Full Year Net Revenue of $225.9 million,
Beating Guidance
Full Year Net Loss of $46.5 million and
Non-GAAP Adjusted EBITDA(1) Loss of $5.6 million, In Line with
Guidance
2024 Outlook Calls for Revenue from $205
million to $215 million and Non-GAAP Adjusted EBITDA(1) from a Loss
of $2 million to a Profit of $3 million
Company to Review Strategic Opportunities for
MMI
GrowGeneration Corp. (NASDAQ: GRWG), (“GrowGen” or the
“Company”), one of the largest retailers and distributors of
specialty hydroponic and organic gardening products in the United
States, today announced financial results for the fourth quarter
and full year ended December 31, 2023.
Fourth Quarter 2023 Highlights Compared to Prior Year
- Net revenues decreased approximately 9% to $49.5 million, and
same-store sales decreased 3.6%
- Gross profit increased to $11.6 million, or 23.5% of net
revenues, from $9.6 million, or 17.6% of net revenues
- Net loss of $27.3 million, or $(0.44) per diluted share,
compared to a net loss of $15.0 million, or $(0.25) per diluted
share, primarily due to non-cash impairment
- Adjusted EBITDA(1) loss of $3.7 million, compared to a loss of
$10.2 million
Full Year 2023 Highlights Compared to Prior Year
- Net revenues decreased approximately 18.8% to $225.9 million,
beating the Company’s previous guidance
- Gross profit decreased to $61.3 million, or 27.1% of net
revenues, from $70.3 million, or 25.3% of net revenues
- Net loss of $46.5 million, or $(0.76) per diluted share,
compared to a net loss of $163.7 million, or $(2.69) per diluted
share
- Adjusted EBITDA(1) loss of $5.6 million, compared to earnings
of $16.7 million
- Reduced operating expense and selling, general, and
administrative expense base by roughly $13.6 million through
operating efficiencies and strategic cost rationalization
- Cash, cash equivalents, and marketable securities of $65.0
million as of December 31, 2023, along with no debt
- Generated $1.4 million of operating cash, primarily driven by
reduction of inventory
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 $65.0 million in cash, cash equivalents, and
marketable securities and with no debt, positioning us well to
continue to execute on our strategic initiatives in 2024.”
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 $5.0 million, or 9%, to $49.5 million for
the fourth quarter ended December 31, 2023, compared to $54.5
million for the fourth quarter ended December 31, 2022. The decline
was driven primarily by a 3.6% decrease in same-store sales. Net
revenues for same-store sale locations open for the same period in
2022 and 2023 were $35.6 million in the fourth quarter 2023,
compared to $37.0 million in the fourth quarter 2022.
Gross profit was $11.6 million for the fourth quarter 2023, an
increase of $2.1 million, compared to gross profit of $9.6 million
for the fourth quarter 2022. Gross profit margin was 23.5% for the
fourth quarter 2023, compared to 17.6% for the fourth quarter 2022,
an increase of 600 basis points, primarily due to improvements in
product mix and corresponding margin performance.
GAAP net loss was $27.3 million in the fourth quarter 2023, a
decrease of $12.3 million, compared to a net loss of $15.0 million
in the fourth quarter 2022. Net loss was $0.44 per diluted share in
the fourth quarter 2023, compared to a net loss of $0.25 per
diluted share in the fourth quarter 2022. The decrease in GAAP net
loss was primarily due to a $15.7 million non-cash impairment
recorded in the fourth quarter 2023 of goodwill and intangible
assets related to prior acquisitions.
Non-GAAP Adjusted EBITDA(1) was a loss of $3.7 million in the
fourth quarter 2023, compared to a loss of $10.2 million in the
fourth quarter 2022. The increase to Adjusted EBITDA(1) was
primarily driven by improvements in gross profit and reductions in
operating and corporate expenses relating to our strategic cost
rationalization.
Cash, cash equivalents, and marketable securities as of December
31, 2023 were $65.0 million.
Full Year 2023 Consolidated Results
Net revenues decreased $52.3 million, or 18.8%, to $225.9
million for the full year ended December 31, 2023, compared to
$278.2 million for the full year ended December 31, 2022. The
decline was driven primarily by a 19.3% decrease in same-store
sales.
Gross profit was $61.3 million for the full year 2023, a
decrease of $9.0 million, compared to gross profit of $70.3 million
for the full year 2022. Gross profit margin was 27.1% for the full
year 2023, compared to 25.3% for the full year 2022, an improvement
of 180 basis points. The improvement to gross margin on a
percentage basis was primarily due to stronger penetration of
private label as a percent of sales.
GAAP net loss was $46.5 million for the full year 2023, a
decrease of $117.3 million, compared to net loss of $163.7 million
for the full year 2022. Net loss was $0.76 per diluted share for
the full year 2023, compared to net loss of $2.69 per diluted share
for the full year 2022. The improvement in net income was primarily
attributable to 186 basis point improvement in gross margin
percent, $13.6 million in annualized expense reductions, along with
$112.2 million dollar reduction in impairment related charges. To
offset, revenue decreased by $52.3 million.
Non-GAAP Adjusted EBITDA(1) was a loss of $5.6 million for the
full year 2023, compared to a loss of $16.7 million for the full
year 2022. The improvement in Adjusted EBITDA(1) was primarily
driven by improvements in the operating and corporate expense
structure compared to the prior year.
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 $205 million to
$215 million
- Full year 2024 Adjusted EBITDA(1) from a $2 million loss to a
$3 million profit
- First quarter 2024 net revenues in the range of $45 million to
$48 million with Adjusted EBITDA(1) between a $2 million loss and
breakeven
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 $31.4 million and $8.9
million in operating profit, reflecting the tremendous strength and
potential of this business. We believe MMI is now in a place where
it makes sense to consider strategic opportunities for the
business, and we recently engaged Lake Street Capital Markets to
advise us in this process. While we are happy having MMI within our
portfolio, we also believe that the right strategic opportunity for
MMI would better position GrowGen to build upon its achievements
and capitalize on additional opportunities within its core
Cultivation and Gardening business.”
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 U.S. GAAP
to non-GAAP information and is a measure calculated and presented
on the basis of methodologies other than in accordance with GAAP.
Please refer to the Use of Non-GAAP Financial Information herein
for further discussion and reconciliation of this measure to GAAP
measures.
(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 Colorado in 2014, GrowGen is the largest
chain of specialty retail hydroponic and organic garden centers in
the United States. The Company also operates an online superstore
for cultivators at growgeneration.com, as well as a wholesale
business for resellers, HRG Distribution, and a benching, racking,
and storage solutions business, Mobile Media or MMI.
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 $1.4 million and $0.7 million at December 31, 2023
and 2022
8,895
8,336
Notes receivable, current, net of
allowance for credit losses of $1.7 million and $1.3 million at
December 31, 2023 and 2022
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; $.001 par value; 100,000,000
shares authorized; 61,483,762 and 61,010,155 shares issued and
outstanding as of December 31, 2023 and 2022, respectively
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
$
278,166
Cost of sales (exclusive of depreciation
and amortization shown below)
37,808
44,894
164,624
207,903
Gross profit
11,644
9,562
61,258
70,263
Operating expenses:
Store operations and other operational
expenses
11,794
12,796
48,082
54,680
Selling, general, and administrative
7,876
8,594
29,799
36,758
Estimated credit losses
274
(37
)
955
1,737
Depreciation and amortization
4,130
3,968
16,607
17,132
Impairment loss
15,659
—
15,659
127,831
Total operating expenses
39,733
25,321
111,102
238,138
Income (loss) from operations
(28,089
)
(15,759
)
(49,844
)
(167,875
)
Other income (expense):
Other income (expense)
(5
)
137
781
684
Interest income
810
390
2,696
580
Interest expense
(91
)
(5
)
(97
)
(21
)
Total other income (expense)
714
522
3,380
1,243
Net income (loss) before taxes
(27,375
)
(15,237
)
(46,464
)
(166,632
)
Benefit (provision) for income taxes
61
248
(32
)
2,885
Net income (loss)
$
(27,314
)
(14,989
)
$
(46,496
)
$
(163,747
)
Net income (loss) per share, basic
$
(0.44
)
$
(0.25
)
$
(0.76
)
$
(2.69
)
Net income (loss) per share, diluted
$
(0.44
)
$
(0.25
)
$
(0.76
)
$
(2.69
)
Weighted average shares outstanding,
basic
61,386
61,064
61,181
60,813
Weighted average shares outstanding,
diluted
61,386
61,064
61,181
60,813
GROWGENERATION CORP. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
Years Ended December
31,
2023
2022
Cash flows from operating activities:
Net income (loss)
$
(46,496
)
$
(163,747
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
16,607
17,132
Estimated credit losses
955
1,737
Share-based compensation
3,171
4,967
Impairment loss related to goodwill and
intangible assets
15,526
127,831
Impairment loss on operating lease
right-of-use assets
133
—
Provision for deferred income taxes
—
(2,359
)
Loss on disposal of fixed assets
218
568
Change in value of marketable
securities
(1,438
)
—
Changes in operating assets and
liabilities (net of the effect of acquisitions):
(Increase) decrease in:
Accounts and notes receivable
(300
)
(3,106
)
Inventory
13,773
32,890
Prepaid expenses and other assets
3,898
10,827
Accounts payable and accrued
liabilities
(3,035
)
(3,359
)
Operating leases
46
508
Customer deposits
1,021
(8,590
)
Payroll and payroll tax liabilities
(2,502
)
(2,769
)
Sales taxes payable
(156
)
(582
)
Net cash and cash equivalents provided by
(used in) operating activities
1,421
11,948
Cash flows from investing activities:
Acquisitions, net of cash acquired
(3,050
)
(7,230
)
Purchase of property and equipment
(6,698
)
(12,896
)
Purchase of marketable securities
(98,680
)
(38,692
)
Maturities of marketable securities
96,758
46,633
Proceeds from disposals of assets
265
612
Net cash and cash equivalents provided by
(used in) investing activities
(11,405
)
(11,573
)
Cash flows from financing activities:
Principal payments on long term debt
(50
)
(108
)
Common stock withheld for employee payroll
taxes
(263
)
(1,618
)
Proceeds from the sales of common stock
and exercise of warrants and options, net of expenses
—
33
Net cash and cash equivalents (used in)
provided by financing activities
(313
)
(1,693
)
Net increase (decrease) in cash and cash
equivalents
(10,297
)
(1,318
)
Cash and cash equivalents at beginning of
year
40,054
41,372
Cash and cash equivalents at end of
year
$
29,757
$
40,054
Supplemental Information:
Cash paid for interest
$
98
$
21
Cash paid for income taxes
$
93
$
—
Right to use assets acquired under new
operating leases
$
4,289
$
9,607
Indemnity holdback from business
acquisition
$
—
$
875
Non-cash repurchase of liability
awards
$
653
$
—
Non-cash issuance of a note receivable
$
299
$
—
Common stock issued for business
combinations
$
—
$
5,710
Liability redemption associated with
business acquisition
$
120
$
—
Common stock issued for intangible
assets
$
—
$
173
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) (unaudited):
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
Net income (loss)
$
(27,314
)
$
(14,989
)
$
(46,496
)
$
(163,747
)
Benefit (provision) for income taxes
(61
)
(248
)
32
(2,885
)
Interest income
(810
)
(390
)
(2,696
)
(580
)
Interest expense
91
5
97
21
Depreciation and amortization
4,130
3,968
16,607
17,132
EBITDA
$
(23,964
)
$
(11,654
)
$
(32,456
)
$
(150,059
)
Share-based compensation
719
987
3,171
4,967
Investment income
810
—
2,696
—
Impairment loss
15,659
—
15,659
127,831
Restructuring and other charges (1)
3,076
487
5,376
568
Adjusted EBITDA
$
(3,700
)
$
(10,180
)
$
(5,554
)
$
(16,693
)
(1) Consists primarily of expenditures
related to the activity of store and distribution consolidation and
one-time severances
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240313173939/en/
Investor Contact
ICR, Inc. GrowGenIR@icrinc.com
Growgeneration (NASDAQ:GRWG)
Gráfico Histórico do Ativo
De Out 2024 até Out 2024
Growgeneration (NASDAQ:GRWG)
Gráfico Histórico do Ativo
De Out 2023 até Out 2024