Record Revenue increased 190% to
$125.9 million;
Net Income of $6.7 million up
161%;
Adjusted EBITDA of $14.5 million, a 229%
increase;
2021 Revenue Guidance Raised to
$455 to $475
Million
- Comparable Store Sales for the Quarter Increased 60% from
Prior Year
- Record Diluted Earnings of $0.11 Per Share in the Quarter
DENVER, Aug. 12, 2021 /PRNewswire/ - GrowGeneration Corp.
(NASDAQ: GRWG), ("GrowGen" or the "Company"), the largest chain of
specialty hydroponic and organic garden centers with 58 locations
across 12 states, today reported record second quarter 2021
revenues of $125.9 million, versus
$43.5 million in the same period last
year.
The Company also reported record second quarter 2021 GAAP
pre-tax net income of approximately $9.6
million compared to pre-tax net income of $2.7 million in the same period last year.
Diluted earnings per share, inclusive of tax expense, was
$0.11 compared to a $0.06 in the same period last year.
Non-GAAP earnings before interest, taxes, depreciation,
amortization and share-based compensation (Adjusted EBITDA) was
$14.5 million, compared to
$4.4 million in the same period last
year, or $0.24 per share, versus
$0.11 in the prior years quarter.
Darren Lampert, GrowGeneration's
Co-Founder and CEO stated, "The GrowGen team delivered an
exceptionally strong second quarter, with revenues up 190% compared
to the same period last year, with same store sales up 60%. The
entire enterprise generated more revenue in the first half of 2021
than all of 2020 and adjusted EBITDA in the first half of 2021 was
more than all previous periods combined. For the year, we
closed 12 acquisitions, adding 20 hydroponic retail locations,
bringing our total store count to 58. Our ability to attract and
purchase the "best of breed" and largest hydroponic operators in
the country was again evident with our signing of HGS Hydro, the
country's third largest hydroponic chain. The strategies
implemented several quarters ago are now positively impacting
margins. We increased our inventory positions across all key
product categories to get ahead of price increases, as well as
expanded more private label purchases. Our private-label and
proprietary products now account for approximately 7% of our
overall sales. I am proud and encouraged with our 170 basis
point increase in gross profit margin. On a per share basis,
adjusted EBITDA was $0.24 for the
quarter versus $0.11 last year.
These increases were accomplished despite port delays, supply chain
interruptions, and increases in container costs. Due to
construction and building delays, we now believe the two
Southern California and the
Ardmore, OK, store openings will
open in the fourth quarter. The company continues to focus on
building out a world-class supply chain, with omni-channel
functionality, that will allow the company to continue to deliver "
just in time" inventory for all types of growers and
cultivators."
Financial Highlights for Second Quarter 2021 Compared to
Second Quarter 2020
- Revenues rose 190% to $125.9
million for second quarter 2021, versus $43.5 million, for the same period last
year.
- Same-store sales at 24 locations open for the same period in
2020 and 2021 were $62.1 million in
second quarter 2021 versus $38.9
million for the same period last year, a 60% increase year
over year.
- Gross profit margin for second quarter 2021 was 28.4% compared
to 26.7% in the same quarter last year, an increase of 170 basis
points.
- Income before tax was $9.6
million for the second quarter 2021 versus $2.7 million for the same period last year.
- Net income was $6.7 million, or
$0.11 per share based on a diluted
share count of 60.2 million.
- Adjusted EBITDA was $14.5 million
for second quarter 2021 versus $4.4
million for the same period last year.
- Private-label sales, inclusive of Power Si and Char Coir, were
7% of revenue compared to less than 1% for the same period last
year.
- Ecommerce revenue was $12 million
compared to $3.3 million for the same
period last year, including Agron.io and all of our e-commerce
sites.
- Cash and short-term securities as of June 30, 2021 was $124.5
million.
Financial Highlights for Six Months 2021 compared to the same
period 2020
- Net revenue for the six months ended June 30,2021, was $215.9
million, compared to $76.4
million for the six months ended June
30, 2020, an increase of $139.5
million or 182%.
- Gross profit margin was 28.3% for the six months ended
June 30, 2021 compared to 26.9% for
the six months ended June 30,
2020.
- Net income for the six months ended June
30, 2021 was $12.9 million,
compared to net income of $0.5
million for the six months ended June
30,2020.
M&A Activity
The company acquired the following hydroponic equipment and
organic garden centers in the second quarter of 2021:
- In April 2021, the Company
acquired Downriver Hydroponics, a Michigan-based indoor garden center in
Wayne County.
- In May 2021, the Company acquired
The Harvest Company, a Northern
California-based garden center with operations in
Redding and Hayfork, CA.
Expansion Efforts
The Company's supply chain spans approximately 875,000 square
feet of retail and warehouse space, across existing locations and
signed leases in new locations, spanning 13 states.
- In April 2021, the Company
entered into a lease for a 40,000 sq. ft. facility in Jackson, MS, the 13th state of operation.
- In May 2021, the Company
announced the building of a sixth Oklahoma location in Ardmore.
- The Company announced the addition of 52,000 square feet in
downtown Los Angeles and 70,000
square feet in Rancho Dominguez,
California, that will serve as distribution and fulfillment
locations for the Company.
- The Company is in the process of building additional locations
that will serve as fulfillment centers that include 25,000 square
feet in Phoenix, Arizona and
58,000 square feet in Medley,
Florida. These locations are expected to be opened by fall
of 2021.
Subsequent Events
- In July 2021, the Company entered
into an asset purchase agreement to acquire HGS Hydro, the nation's
third largest chain of hydroponic garden centers, with six stores
across Michigan and a seventh
store slated to open in the fall of 2021.
- In July 2021, the Company
acquired Aqua Serene, a southern Oregon-based hydroponic garden center with
stores in Eugene and Ashland, Oregon.
- In July 2021, the Company
acquired Mendocino Greenhouse and Garden Supply, a Northern California-based hydroponic garden
center, located in Mendocino,
California.
Conference Call
The company will host a conference call August 12, 2021 at 9:00AM
Eastern Time. To participate in the call, please dial
888-390-0546 (domestic); 416-764-8688 (International). Participants
should request the GrowGeneration Earnings Call or provide
confirmation code: 94991680. This call is being webcast and
can be accessed on the Investor Relations section of GrowGeneration
website at:
https://ir.growgeneration.com/news-events/ir-calendar.
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 58 stores, which include 21 locations in
California, 8 locations in
Colorado, 7 locations in
Michigan, 5 locations in
Maine, 5 locations in Oklahoma, 2 locations in Nevada, 2 locations in Washington, 4 locations in Oregon, 1 location in Arizona, 1 location in Rhode Island,1 location
in Florida, and 1 location in
Massachusetts. GrowGen also
operates an online superstore for cultivators
at growgeneration.com and B2B ERP platform, agron.io. 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," "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.
Contacts:
Michael Salaman
michael@growgeneration.com
John Evans
Investor Relations
415-309-0230
john.evans@growgeneration.com
The accompanying
notes are an integral part of these Condensed Consolidated
Financial Statements.
|
ITEM 1. FINANCIAL
STATEMENTS
GROWGENERATION CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands)
|
June 30,
2021
|
|
December
31,
2020
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
67,155
|
|
$
|
177,912
|
Marketable
securities
|
57,357
|
|
—
|
Accounts receivable,
net
|
4,377
|
|
3,901
|
Notes receivable,
current
|
4,535
|
|
2,612
|
Inventory,
net
|
95,937
|
|
54,024
|
Income taxes
receivable
|
—
|
|
655
|
Prepaids and other
current assets
|
26,286
|
|
11,125
|
Total current
assets
|
255,647
|
|
250,229
|
|
|
|
Property and
equipment, net
|
10,455
|
|
6,475
|
Operating leases
right-of-use assets, net
|
31,661
|
|
12,088
|
Notes receivables,
net of current portion
|
1,371
|
|
1,200
|
Intangible assets,
net
|
44,279
|
|
21,490
|
Goodwill
|
108,740
|
|
62,951
|
Other
assets
|
694
|
|
301
|
TOTAL
ASSETS
|
$
|
452,847
|
|
$
|
354,734
|
|
|
|
|
LIABILITIES &
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
36,481
|
|
$
|
14,623
|
Accrued
liabilities
|
2,639
|
|
672
|
Payroll and payroll
tax liabilities
|
4,412
|
|
2,655
|
Customer
deposits
|
6,793
|
|
5,155
|
Sales tax
payable
|
2,046
|
|
1,161
|
Income taxes
payable
|
1,846
|
|
—
|
Current maturities of
lease liability
|
5,464
|
|
3,001
|
Current portion of
long-term debt
|
83
|
|
83
|
Total current
liabilities
|
59,764
|
|
27,350
|
|
|
|
|
Deferred tax
liability
|
1,697
|
|
750
|
Operating lease
liability, net of current maturities
|
27,427
|
|
9,479
|
Long-term debt, net
of current portion
|
106
|
|
158
|
Total
liabilities
|
88,994
|
|
37,737
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
Common
stock
|
60
|
|
57
|
Additional paid-in
capital
|
353,575
|
|
319,582
|
Retained earnings
(deficit)
|
10,218
|
|
(2,642)
|
Total stockholders'
equity
|
363,853
|
|
316,997
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$
|
452,847
|
|
$
|
354,734
|
The accompanying
notes are an integral part of these Condensed Consolidated
Financial Statements.
|
GROWGENERATION CORPORATION AND
SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
amounts)
(Unaudited)
|
For the Three
Months Ended
June 30,
|
For
the
|
For the Six Months
Ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Sales
|
$
|
125,885
|
|
$
|
43,451
|
|
$
|
215,907
|
|
$
|
76,433
|
Cost of
sales
|
90,172
|
|
31,866
|
|
154,817
|
|
55,902
|
Gross
profit
|
35,713
|
|
11,585
|
|
61,090
|
|
20,531
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Store
operations
|
12,624
|
|
3,877
|
|
20,806
|
|
7,516
|
Selling, general, and
administrative
|
10,563
|
|
4,431
|
|
17,968
|
|
11,496
|
Depreciation and
amortization
|
2,917
|
|
468
|
|
4,971
|
|
827
|
Total operating
expenses
|
26,104
|
|
8,776
|
|
43,745
|
|
19,839
|
|
|
|
|
|
|
|
|
Income from
operations
|
9,609
|
|
2,809
|
|
17,345
|
|
692
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Other
expense
|
(8)
|
|
(66)
|
|
(46)
|
|
(61)
|
Interest
income
|
36
|
|
—
|
|
40
|
|
25
|
Interest
expense
|
(4)
|
|
(13)
|
|
(6)
|
|
(20)
|
Total non-operating
income
(expense), net
|
24
|
|
(79)
|
|
(12)
|
|
(56)
|
|
|
|
|
|
|
|
|
Net income before
taxes
|
9,633
|
|
2,730
|
|
17,333
|
|
636
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
(2,920)
|
|
(156)
|
|
(4,473)
|
|
(156)
|
|
|
|
|
|
|
|
|
Net income
|
$
|
6,713
|
|
$
|
2,574
|
|
$
|
12,860
|
|
$
|
480
|
|
|
|
|
|
|
|
|
Net income per share,
basic
|
$
|
0.11
|
|
$
|
0.07
|
|
$
|
0.22
|
|
$
|
0.01
|
Net income per share,
diluted
|
$
|
0.11
|
|
$
|
0.06
|
|
$
|
0.22
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding, basic
|
59,061
|
|
38,617
|
|
58,588
|
|
38,224
|
Weighted average
shares outstanding, diluted
|
60,223
|
|
41,016
|
|
59,794
|
|
40,241
|
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):
|
Three Months Ended
June 30,
|
|
2021
|
|
2020
|
|
(000)
|
|
(000)
|
Net income
|
$
|
6,713
|
|
$
|
2,574
|
Income
taxes
|
2,920
|
|
156
|
Interest
expense
|
4
|
|
13
|
Depreciation and
Amortization
|
2,917
|
|
468
|
EBITDA
|
$
|
12,554
|
|
$
|
3,211
|
Share based
compensation (option compensation, warrant compensation, stock
issued for services)
|
1,914
|
|
1,187
|
Adjusted
EBITDA
|
$
|
14,468
|
|
$
|
4,398
|
|
|
|
|
Adjusted EBITDA per
share, basic
|
$
|
0.24
|
|
$
|
0.11
|
Adjusted EBITDA per
share, diluted
|
$
|
0.24
|
|
$
|
0.11
|
|
Six Months
Ended
June 30,
|
|
2021
|
|
2020
|
|
(000)
|
|
(000)
|
Net income
|
$
|
12,860
|
|
$
|
480
|
Income
taxes
|
4,473
|
|
156
|
Interest
|
6
|
|
20
|
Depreciation and
Amortization
|
4,971
|
|
827
|
EBITDA
|
$
|
22,310
|
|
$
|
1,483
|
Share based
compensation (option compensation, warrant compensation, stock
issued for services)
|
3,241
|
|
5,302
|
Adjusted
EBITDA
|
25,551
|
|
$
|
6,785
|
|
|
|
|
Adjusted EBITDA per
share, basic
|
$
|
0.44
|
|
$
|
0.18
|
Adjusted EBITDA per
share, diluted
|
$
|
0.43
|
|
$
|
0.17
|
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SOURCE GrowGeneration