424 |
|
|
$ |
120,752 |
|
Cost of sales (exclusive of depreciation and amortization shown below) |
|
39,115 |
|
|
|
46,788 |
|
|
|
74,639 |
|
|
|
87,326 |
|
Gross profit |
|
14,421 |
|
|
|
17,137 |
|
|
|
26,785 |
|
|
|
33,426 |
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Store operations and other operational expenses |
|
10,210 |
|
|
|
12,008 |
|
|
|
20,844 |
|
|
|
24,630 |
|
Selling, general, and administrative |
|
7,104 |
|
|
|
7,503 |
|
|
|
15,012 |
|
|
|
14,341 |
|
Estimated credit losses (recoveries) |
|
6 |
|
|
|
107 |
|
|
|
(482 |
) |
|
|
424 |
|
Depreciation and amortization |
|
3,615 |
|
|
|
3,824 |
|
|
|
7,357 |
|
|
|
7,756 |
|
Total operating expenses |
|
20,935 |
|
|
|
23,442 |
|
|
|
42,731 |
|
|
|
47,151 |
|
|
|
|
|
|
|
|
|
||||||||
Loss from operations |
|
(6,514 |
) |
|
|
(6,305 |
) |
|
|
(15,946 |
) |
|
|
(13,725 |
) |
|
|
|
|
|
|
|
|
||||||||
Other income (expense): |
|
|
|
|
|
|
|
||||||||
Other (expense) income |
|
(10 |
) |
|
|
(51 |
) |
|
|
37 |
|
|
|
809 |
|
Interest income |
|
737 |
|
|
|
753 |
|
|
|
1,339 |
|
|
|
1,181 |
|
Interest expense |
|
(14 |
) |
|
|
(3 |
) |
|
|
(70 |
) |
|
|
(5 |
) |
Total other income |
|
713 |
|
|
|
699 |
|
|
|
1,306 |
|
|
|
1,985 |
|
|
|
|
|
|
|
|
|
||||||||
Net loss before taxes |
|
(5,801 |
) |
|
|
(5,606 |
) |
|
|
(14,640 |
) |
|
|
(11,740 |
) |
|
|
|
|
|
|
|
|
||||||||
Provision for income taxes |
|
(95 |
) |
|
|
(93 |
) |
|
|
(93 |
) |
|
|
(93 |
) |
|
|
|
|
|
|
|
|
||||||||
Net loss |
$ |
(5,896 |
) |
|
$ |
(5,699 |
) |
|
$ |
(14,733 |
) |
|
$ |
(11,833 |
) |
|
|
|
|
|
|
|
|
||||||||
Net loss per share, basic |
$ |
(0.10 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.19 |
) |
Net loss per share, diluted |
$ |
(0.10 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.19 |
) |
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding, basic |
|
60,681 |
|
|
|
61,077 |
|
|
|
61,090 |
|
|
|
61,053 |
|
Weighted average shares outstanding, diluted |
|
60,681 |
|
|
|
61,077 |
|
|
|
61,090 |
|
|
|
61,053 |
|
Use of Non-GAAP Financial Information
EBITDA and Adjusted EBITDA are non-GAAP financial measures commonly used in our industry and should not be construed in isolation as substitutions to net income (loss) as indicators of operating performance or as alternatives to cash flow provided by operating activities as a measure of liquidity (each as determined in accordance with GAAP). GrowGeneration defines EBITDA as net income (loss) before interest income, interest expense, income tax expense, depreciation and amortization, and Adjusted EBITDA as further adjusted to exclude certain items such as stock-based compensation, impairment losses, restructuring and corporate rationalization costs, and other non-core or non-recurring expenses and to include income from our marketable securities as these investments are part of our operational business strategy and increase the cash available to us. We believe these non-GAAP measures, when used in conjunction with net income (loss), provide meaningful supplemental information to both management and investors, facilitating the evaluation of performance across reporting periods. Management 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. We believe that these non-GAAP financial measures may be useful to investors in their assessment of our operating performance and valuation. In addition, these non-GAAP financial measures address questions routinely received from analysts and investors and, in order to ensure that all investors have access to the same data, we have determined that it is appropriate to make this data available to all investors.
Set forth below is a reconciliation of EBITDA and Adjusted EBITDA to net income (loss) (in thousands):
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Net loss |
$ |
(5,896 |
) |
|
$ |
(5,699 |
) |
|
$ |
(14,733 |
) |
|
$ |
(11,833 |
) |
Provision for income taxes |
|
95 |
|
|
|
93 |
|
|
|
93 |
|
|
|
93 |
|
Interest income |
|
(737 |
) |
|
|
(753 |
) |
|
|
(1,339 |
) |
|
|
(1,181 |
) |
Interest expense |
|
14 |
|
|
|
3 |
|
|
|
70 |
|
|
|
5 |
|
Depreciation and amortization |
|
3,615 |
|
|
|
3,824 |
|
|
|
7,357 |
|
|
|
7,756 |
|
EBITDA |
$ |
(2,909 |
) |
|
$ |
(2,532 |
) |
|
$ |
(8,552 |
) |
|
$ |
(5,160 |
) |
Share-based compensation |
|
654 |
|
|
|
947 |
|
|
|
1,432 |
|
|
|
1,514 |
|
Investment income |
|
718 |
|
|
|
1,181 |
|
|
|
1,298 |
|
|
|
1,181 |
|
Restructuring and other charges (1) |
|
394 |
|
|
|
1,260 |
|
|
|
1,808 |
|
|
|
1,519 |
|
Adjusted EBITDA |
$ |
(1,143 |
) |
|
$ |
856 |
|
|
$ |
(4,014 |
) |
|
$ |
(946 |
) |
(1) Consists primarily of expenditures related to the activity of store and distribution consolidation and one-time severances |
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View source version on businesswire.com: https://www.businesswire.com/news/home/20240808677273/en/
KCSA Strategic Communications
Philip Carlson
Managing Director
T: 212-896-1233
E: GrowGen@kcsa.com
Source: GrowGeneration Corp.
